Generally, a business is considered “For Profit” if the business generates a profit in at least three out of five consecutive years. For training, showing, breeding, or racing horses, then the business needs to generate a profit for two out of seven years. What if the business does not meet this test?
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Tax Consequences for Determining if a Business is For-Profit or Hobby
It’s important to understand the hobby loss rules when starting a side business. For the first couple of years, it is common for a start up business to lose money. If the side business loses money for several years, the business may be a hobby. The tax consequences of reporting a business as “for profit” versus a hobby can be significant.
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Trust Fund Penalty – Rules for DBA and Single Member LLC
Generally, the IRS has to assess trust fund penalties to make individuals in a corporation personally liable for unpaid payroll taxes. The word “corporation” has meaning in tax law. If the business is not considered a corporation, then the owner is automatically personally liable for unpaid payroll taxes. Read this blog for more information on the trust fund recovery rules for DBAs and Single Member LLCs. Continue reading…
Trust Fund Penalty – How long to assess?
The IRS has limited time to assess trust fund recovery penalties. Generally, the IRS has three years from the filing date of the employment tax returns to assess the trust fund recovery penalty. This seems simple but it does require further explanation.
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Another Nationwide Firm in Trouble?
Nationwide tax resolution firm Omni Financial under investigation by the Florida Attorney General. Will this be the next nationwide firm to go down?
Trust Fund Penalty – Who is the responsible person?
The IRS will hold individuals in a company personally liable for trust fund recovery penalties. The IRS will conduct an investigation to make this determination. This blog discusses the factors the IRS evaluates during the investigation to determine the individuals considered a “responsible person” for trust fund penalties.
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Trust Fund Recovery Penalty – What is it?
When a business is in a difficult financial situation, a decision may be made to temporarily not pay payroll taxes. What may not be known is when the payroll taxes are left unpaid, the IRS can make individuals in the business personally responsible for the payroll taxes. This is called Trust Fund Recovery Penalty. Continue reading…
The Lark
I was invited by Merrill Lynch for 1 hour of CPE and dinner at the restaurant, the Lark. The Lark is located in West Bloomfield, Michigan, near the corner of Farmington and Maple. The CPE course was fine. However, the food was amazing.
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Livingston Interdisciplinary Professional Association (LIPA)
Livingston Interdisciplinary Professional Association (LIPA) is offering a free seminar on divorce and family law. LIPA’s mission is to inform and guide Livingston county couples and families in order to reach smarter, more helpful and less costly outcomes in divorce and family law situations through non-court processes.
IRS New "Fresh Start" Program works!
Earlier this year the IRS announced the “Fresh Start” program. The IRS implemented this program to provide relief to struggling taxpayers. I discussed the need for program in my blog posting, “IRS Overwhelmed by Offer in Compromise Requests, Changes Made.” I must admit that I was a little skeptical of this program in the beginning. But now I am a believer.
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