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How To Prepare An Income Statement

Income Statement, Financial Health, Profit And Loss Statement, Mile IQ, Tax Blog, TaxConnections

An income statement is an important document for your company’s financial health. Yet, many small business owners stumble when preparing it. Read on for help in preparing your own income statement.

What Is An Income Statement?

An income statement is a report of revenues generated and expenses incurred by your business. It’s most commonly recorded over the course of a year, a month or a quarter. This statement is sometimes called a Profit and Loss statement because the report arrives at a net profit or loss. Read more

TaxConnections Tax Professionals – Can You Help With This Question Of The Week?

TaxConnections Tax Professionals – Can You Help With This Question Of The Week?

When making a PARTIAL sale of an MLP, can designating recently purchased unit Lots as the ones to be sold reduce income tax?

I have searched and searched but have been unable to find this answer. I am unfamiliar with the accounting for MLP sales, and have a situation with a PARTIAL sale of an MLP, where it was designated the most recently purchased unit Lot be sold, which is documented by the broker’s statement. The K-1 figured the Ordinary Income based on the FIFO method using the first Lots purchased which are about 18 yrs. old. Read more

TaxConnections Tax Professionals – Can You Help With This Question Of The Week?

Answer Tax Question, Ask Tax Advisor, Ask Tax Expert, ask tax question, Tax Blog, Tax Question, TaxConnections

TaxConnections Tax Professionals – Can You Help With This Question Of The Week?

Is future income from a promissory note all taxable in the year the note was issued?

When we sold our business we signed a promissory note with the buyers for a portion of the purchase price with a 15 year payback at 6% interest. Our accountant told us that we must pay taxes on the full amount of the note even though we will receive the income over 15 years. Seems unfair to have taxation BEFORE compensation. Is this right? Read more

The IRS Can Do A Better Job Providing Military Taxpayers With Accurate And Up-To-Date Information About Tax Issues They Are Facing

Nina Olson, Tax Advocate, Tax Blog, Washington D.C., USA, TaxConnections

As we near the end of the 2018 filing season, it is worth reflecting on the challenges taxpayers face in complying with complex tax law provisions. In my 2017 Annual Report to Congress, I identified IRS customer service and information provided to military taxpayers as one of the Most Serious Problems facing taxpayers. In this blog, I will discuss the needs and preferences of military taxpayers and recap some of my recommendations on how the IRS can substantially improve its service to this taxpayer population. Read more

IRS Reminds Those With Foreign Assets About U.S. Tax Obligations

Tom Kerester, Tax Blog, Tax Ambassador, Washington D.C., USA, TaxConnections

WASHINGTON — The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, to check if they have a U.S. tax liability and a filing requirement. At the same time, the agency advised anyone with a foreign bank or financial account to remember the upcoming deadline that applies to reports for these accounts, often referred to as FBARs.

Here is a rundown of key points to keep in mind:

Deadline For Reporting Foreign Accounts Read more

UK Tax: Extension Of Security Deposit Legislation

Kevin Offer, Tax Blog, Tax Advisor, London, United Kingdom, TaxConnections

The government are concerned that a small number of businesses choose not to pay the tax they owe or seek to unfairly reduce their tax bill. One of the ways available to HMRC to tackle this is the power to require high-risk businesses to provide an upfront security deposit where there is a serious risk of non-compliance. Currently, these powers only apply to certain taxes and duties, but the non-compliant behaviours which warrant security action will be typically found across other aspects of these businesses’ tax affairs. Read more

Due Date Clarified For Transition Tax On Foreign Company Owners

Of all the income tax provisions in Trump’s major tax reform legislation, the so-called “transition tax” is perhaps the most unusual in its scope and breadth. For many U.S. persons owning foreign companies that trigger the transition tax, a certain degree of panic set in at the beginning of this year, because the transition tax statute (IRC Section 965), if read strictly, seems to give a hard deadline of April 15 for paying the first portion of the tax under the statute’s payment installment plan. Read more

The Key To A Legal And Successful Reduction In Your Tax Liability Is Planning

The key to a legal and successful reduction in your tax liability is planning. We don’t just comply with tax procedures but we also recommend proactive tax saving measures to maximize your income after tax deductions.

We take it upon ourselves to master the current tax laws, new tax rules and the complicated tax codes by frequently attending tax seminars. Read more

How Are Nonprofits Affected By The Tax Cuts And Jobs Act?

Kazim Qasim, Tax Advisor, Tax Blog, Orlando, Florida, USA, TaxConnections

After a lengthy process, Congress and the President did what they had to do in late December 2017 to put into law one of the most significant pieces of legislation in decades: the Tax Cuts and Jobs Act (TCJA). The Act put into place a number of provisions that will affect Not for Profit Organizations. Note the following areas of tax impact that the provisions of the TCJA  brought in relation to Not For Profit Organizations, as noted in Yeo Yeo:

  • Changes the computation of unrelated business taxable income (UBIT) if an organization has more than one unrelated trade or business. It’s possible that more nonprofits will have to pay UBIT. As Nolo explains:

Read more

The Reality Of Owning A Controlled Foreign Corporation After Trump’s Tax Reform

Olivier Wagner, Tax Traveler, Tax Blog, Tax Abroad, Vancouver, Canada, TaxConnections

Do you know that owning a Controlled Foreign Corporation got affected by New Tax Bill? In a nutshell, Trump’s tax reform now means that all income is Subpart F income. In addition, all currently untaxed retained earnings will be subject to a one-time tax. Read further if you want to find out what it means exactly and how U.S. expats with CFCs are affected.

Let’s take a quick look at a few changes that were introduced in recent tax legislation. Generally, Trump’s tax reform benefits individuals who are struggling with their finances by doubling standard deductions, i.e. from $6,000 to $12,000 for singles, and reducing the rates for five tax brackets of the existing seven. Read more

IRS Warning: Don’t Be A Victim Of ‘Ghost’ Tax Return Preparers

Tom Kerester, Tax Ambassador, Tax Blog, Washington D.C., USA, TaxConnections

WASHINGTON ― The Internal Revenue Service is cautioning taxpayers to avoid the dangers of “ghost” tax return preparers.

According to the IRS, a ghost preparer is paid to prepare a tax return, but does not sign it, either electronically or on paper, as the paid preparer. These phantom preparers who won’t put their name on the tax return are a warning sign for taxpayers of a potential scam.

Here’s how it works. The ghost preparer can print the paper return for their client and tells them to sign and mail it to the IRS. Or, for electronically-filed returns, they will prepare it but won’t digitally sign it as the paid preparer. Read more

Individual Taxpayer Identification Number (ITIN) Reasons And Qualification

Daniel Gray, Tax Blog, Tax Advisor, Toronoto, Canada, TaxConnections

You have to meet the return filing reason , or one of the exception-to-return-filing reasons. One cannot just arbitrarily apply for an ITIN as you must include documentation proving that you need one and that your reason aligns with IRS qualification requirements to receive one. The IRS sets out a finite prescribed list of qualification requirements – all split into two groups – IRS-return-filers OR exceptions. One reason that can be used for many applicants when they can’t qualify under other reasons, is owning many but not all types of USA bank accounts (so long as the US bank provides you with the required ITIN letter). Read more

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