TAXPAYER PENALIZED FOR WASTING COURT’S TIME A self-employed hearing aid specialist (“petitioner”) claimed he had no taxable income and made no estimated tax payments on his 2006 and 2007 tax returns. Through third-party information returns and a bank account analysis, the IRS determined he had unreported business receipts of $209,331 for 2006 and $279,600 for [...]
SOCIAL SECURITY AND MEDICARE UPDATE The annual inflation adjustments have been announced for the various social security amounts and thresholds, so we thought it would be a good time to update you for 2014. For social security beneficiaries under the full retirement age, the annual exempt amount increases to $15,480 in 2014, up from $15,120 [...]
MAKING YOUR HOBBY A BUSINESS Taxpayers often enjoy their hobby activity more than they do their job. In many cases, they invest a great deal of time and money, and some eventually make their hobby a full or part-time business activity. Unfortunately, the IRS has a lot to say when it comes to the business [...]
RETIREMENT PLAN REVIEW Your retirement plan savings (e.g., qualified plans and IRAs) are important to your financial wellbeing for many reasons. You can accumulate income without currently paying tax, and the power of compounding pretax dollars makes a retirement plan one of the most powerful investment vehicles available. When you reach retirement age, your retirement [...]
CONVERTING A RESIDENCE TO RENTAL PROPERTY Recovering real estate values may cause some homeowners to consider converting their personal residence to rental property for investment purposes. The process for making this decision should include an analysis of economic factors, such as the homeowners’ marginal tax rate and the potential loss of the ability to exclude [...]
STRUCTURING A TAX-FREE INCORPORATION When forming a corporate entity, one method of capitalization is through a tax-free (actually, tax deferred) exchange. Properly transferring property to a corporation delays the recognition of any gain on that property until a taxable event occurs (e.g., sale of property or stock of the corporation, or liquidation of the corporation). [...]