If you plan to operate your business as a corporation, whether a C or S Corp, just remember that you must treat the corporation as a separate entity. This means you must have a separate bank account, get a taxpayer identification number and then pay all bills and collect income through the corporation. Make sure you keep corporate funds separate from your personal funds. Also keep good records to justify all your business deductions. The IRS may disallow the corporation for tax purposes if you don’t treat it as a separate entity.
Brian’s Tax Musings
Planning on donating a car, truck or van to charity? Remember that your deduction has nothing to do with kelly blue book or other fair market value estimates. The charity has to send you a letter telling you how much they sold you vehicle for – there is your deduction. If they decide to keep it for use in the charity, you can take fair market value, but the charity has to notify you they kept the vehicle.What happened was that too many people were taking inflated values of charitable donations versus what the charities were reporting as vehicles sold. The difference was tremendous and Congress finally stepped in and required the charity to tell you what they sold the vehicle for back in 2005. So make sure the charity sends you either a letter or a form 1098-C saying how much the vehicle was sold for (the 1098-C is preferable because they reported it to the IRS).
Brian’s Tax Musings
You can deduct cash, non-cash items, mileage and out of pocket expenses donated to charity as a charitable deduction, but not the value of your time. Regulation sec 1.170A-(g) disallows any contribution of services to charity as a deduction. Sorry, but time donated to charity is just that – charitable.