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Tax Articles

What is a Church?

The IRS developed 14 criteria to evaluate applications for church foundation status. If a church does not meet these criteria, it will not receive tax exempt status. The criteria are weighted with the four most important of these being: • A complete organization of ordained ministers ministering to their congregations. • The provision of regular religious services and religious education…


Alimony Deduction

Back from vacation! Nashville, TN! Awesome town! In reviewing Paul T. Banach v. Commissioner – TC Memo 2010-33 – I learned that payments may be claimed as alimony under §215 if all four requirements of §71(b)(12) are met. Payment in cash will be considered alimony only if the: (1) payment is received by (or on behalf of) a…


What The IRS Instructs You To Do If You Have NOT Filed Your Taxes

Basically the simple answer is file your tax forms with both the US Federal government and applicable state governments.  Start by filing the previous 3 years of income tax returns ASAP. It is possible the IRS may have already filed returns for you. Under Section 6020(b) of the Internal Revenue Code, the IRS may file a…


IRS Mileage Deduction Rate Increases: $0.55.5-Business; $0.23-Medical or Moving; and, $0.14-Charitable

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51. In recognition of recent gasoline…


IRA’s Cannot Hold Sub-Chapter ‘S’ Stock: Trusts Can Though

To be taxed as an S corporation, a C corporation must elect S status by filing IRS Form 2553. Electing S status is fairly simple for a new or existing corporation, but meeting the requirements for S status can be more complex when the C corporation is not owned by an individual. Eligibility is based on §1361, which states only a “small…


Protective Tax Refund Claim

Protective refund claims are filed to preserve a taxpayer’s right to claim a refund when the taxpayer’s right to the refund is contingent on future events like future litigation, and may not be determinable until after the statute of limitations expires. Without a protective refund claim, taxpayers will only have a three-year statute of limitations in which to seek a refund. For example as…


Domestic Partners: Income Reporting

The IRS issued three rulings in 2010 to address how the income of registered domestic partners in California should be reported and taxed for both state and federal income tax purposes. In Chief Counsel Advice 201021050, the IRS determined that for tax years beginning after December 31, 2006, registered domestic partners in California are to report one-half of the community income,…


The Use of Quick Books by IRS Auditors

In January 2011 IRS agents began to audit Quickbooks data files and will require a copy of your QuickBooks data, if used, to help them with the audit. YIKES! These are some of my suggestions to prepare for a tax audit involving Quickbooks. Make an annual backup that matches the tax return and store it away offsite to be…