Can our corporation deduct the amount it spends to buy back its own shares?
A corporation generally cannot deduct the purchase price of its own shares as an operating expense.
Tax Strategy Blog: Page 10
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The corporation bought all my shares, but my spouse still owns stock. Is sale treatment automatic?
A complete redemption of shares directly held by an owner does not automatically qualify as a sale when family attribution applies.
My C-corp stock basis is zero. How do we calculate tax on a liquidation payment?
A complete C-corporation liquidation generally treats shareholder distributions as payment in exchange for stock.
Our C corp received a dividend on a short-held investment. Is the dividends-received deduction automatic?
A corporation's dividends-received deduction is subject to eligibility limits, including holding-period and risk-reduction rules.
We paid to replace a failed subcontractor. How do those costs enter the unfinished contract calculation?
Replacement subcontractor costs can enter the unfinished contract's properly allocable cost pool, but the analysis must also address recoveries and…
My contractor became an employee in July. How do I report both periods?
Separate genuine changes in the working relationship from a correction of earlier misclassification.
We bought materials in December for a job starting next year. Do they reduce this year's contract income?
Buying materials is not the same as immediately deducting them or earning an equivalent percentage of contract revenue.
Our estimated construction costs increased sharply. Do we revise prior completion percentages?
Under percentage-of-completion reporting, revised estimated total costs generally affect the current cumulative calculation.
A customer paid to end a multiyear service contract. Is that payment capital gain?
Payments to Cancel a Business Service Contract. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
The project is usable, but punch-list work remains. Is the contract complete for tax?
A tax completion date is not necessarily the final invoice date or the date the last small defect is corrected.
Our completed project's final costs changed later. Do we need a look-back interest calculation?
A later final-cost adjustment can require a look-back interest review for a contract reported under percentage of completion.
We signed separate contracts for one customer's project. Can each use its own tax method?
Separate signatures do not guarantee separate contracts for Section 460.
Does a small job that crosses December automatically require percentage-of-completion reporting?
Crossing December can make a construction agreement a long-term contract, but it does not automatically require the percentage-of-completion method.
Our agreement includes land and construction. Does the whole price use the long-term contract method?
A land transfer and construction services bundled in one agreement do not automatically share one tax accounting method.
My customer has not approved a construction change order. Does it belong in contract revenue yet?
An unsigned change order does not automatically disappear from a percentage-of-completion calculation.
A job was canceled and we moved its materials to another job. Can we deduct the old job's full costs?
Canceling a construction job does not make reusable materials worthless.
Can my business pay for my spouse to attend my industry conference?
Separate your own business travel from your spouse's participation and expenses.
Can my company reimburse mileage on my personally leased car?
Review the vehicle method, business-mile records and reimbursement plan.
Two of my businesses use my home internet. Can both reimburse it?
Two Companies Reimbursing Your Home Internet. Review the facts, records and next steps for your business.
A customer paid after we filed the company's final return. How do we report the money?
Old Customer Debt Collected After a Final Return. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
My family uses the company car on weekends. How should we report it?
Separate business use from personal availability and actual personal use.
I funded the corporation, then received extra shares for my work. Are both amounts capital contributions?
Cash invested in a corporation and shares awarded for services are separate tax events.
I paid the landlord under my personal guarantee after my company closed. Who claims any deduction?
Owner Pays a Guaranteed Business Lease After Closure. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our books spread free rent across the lease. Can the tax return use the same rent expense?
Free-Rent Periods and Book-to-Tax Differences. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
My cofounder left before our business opened. Who claims the startup costs we each paid?
Startup Costs When a Cofounder Leaves Before Opening. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Customers returned products after we closed the store. Which records and tax year do we use?
Customer Returns After a Store Has Closed. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
A refund arrived for our closed corporation. Can I deposit it personally and ignore the company books?
Business Tax Refund After the Bank Account Closes. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our checkout collects donations for a charity. How do we keep them separate from our sales?
Customer Charity Donations in Business Deposits. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
A customer charged back last year's sale. How do I reconcile it with this year's 1099-K?
Cross-Year Chargebacks and Form 1099-K. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We changed our reports to accrual accounting. Did we also change our tax method?
Accrual Management Books but Cash-Method Tax Return. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our books show no retained earnings. Does that mean a C-corp distribution cannot be a dividend?
Book retained earnings and tax earnings and profits are different measures.
Does the price in our buy-sell agreement automatically establish the shares' estate-tax value?
A buy-sell agreement's price does not automatically control federal estate-tax valuation.
I paid the seller's employee bonuses at closing. Can I deduct them?
Buyer Pays the Seller's Employee Bonuses. Review the facts, records and next steps for your business.
The seller wants consulting fees paid to a new LLC. Does that change my tax?
The payment recipient's entity name does not determine whether the amount is purchase price or compensation for services.
I am buying a business with prepaid customers. Who handles the tax?
Identify which party received the cash, who must perform the work and how the liability affects the purchase agreement.
Our company will redeem a deceased owner's shares using insurance. Is that obligation automatically offset against the insurance value?
A corporate redemption obligation does not automatically offset company-owned life-insurance proceeds in valuing a deceased owner's shares.