Recent Articles

K-1

An Internal Revenue Service tax document allocating the respective net income and/or losses to the respective owners. It is provided to the owners upon completion of the annual tax return. Each line on the K-1 identifies to the owner how much to include in the respective sections of their personal tax returns from the business operations.

Joint Venture

01/08/2017

The average person may not realize this, but the most notable joint venture in existence today is the National Football League.   It figuratively owns every Sunday in the fall of each year.  It is an association of 32 clubs agreeing to compete [...]

Aggregate and Entity Theories of Partnership

12/28/2016

A partnership is defined as an association of two or more persons to carry on as co-owners a business for profit.  The premise is built around the notion that the combined power of the partners exceeds the sum of the value the partners [...]

Owner Compensation in an S-Corporation

06/05/2015

One of the tax attributes of an S-Corporation over other forms of tax entities is the ability to reduce the overall tax obligation.  Naturally the lower the overall tax requirement the more profit generated for the owner(s).   The S-Corporation [...]

Direct Form of Compensation – Four Different Types

02/07/2015

There are four different types of direct compensation for employees.  These include: 1) Hourly Compensation, 2) Salaries, 3) Commissions and 4) Bonuses.  There is some misinformation related to direct compensation as this subject relates to owners [...]

Limited Liability Company – Step By Step Setup

01/17/2015

There is multi-step process to establish a Limited Liability Company (LLC).  You must first be recognized by the state of origin and then apply to the Internal Revenue Service to identify the particular tax entity arrangement.  Both recognition [...]

Real Estate Investment Trusts – REITs

12/09/2014

Real Estate Investment Trusts are corporations, trusts or associations that act as agencies in real estate and associated mortgages. This is a specialized tax segment and it requires recognition by the Internal Revenue Service to operate as a Real [...]

At-Risk Rules – An Elementary Understanding

10/28/2014

Code Section 465 of the Internal Revenue Code defines ‘At-Risk’ as the financial value the taxpayer has in jeopardy related to the business activity the taxpayer is invested in as some form of an owner.  Effectively, the taxpayer may only take [...]

Phantom Income

10/27/2014

Those small businesses using partnership or S-Corporation formats issue Form K-1 to the respective owners.  When income is assigned to the owner and there is no corresponding cash related to that income, then this income is referred to as [...]

What is an S-Corporation?

03/03/2013

Within the family of corporations, the Internal Revenue Service (IRS) grants tax free status to S-Corporations.  It is strictly an IRS term.  In the IRS code, there are several subchapters pertaining to corporations; Subchapter S identifies and [...]
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