The lender deducted fees before funding our loan. Can we expense the difference immediately?
Loan Fees Withheld Before the Business Gets Cash. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Tax Strategy Blog: Page 8
1236 articles for business owners and real estate investors. Page 8 of 35.
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Can our partnership put a member on W-2 payroll through its wholly owned disregarded LLC?
A partnership generally cannot convert a partner into an employee by routing pay through its wholly owned disregarded entity.
We ended a multiyear software license early. What happens to its remaining prepaid cost?
Unused Prepaid License Fees After Termination. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
The bank charged off our loan but still wants payment. Has the debt been canceled for tax?
Lender Charge-Off While Collection Continues. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We paid a lump sum to extend our commercial lease. Is that payment treated like monthly rent?
Paying to Extend a Business Lease. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our new landlord reimbursed our moving costs. Can we net it against rent?
Landlord Reimbursement for a Business Relocation. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We share equipment but invoice our customers separately. Can we skip partnership tax reporting?
Separate customer invoices do not by themselves establish that a joint arrangement is outside partnership tax reporting.
Our software generated a return, but the IRS rejected the e-file. Is the return considered filed?
Generating or transmitting a return does not establish that the IRS accepted it.
We discovered an IRS notice after moving offices. Can we assume the response deadline starts when we found it?
Finding an IRS notice late does not automatically restart its deadline.
We paid the business tax, then received a penalty notice. Does payment alone prove the penalty is wrong?
Paying the underlying tax does not necessarily eliminate a filing, deposit or payment penalty already incurred.
We replace defective products for free. How do we avoid deducting the same inventory twice?
Warranty Replacements and Inventory Deductions. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our books use standard product costs. Can the tax return use them without reconciling actual costs?
Standard costs can be useful, but tax inventory must reflect a permissible method that reasonably approximates actual costs and handles variances properly.
We paid for inventory still at an overseas port. Is it our year-end inventory?
Inventory Overseas at Year-End: Who Owns It?. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our customers return expensive shipping containers. Should we expense them with each sale?
Reusable Shipping Containers and Product Costs. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
My bookkeeper records every company transfer as income. Is that right?
Are Transfers Between Your Companies Taxable Income?. Review the facts, records and next steps for your business.
Our insurer denied a business-loss claim, but we appealed. Can we claim the loss now?
Denied Business Insurance Claim Under Appeal. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
The insurer paid me personally for equipment my company owned. Who reports the claim?
Insurance Paid the Owner for a Company Asset. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We received an advance before the business insurer agreed on the total claim. How do we record it?
Insurance Advances Before a Business Claim Settles. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We are closing with unused customer gift cards outstanding. What happens to the tax balance?
Unused Customer Gift Cards When a Business Closes. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
I contributed property and its loan to my corporation. Is the whole transfer automatically tax-free?
A property contribution can qualify for nonrecognition under Section 351 only when its requirements are met.
I signed a tax power of attorney personally. Does it let the advisor handle my company's payroll notices?
A personal Form 2848 does not automatically authorize an advisor to represent a separate corporation on payroll taxes.
A lender forgave principal and unpaid interest. Do both amounts create the same income?
Forgiven Principal and Accrued Business Interest. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
A foreign supplier uses a U.S. bank account. Does that make it a U.S. payee for tax forms?
The bank account receiving funds does not determine the supplier's U.S.
My foreign hotel receipt and card statement use different currencies. Which amount supports the business travel expense?
A U.S.-dollar functional-currency taxpayer must translate foreign-currency expenses using an appropriate rate for when the item is paid or accrued under…
Our overseas customer withheld local tax from our fee. Can we automatically claim a U.S. foreign tax credit?
Foreign tax withheld from an invoice is not automatically a usable U.S.
Our overseas contractor moved to the United States midproject. Do we need to revisit earlier payment instructions?
A contractor's move can change the source of later service income and may also change tax residency or documentation requirements.
My processor converts foreign sales before paying me. Which amount belongs in the books?
Foreign-Currency Sales and Processor Conversion Fees. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We promised a foreign vendor a net payment. Who bears any U.S. withholding tax?
A promise to pay a foreign vendor net of withholding can increase the payer's total contractual cost.
Our foreign vendor's W-8 expired before payment. Can we keep using last year's withholding treatment?
An expired W-8 cannot automatically support the same treatment indefinitely.
Our U.S. partnership has a foreign partner but made no distributions. Can withholding still apply?
A partnership can owe Section 1446 withholding on effectively connected taxable income allocable to a foreign partner even when it distributes no cash.
We pay a foreign company to license content used in the United States. Do withholding forms apply?
Paying Foreign Licensors for U.S. Business Use. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We buy overseas equipment with U.S. installation included. Is the whole payment treated like buying goods?
A purchase of foreign goods and payment for U.S.-performed installation services require separate characterization.
Our industry convention is outside North America. Is the travel deductible just because the agenda is business-related?
A convention outside the North American area faces an additional reasonableness test beyond ordinary business purpose.
We pay a foreign contractor who works partly in the United States. Can we treat the whole invoice as foreign-source?
Service income generally follows where the services are physically performed, not simply where the contractor lives or sends invoices.
We reimburse a foreign consultant's U.S. travel. Can those amounts be ignored when reviewing withholding?
Travel reimbursements on a foreign consultant's invoice should not be excluded from withholding review merely because they are labeled expenses.
My overseas trip combines business and personal days. Can I use the same airfare rule as a domestic trip?
Foreign travel can require allocation of transportation costs between business and personal activity even when a primarily business domestic trip might…