| Terminating S Corporation Status |
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| An S corporation may voluntarily terminate its status by filing a statement with the Internal Revenue Service Center where the original election was filed. In order to properly revoke an election, the consent of shareholders that at the time of revocation own more than one-half of the issued and outstanding shares is required. More... |
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| Clean Fuel Tax Deduction |
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| A taxpayer who is the original owner of a qualifying hybrid vehicle that combines an electric motor with a gasoline-powered engine may be eligible to claim a one-time tax deduction on his or her federal income tax return. In an attempt to encourage consumers to purchase more fuel efficient automobiles, Congress has enacted a federal tax law that allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that uses a clean-burning fuel. Hybrid vehicles obtain higher fuel efficiency and produce fewer harmful emissions than similar gasoline-powered vehicles. More... |
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| Tax-Free Contributions in Exchange for Corporate Stock |
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| When a corporation is formed, its shareholders transfer money and property to the corporate entity in return for stock. Generally, if you transfer money or property into a corporation solely in exchange for stock of that corporation and you control the corporation immediately after the transaction, neither you nor the corporation recognizes any gain or loss resulting from the exchange. This general rule is not elective. If the statutory requirements of a tax-free exchange are met, neither gain nor loss will be recognized. The rule applies if you are an individual or if you are a member of a group that transfers property into a corporation. In addition, the exchange is tax-free no matter whether the corporation is being formed or whether it is already operating. More... |
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| Business Income |
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| The definition of taxable business income is a broad one. To paraphrase the Internal Revenue Code, it includes all income from whatever source it is derived. In general, anything of value received by a business is considered income unless it is specifically excluded by the tax laws. More... |
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| Preparing for an Audit |
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| Substantiation is the key to a successful audit of your small business tax return. The Internal Revenue Service has the right to look at any records used to prepare the return, so get ready to bring them in. But do not bring in a crate of receipts for the auditor to wade through. This is one situation where neatness really does count. The more receipts and paperwork the auditor has to search through, the more errors he or she can find. When the examiner asks about automobile deductions, your ability to produce a file labeled "car" not only builds the appearance of credibility but also prevents the auditor from finding potentially problematic items in your crate. In addition, going through all that paperwork to organize it refreshes your memory concerning the year in question. More... |
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