| Abusive "Welfare Benefit Plan" Tax Schemes |
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| Generally, contributions to a welfare benefit fund are deductible when paid, but only to the extent that they qualify as ordinary and necessary business expenses of the taxpayer and only to the extent allowable under the Internal Revenue Code. The Code imposes strict limitations on the amount of tax-deductible pre-funding permitted for contributions to a welfare benefit fund. More... |
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| Corporation Sole Tax Scams |
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| Corporation Sole statutes permit the incorporation of religious leaders in order to ensure the continuation of ownership of property held for the benefit of a legitimate religious organization. Generally, religious leaders such as bishops or parsons take advantage of corporation sole statutes. Creditors of a Corporation Sole may not look to the assets of the person holding the office nor may creditors of the officeholder look to the assets of the Corporation Sole. Not all states permit the Corporation Sole form of corporate structure. More... |
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| Equipment Leases - Should They Be Depreciated or Expensed |
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| You are leasing a large piece of equipment for use in your business. As you are preparing your income tax return, you wonder whether the total cost of the monthly lease payments can be taken as rent expense or whether you have to allocate the cost of the equipment over its estimated useful life (called depreciation). If you had purchased the equipment, you know that the Internal Revenue Code would generally require depreciation. More... |
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| Electing S Corporation Status |
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| A timely and proper S corporation election generally permits the income of the business to be taxed directly to the shareholders of the corporation rather than to the corporation itself. In order to be effective in a current calendar year, the election must be filed by March 15th of that year. If it is filed any later, the election will apply to the next tax year. 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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