Discover the best entity for your business: Use this chart. If you are a business owner unable to decide on the entity structure that fits your needs, help is around the corner. Moving around the complex landscape of business entities is always tricky, but our detailed Entity Comparison Chart can give you the clarity to make an informed decision. Why this chart is a must-read? Simplifies complex information Simply summarize the essentials of each business entity type, such as single-member … The post Discover the best entity for your business: Use this chart. appeared first on BergerFirst ..read more

1099s for corporations and other 1099 surprises Are you wondering what this 1099 is all about? Let us explain. Businesses making payments of $600 and above from their business accounts for service must send the individual a Form 1099-NEC and file a copy with the IRS. Fees for professional services paid to attorneys, physicians and members of other professions must be reported in returns of information (1099s) if paid by persons engaged in a trade or business and paid in the course of such trade or business. Now, the shocking news: This includes payments to medical and legal corporations. F ..read more

How the IRS disappears tax refunds on unified tax returns Question My client has not filed taxes for 10 years, and the IRS wants his returns. Now, the problem is not the money he owes but the at least $100,000 he overpaid. The IRS won’t refund the amount. Are there any options to open up those returns for a refund? Answer The refund statute of limitations is straightforward. Here are the two prongs: To claim a refund for federal taxes paid, you must file the refund claim within three years from the date the return was filed or two years from the date the tax was paid. Since your client did ..read more

Who should own the business car: Corporation or Individual? Question As a tax practitioner, I have clients who operate single-owner S corporations. They want to know who should own the business vehicle—the individual or corporation—and its ramifications. I am confused about what answer to give my clients. I need help. Answer Yes Individual Ownership Financially it is advised for the individual to own the vehicle because the owner can get a better rate on vehicle insurance. However, owning the vehicle personally and having the corporation reimburse actual expenses for depreciation and/or Se ..read more

Do you need to amend your 2020 tax return for the 2020 ERC? Many questions arise when it comes to 2020 tax returns for 2020 ERC. Here are some questions and solutions: Question The IRS requires that the employer amend the 2020 tax return for the employee retention credit (ERC). Here is an employer’s situation to help you understand. The deal: The employer doesn’t have the credit yet. The IRS stopped processing ERC claims from September 14, 202, through at least December 31, 2023, and the claim was filed between these dates. Though the employer is sure to get it, it may not be until Novemb ..read more

CPA steals the payroll taxes, owner has to pay the IRS You read it right! The CPA stole the payroll taxes, which means he has the money. Now, the owner is responsible, as he has to pay the payroll taxes due to the IRS, and matters get worse. The owner also has to pay a 100 percent trust fund penalty on the W-2 payroll taxes, which includes federal income, social security, and Medicare taxes that the CPA embezzled. Background The case of Rodney Taylor. Rodney hired a CPA, Robert Gard, to attend to his corporation’s bookkeeping and accounting matters. As years passed, Cumulatively Gard embe ..read more

Do you need to amend your 2020 tax return for the 2020 ERC? Many questions arise in the minds of employers when it comes to 2020 tax returns for the 2020 ERC. Here are some questions and solutions: Question The IRS requires that the employer amend the 2020 tax return for the employee retention credit (ERC). Here is an employer’s situation to help you understand. The deal: The employer doesn’t have the credit yet. The IRS stopped processing ERC claims from September 14, 202, through at least December 31, 2023, and the claim was filed between these dates. Though the employer is sure to get i ..read more

Despite Its High Cost, This Education Is Deductible Question We run an S corporation and specialize in flipping houses. We have been doing well over the years. Now, my spouse and I want to attend a $35,000 per head, three-day in-person training event that can help us perform well in our business. Though the cost is high, the outfits for this program are not accredited, as in the case of Harvard University (example). Our tax preparer worries that the training program’s high cost could trigger an audit. He recommends that we amortize the cost over the expected period of benefit instead of e ..read more

Sell Stock at a Loss to Your Daughter Here is a scenario that might interest you. Say, you bought stock in 2022 for $17,000, and in 2024 you sold it to your daughter at fair market value for $9,000. What would be the loss deduction you claim on your 2024 tax returns? The answer is $0. This is how it works. The loss cannot be deducted because the sale was made to your daughter, who is related to you. Now, if she sells the stock at a loss, her basis is $9,000, and the sale is at a gain, she may use your unrealized loss to reduce her gain. Here are a few examples: Case 1: Your daughter sel ..read more

Q&A: S Corporation Reimburses Personal Vehicle Here is a question put forward by an S Corporation businessman. He runs an S Corporation and the corporation reimburses for the use of his personal vehicle. He bought the vehicle in 2022 and is now planning to sell it. So, what happens when he trades it? The answer is as follows: Case 1: If you purchased a vehicle for $40,000 and the corporation reimbursed $40,000 for bonus depreciation and now you trade in the vehicle for $45,000 and the dealer gives you $20,000 for the trade-in, you will have $20,000 profit on the trade ($20,000-zero ba ..read more