“Your most unhappy customers are your greatest source of learning.” — Bill Gates
Small Business and Work Opportunity Tax Act of 2007
This is another one of the almost countless tax acts that add layer upon layer to the already incredibly complex Internal Revenue Code, without any attempt at overall simplification. One of the major provisions is the final change (apparently) in the so-called “Kiddie Tax,” that we somewhat explained in the November 2007 issue of “Financial Fax.” Here are some more changes:
- The favorable Section 179 write-off is generally increased to a $125,000 immediate federal tax deduction, for normally
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“Under the English legal system you are innocent until you are shown to be Irish.” — Ted Whitehead
Audit Information and Misinformation
Many taxpayers seem to believe that if the IRS doesn’t call them in for an audit within six months after their return is filed, they are home free. WRONG!
- The IRS has, at least, three years from the date your return was filed or due, whichever is later, to audit your return.
- If you omit more than 25% of the gross income from your return, the statute of limitations is raised to six years.
- There is a further
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“The avoidance of taxes is the only intellectual pursuit that carries any reward.” — John Maynard Keynes
Tax planning primarily concerns the timing and the method by which income is reported and deductions and credits are claimed. The basic strategy for all year-end tax plans is to time your income so that it will be taxed at a lower rate — and to time your deductible expenses (and any tax credits) so that they can be claimed in a year in which you are in a higher tax bracket. The tax planning rules are simple (while their execution may … Read the rest
“You can marry more money in five minutes than you can earn in a lifetime.”
A buy-sell agreement is frequently the key document in a company’s business continuation plan and the owners’ estate plans. These agreements establish a fair price for an ownership interest in a closely-held business and ensure an orderly business transition. They usually provide that the business (or a portion thereof in the case of multiple owners) will be sold (or offered for sale) at a specified price and under certain circumstances, which are detailed in the agreement. The primary circumstances (“triggering events”) are: death, disability or … Read the rest
“E-file will cut many months off the audit process and will allow us to develop sophisticated analytical tools to better select areas of audit inquiry.” — IRS Commissioner Mark W. Everson
Would You Like to Pay Your Payroll Tax Deposits — Twice?
Both the IRS and the courts have taken the position (and won) that if you give money to an independent agent to pay an obligation of your business, and they do not do so — you still owe the money! This recent case is not the first one involving payroll tax deposits and outside agents. Outsourcing payroll functions … Read the rest