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