From the Internal Revenue Service to your local governing regluations, this category deals with the area of income taxes, revenue taxes, personal property taxes, and other tax matters.
On December 10, 2014, the Internal Revenue Service announced the mileage rate deduction for 2015. They increased the amount allowed 1.5 cents to 57.5 cents per mile. How do you calculate and use the mileage rate formula for tax purposes?
There is one tax rule that confuses business owners and it relates to the year-end practice of paying bills and receiving compensation for receivables. This is referred to as the ‘Mailbox Rule’. This is strictly a tax issue for cash basis taxpayers. I’m here to set the record straight!
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 losses on his tax return contingent on the loss being directly tied to invested dollars with some form of tax basis.
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 ‘Phantom Income’. In effect, it is assigned income for tax purposes without the corresponding cash to pay the tax liability.
If you received a 1099-C, the first question you ask is: ‘Do I have to include this in my taxable income?’ Well, the answer is ‘it depends’. Not what you want to hear but there are a lot of variables involved in answering this question.
There are several different retirement plans available to the small business owner. But no plan offers so many advantages to small business as the Simple retirement plan. The positive attributes include: 1) Easiest to understand, 2) Least amount of paperwork, 3) No compliance reporting and 4) Plenty of flexibility. If you are in business and have less than 25 employees, this is your best option to include a great benefit for your employees. This article describes this form of a retirement plan and Section 408 of the Internal Revenue Code, identifies the advantages, and concludes with a comprehensive example. In addition, I explain how to fill out the proper document to begin the plan.
This is a plan within an allowed set of plans under Section 408 of the Internal Revenue Code. All of us have heard of Section 401(k) plan. The Internal Revenue Code dedicates Sections 401 through 408 to codifying retirement plans. Within Section 408 are the easier to understand retirement plans. They include Simplified Employee Plans (SEPs), Salary Reduction Simplified Employee Plans (SARSEPs) and the Savings Incentive Match Plan for Employees (SIMPLE). Section 408(p) addresses the SIMPLE.
Many people turn their hobbies into a business operation. Not so much to make a living or make big profits, but more to help offset the costs of the hobby. Whenever you go to one of those community fairs, the vendors at the respective booths are mostly folks selling a product that is direct outcome of their hobby. The bands that play on stage, they make some money, but never enough to offset the cost of instruments, gear and transportation. But they enjoy entertaining folks and they hope someday they’ll get discovered.
The Internal Revenue Service uses a complex definition to identify capital expenditures (assets). A capital expenditure is not deductible as an expense in the tax year purchased; the taxpayer or entity must use depreciation, amortization or depletion to obtain deductible value on the entity’s return.
On December 6, 2013, the Internal Revenue Service announced the mileage rate deduction for 2014. They reduced the amount allowed one-half a cent to 56 cents per mile. How do you calculate and use the mileage rate formula for tax purposes?
When a product or investment is sold, the seller must realize a gain or loss from the transaction. The actual sale or transaction will trigger the gain or loss realized. In effect, the receipt of cash sets the threshold for a ‘REALIZED’ amount. Unrealized gains or losses are potential i.e. on paper transactions.
