This posting by Kelly Phillips Erb as a contributor for Forbes does a nice job of spelling out the S Corporation reasonable compensation issues with the IRS and the recent CPA S Corporation court case that raised Watson’s payroll from $24000 per year to $91000 (but on income averaging $180000 to $200000 for two years, or less than 50% a year on average): http://www.forbes.com/sites/kellyphillipserb/2012/03/25/taxes-from-a-to-z-u-is-for-unreasonable-compensation/Here is a link to the Watson case that is also in the article:http://www.scribd.com/doc/86679355/Watson-v-USI think one of the really great points this article makes is to come up with a documented calculation of how the compensation was arrived at and why it is reasonable. Just saying ‘it seemed about right’ just will not cut it in an IRS comp audit and there are going to be more of these in the future as ways to balance out social security and medicare are looked at. I know I have been beating this issue to death but if you have a small S Corp in the future this may really affect you and you need to do some planning with your tax professional to keep out of the woods on this. For financial, accounting and tax musings,You can [...]
The Question of Taxing Employer-Provided Health Insurance
Is the taxability of health insurance provide by employers on the table? See this posting in the New York Times by Bruce Bartlett for some history and his take on it:http://economix.blogs.nytimes.com/2013/07/30/the-question-of-taxing-employer-provided-health-insurance/?_r=0I tend to agree with the author – right now the makeup of Congress would probably not allow this change to go anywhere. In the future, who knows?For financial, accounting and tax musings,You can count on us to count for you! email bstonercpa@sbcglobal.net phone 818-317-6035 Website www.briantstonercpa.com Follow me on Twitter! @bstonercpa
Dear IRS: That Income? It’s Not Mine
Ever share income with another person not on an account? This article by Robert W. Wood in Forbes goes into the issues and problems:http://www.forbes.com/sites/robertwood/2013/07/29/dear-irs-that-income-its-not-mine/Make sure you document everything if you do something like this or it can be a real problem with the IRS and your state taxing authority.For financial, accounting and tax musings,You can count on us to count for you! email bstonercpa@sbcglobal.net phone 818-317-6035 Website www.briantstonercpa.com Follow me on Twitter! @bstonercpa