Business Tax Advice – Staying Tax Healthy in 2017
TAXPERT JANUARY 2017
Taxpert
January 2017
IRS IS FOCUSING MORE AUDIT RESOURCES ON S CORPORATION ENFORCEMENT
It has been reported that the IRS Commissioner said at an American Bar Association meeting in 2016, IRS expects that more audit enforcement will be focused on S Corporations to allow IRS to deal with… “payroll and correlated business activities”. IRS scrutiny of S Corporations continues to increase because of the favorable pass-through elements, the most familiar tax features of the S Corporation are:
√ Pass-through deduction of business losses up to stockholder basis
√ Special treatment of certain fringe benefits for 2% owners
√ Distributions that may avoid employment taxes
√ One level of taxation
√ Ability to maintain previously taxed, but undistributed income inside the entity
You should position Your Company to survive an IRS audit. Acknowledge that Your Company is a legal entity, separate from You [the owner/stockholder], and must be operated at “Arm’s Length” - with its own legal documents, accounting records, financial statements, and tax returns. While this discussion is directed to S Corporation entities, our recommendations apply to all business entities - sole proprietors, corporations, limited liability companies, partnerships and joint ventures.
#DO TAKE REASONABLE COMPENSATION THROUGH SALARY, WAGES OR GUARANTEED PAYMENTS
#MAINTAIN BUSINESS BANKING AND ACCOUNTING SYSTEMS FOR THE COMPANY
#DO NOT COMMINGLE BUSINESS AND PERSONAL FINANCIAL TRANSACTIONS
#MAINTAIN DETAILED RECORDS OF BASIS, EQUITY AND CAPITAL INFUSIONS
You are In The Zone,
don moragne