Business Entity Selection and the Tax Consequences of Converting

For this post Brandon Rains, founder of the Rains Laws Firm and an expert on business formation espouses his observations about business structure changes and I address the income tax reporting requirements of those changes therein. Generally speaking there are five choices when it comes to business structure and income reporting requirements: Sole Proprietorship (IRS Form…

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Income 54: Nonresident Partners and Shareholders of Partnerships and S Corporations

The Colorado Department of Revenue has finally revised its guidelines in FYI Income 54 regarding people who do not live in Colorado but are partners and/or shareholders of partnerships and/or S corporations in Colorado, ensuring that pass-through entities pay Colorado income tax on their Colorado-source income. This #EnrolledAgent says #AboutTime! According to the revised guidelines, this requirement…

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Why to Revoke An S Election and How to Do It – Internal Revenue Code Section 1362(d); Reg § 1.1362­6(a)

Many entrepreneurs get caught up in selecting the “most appropriate business structure” – particularly people planning to conquer the moon right out of the gate. If this is you beware as business structure is a determination that is best driven out of operational efficacy. Why? Most all new businesses fail, it is a fact of life. Properly…

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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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Business Taxes Due Next Week – AVOID PENALIZATION – File An Automatic Extension Request TODAY – IRS Form 7004

The Business and Partnership Tax deadline is coming up fast! Don’t sweat it! File IRS Form 7004 to apply for Automatic Extension of Time to File Certain Business Income Tax. If you happen to be compelled, feel welcome to check out the instructions for IRS Form 7004. If you need help contact me and one of my…

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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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Schumann v. IRS: Reg. 1.469-2(f)(6) – The Nuanced Relationship Between Passive Losses & Self Rental Gains

Back to my friends that I previously wrote about who misunderstood passive activity and material participation. They are a married couple filing jointly and own a very successful business together structured as an S-corporation as well as a portfolio of rental real estate properties.  They actually consider themselves privileged to have their their tax woes shared…

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Defining Passive Activity Between Spouses – Beyond the Bedroom: What Is Material Participation?

One would imagine this is the script to a low budget B-rated film by the title, it is not. But if it got you reading all the better because you may want to know about my friends, a professionally successful and happily married couple who jointly own rental real estate that generated losses for tax…

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What is the best Business Structure to form If Any?

What I love most about Colorado, more than the 300+ days of sun every year and the glorious rocky mountains, are the people.  For the most Coloradans are risk taking job creators, starting new businesses from scratch out of their garages and turning passions for a hobby into a business with a profit motive. Of…

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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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