Tag: Internal Revenue Service
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Constructive Dividends – Definition, Understanding and Application
When a corporation confers an economic benefit upon a shareholder, in his capacity as such, without an expectation of reimbursement, that economic benefit becomes a constructive dividend, taxable as such. See INTERNAL REVENUE SERVICE NATIONAL OFFICE FIELD SERVICE ADVICE MEMORANDUM FOR DISTRICT COUNSEL, Number 200011003 dated October 27, 1999; specifically Page 4, 3rd paragraph.
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Bookkeeping – Advanced Skillsets (Lesson 70)
The next section of bookkeeping (advanced skill sets) introduces the bookkeeper to the different organizational methods and explains why certain kinds of transactions are handled differently than standard entry practices.
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Owner Compensation in an S-Corporation
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 allows an owner to reduce their tax responsibility via the compensation package assigned to the owner.
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SS-4 IRS Application for an Employer Identification Number
An employer identification number (EIN) is the business equivalent of a Social Security number. A unique identifier is assigned to the business for use in communicating and complying with the Internal Revenue Service. Just like a Social Security number, it is a 9 digit number with the first two digits as the prefix.
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Pizza Restaurant Audit Guide used by the Internal Revenue Service
In the mid 90’s, the Internal Revenue Service created an audit guide specifically for pizza establishments. Today, this guide along with the Retail Industry Guide, specifically Chapter 4 which covers the examination techniques for the food service industry is used to audit the typical family style pizza restaurant.
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Capital Expenditures – IRS Definition
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.
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Partnership Agreements – An Introduction
There is a tremendous amount of information to convey to fully understand partnership agreements. This is the first in a series of articles related to partnership agreements. Throughout this series I will explain the various sections and issues a small business owner faces in creating a sound and fair agreement with a single or multiple partners.
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What is an Audit?
An audit is defined as a methodical examination. Audits are grouped into two principal sets – financial and organizational compliance (usually related to licensure). For the small business entrepreneur, it is almost unheard of for them to have an organizational compliance audit.