Deliberate Tax Free Compounding is the Secret of the Golden Flower

I am getting to be an old man now and so profoundly thankful that the lessons of tax-free compounding were impressed upon me at an early age. It has made a huge difference in my financial well being and subsequent happiness. You too can use the power of tax-free compounding to increase retirement savings. We…

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Defining Small Employer with Regards to Offering Health Insurance

Many business owners of all sizes have been posting to this blog lately with concerns about offering minimum essential health insurance coverage for their employees. It is indeed a complex topic full of both pitfalls and opportunities. When you drill down into the nuances of what it really means to be a small employer in these regards it quite…

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Meal Expense – Navigating Between Internal Revenue Code Sections 162, 274, 132; IRS Technical Advice Memorandum 200030001; and, Churchill Downs v. Commissioner

As per usual I’m swimming in areas where the tax code is seemingly at odds. The latest matter across my desk regards meals and entertainment (M&E) expense. These are the two questions at hand: Specifically at what point does a meeting expense incurred under IRC section 162 to present a sales pitch to groups of prospective investors…

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IRS Form 1099-misc Filing Requirements Defined as per IRC 6041

I was talking with a taxpayer the other day who registered as an LLC with Colorado Secretary of State. She developed an intriguing business model that is doing remarkably well according to the financial statement. As part of a tax planning conversation our discussion surrounding gross receipts digressed into how the billing function works. Interestingly…

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Can You Establish a SEP Plan if you are a Sole Proprietor? What if that Sole Proprietorship Had Historically Passive Income?

Regardless of their nature or topic matter, off beat questions are one of the spices of life. When it comes to the realm of taxation generally speaking the answers frequently distill down to – it depends. These two questions were asked of me on my last trip to New York City and I couldn’t restrain…

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Odujinrin v. IRS Commissioner Reinforces the Significance of Engaging a Reputable Enrolled Agent

In Wole Odujinrin v. IRS Commissioner the petitioner, a hematology oncologist who represented himself, did not have adequate substantiation to support his petition and was not entitled to claim a net operating loss. He was also liable for an accuracy-related penalty under IRC 6662 – the expensive kick in the shorts. This petitioner moronically showed up with little…

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What is an FTE? What is a Seasonal Employee?

My friend, confidant, mentor and expert in the procedural ramifications of ObamaCare, Debbie Nash of D. Nash & Associates, got to talking with me about some of the nuances of this legislation and our discussion quickly digressed into what the definition is of a ‘Full Time Equivalent’ (FTE) employee for IRS tax purposes. One of…

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The New Home Office Deduction Safe Harbor – IRS Rev. Proc. 2013-13

The Internal Revenue Service announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes. The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can…

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US Treasury SS-8 Determination of Worker Status for Purposes of Federal Employment Tax

In my dealings with the US Treasury Department regarding worker classification disputes I have learned that although in reality there may be shades of gray distinguishing between what constitutes an employee and what constitutes an independent contractor the US Treasury has some very specific positions.  Here are four that will hopefully help you make the…

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Employee Tool and Equipment Plans

Tool and Equipment Plans generally require employees to provide their own tools. Some plans purport to receive tax-favored treatment as “accountable plans” under the definition of adjusted gross income in Internal Revenue Code § 62(c). If you are expected to use your own tools and equipment on the job and get reimbursed be very careful in…

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