Archive for the ‘Contributor’ Category

Selling Your Business – A Tool To Reduce Capital Gains Taxes

August 8th, 2011 admin

Editor’s Note: The IRS and Treasury Department have enacted regulations that  severely limit the effectiveness and use of private annuity trusts as an income  and estate planning strategy. The regulation covers all private annuity  trusts created after October 18, 2006. All trusts created before this date are  grandfathered and will continue to receive the tax benefits of the  trust.

The biggest change is the elimination of the deferral of  capital gains taxes on all future private annuities. Without that feature,  many individuals will be forced to look at other strategies to determine what  would be best for their situations. Therefore, before you implement any strategy  discussed in this article, be sure to consult a legal and tax professional.

“I would rather expire at my desk than to sell my business and pay Uncle Sam one dime in taxes.” How many owners that have paid their fair share of taxes for twenty years of building their business feel this way? The tax bite is the single biggest factor in an owner’s reluctance to sell his/her company.

I have previously written articles discussing various aspects of transaction structures to minimize taxes. As a result, I am often contacted by a panicked seller that is a week from closing his business sale as he looks in disbelief at his accountant’s spreadsheet detailing the tax burden of his impending sale. (more…)

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Benefit Of A Self-Employment Tax Deduction

January 13th, 2010 admin

By: Nicky Pilkington

You are your own boss. You have been working alone for quite a while, and then why not make the most of what is offered to you.

Self-employment tax deduction is a blessing for those who run their own business or are planning to set up their business. File taxes under Schedule C or Schedule C-EZ and have your social security number for identification. This helps you in getting relief that would have been difficult if you were a mere employee.

Both schedules work differently and a careful understanding is very necessary. Form Schedule C-EZ is used by those whose business expenses are small, who end up the year with a profit, which run the business without any employees, who have no need to claim a home-office deduction and who do not report any depreciation.

Form Schedule C is for business enterprises that bigger and require more handling. The main difference is that under schedule C, you can show a loss.

The following are the tax deductions that you can claim if you are self-employed:

Equipment Expenditure: you use a lot of computer for your own purpose and you can claim deductions. Also on the cabinets. But the actual limit can be sought in the IRS publications.

A percentage of travel, meal and entertainment expenses can be deducted under this facility.

Health Insurance and Social Security Taxes: health premium paid on your and your family’s health is deductible but under form 1040.

Self-managed retirement benefits: You can open a Keogh or a Simplified Employee Pension plan. The contribution that you make to either of these plans from your earnings can be subtracted from your adjusted gross income when you file Form 1040.

Home Offices: using a part of your house for book keeping and storing files can be used as a deductible expense.

Well, these are just a few options available to you in terms of saving some money. Consult a well known tax consultant and you can reap better rewards in terms of savings.

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Surprise – You Have Been Audited By The IRS

December 15th, 2009 admin

One of an American citizen’s worst fears is an audit by the IRS. The unlucky individual who is the target of an audit begins to conjure up images of penalties, fines, levies, or worst of all, jail time. Even the most honest of taxpayers, under the scrutiny of an audit, begins to think back in their mind, “Did I calculate my return correctly?”, “Did I save all my receipts for the deductions I claimed?” This is a most stressful and challenging time in a taxpayer’s life. Nevertheless, before one loses sleep over the impending audit, there is a law which protects Americans in an IRS audit situation.

To be more specific, in 1998 the IRS passed the third installment of the Taxpayer Bill of Rights (TaBOR). (more…)

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Buying a Business – Checking the Lease

December 14th, 2009 admin

Despite stringent disclosure rules which aim to even things up between the supposedly rapacious seller and the innocent purchaser, it’s very easy for a buyer of a small family business to be caught by buying a dud. (more…)

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