The Tax Court has concluded that a foreign corporation’s proceeds from the redemption of a U.S. limited liability company that was treated as a partnership for U.S. income tax purposes was not U.S.-source income and was not effectively connected with a U.S. trade or business. Read more
Tag Archive for Corporation
If you intend to set up a new company in Ireland in 2017, please be aware that you must register with the Irish Revenue Authorities within thirty days of incorporation. This can be done by completing the relevant sections of a TR2 Form:
New business owners often ask, “How do I set up my business For Tax Purposes?” One of the choices you make when starting a business is the type of legal organization you select. This decision can affect how much you pay in taxes, the amount of bookkeeping and paperwork required, the personal liability you might be responsibility for, and your ability of borrow money.
For-profit businesses fall under one of four structures for tax purposes:
1. Sole Proprietor – An individual who owns an unincorporated business by themselves. Most small and home based businesses are sole proprietorships. For tax purposes, the business activity of a sole proprietor is reported on Schedule C of Form 1040. This is Read more
A shareholder-employee’s compensation from an S corporation is often subject to IRS scrutiny because S corporation flow-through income enjoys an employment tax advantage over that of sole proprietorships, partnerships and LLCs. This advantage finds its genesis in Revenue Ruling 59-221, which held that a shareholder’s undistributed share of S corporation income is not treated as self-employment income. In contrast, earnings attributed to a sole proprietor, general partner or many LLC members are subject to self-employment taxes.
As employment tax rates have climbed, this advantage of operating as an S corporation has become magnified. Because S corporation income is not subject to self-employment tax, there is tremendous motivation for shareholder-employees to minimize their salary in favor of distributions, which are also not subject to payroll or self-employment tax.
So how does a taxpayer or more likely his advisor determine what is “reasonable compensation” for an owner/employee of an S Corporation? Read more