Reporting A Settlement

If you happen to be awarded a settlement you need to be careful in how the proceeds are reported to avoid scrutiny by the taxing authorities. I just closed a file today in IRS Examination the facts of which surrounded

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Posted in Tax Guidance & Preparation, Tax Preparer, Tax Problems & Requests, Taxable Income

Exclusion of Capital Gain from Sale of Personal Residence Does Not Always Apply

The US Tax Court case of David A. Gates, et ux. v. Commissioner 135 serves as best I can tell as precedent. Under §121, if married taxpayers own and use property as their principal residence for at least two of the five years ending

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Posted in 1031 Exchange, Capital Gain, Capital Loss, Tax Court, Tax Guidance & Preparation, Tax Problems & Requests

Reporting Back Pay

Reporting back pay is not as straight forward as one imagines. If you issued back pay you should report it on IRS Form W-2 (in boxes 1, 3, and 5) for the year payment is made. If any punitive damages are involved in

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Posted in Employment Tax, Paying Taxes, Payroll Tax Problems, Social Security Tax, Tax Guidance & Preparation, Tax Problems & Requests, Taxable Income

Partnership Vs. Qualified Joint Venture

Under IRC 761 the term partnership essentially includes a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not, a corporation or a trust or estate. It

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Posted in Partnership, Qualified Joint Venture

Co-ownership of Rental Real Estate Does Not Require Partnership Formation

Generally co-ownership in rental property does not require the formation of a partnership when the following conditions are met. 1. Each co-owner must hold title to the property as a tenant in common (TIC) under local law. This usually doesn't apply

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Posted in Husband/Wife, Partnership, Rental Real Estate

Tax Tips for Selling Your Home

Generally you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale. If you have

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Posted in Capital Gain, Capital Loss, Home Sale, Rental Real Estate, Tax Guidance & Preparation

Claim IRS Tax Credit for Hiring Veterans

The VOW to Hire Heroes Act of 2011, provides an expanded Work Opportunity Tax Credit (WOTC) to businesses that hire eligible unemployed veterans and for the first time also makes the credit available to certain tax-exempt organizations. IRS Notice 2012-13, posted

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Posted in Employment Tax, Tax Credit, Veteran

IRS Form 1040 Schedule C: Profit or Loss from Business

The sole proprietorship or Limited Liability Corporation (LLC) is in my opinion the easiest type of business entity to set up and begin operating from an income tax reporting perspective. It is not separate from its owner with the income and

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Posted in Accounting Method, Business Expense, Business Income, Car expense, Depreciation, Disallowed Expenses, Employee Business Expense, Entity Classification, FICA, Health Insurance, Hobby, Home Office, Husband/Wife, IRS Form 1040 Schedule C, Medicare, Net Operating Loss, NOL, Passive Activity, Self Employ, Small Business, Social Security, Social Security Tax, Sole Proprietor, Start up costs, Sub-chapter S, Tax Guidance & Preparation, Tax Problems & Requests

IRS Failure to File Penalty Abatement for Partnerships

IF your partnership failed to timely file its IRS Form 1065 and you get penalized by the IRS you seek relief from or abatement of this penalty under IRS Revenue Procedure 84-35 if your partnership meets the following criteria 1.

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Posted in IRS Penalties, IRS Penalty and Interest Abatement, Partnership

Lessons From Mitt Romney’s Tax Return

Check out Mitt Romney's 2010 tax return and learn how he does it. The most important lesson I learned in perusing his return (besides the significance of sheltering your $$ outside of the USA) is the immediate impact of targeted charitable contributions.

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Posted in Abusive Tax Shelter, Accounting Method, Alternative Minimum Tax (AMT), Asset Classification, Audit Technique Guide, Basis, Business Expense, Business Income, Charitable Contribution, Cost Basis, Mitt Romney Taxes
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