How do I reconcile calendar-year W-2 totals to my company's fiscal-year tax return?
Calendar-Year Payroll in a Fiscal-Year Business Return. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Tax Strategy Blog: Page 9
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Can my related businesses use different accounting methods?
The answer requires a taxpayer-by-taxpayer eligibility and method review, including any rules that aggregate related businesses.
I paid franchise and buildout costs, but the location never opened. What can I deduct?
Franchise Fees When the Location Never Opens. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our business sale fell through. Can we deduct all the deal costs?
A failed transaction does not make every related cost currently deductible.
I spent money searching for a business to buy but never formed a company. Who claims the costs?
Acquisition Search Costs Before Forming a Company. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We reworked a defective production batch. Can we expense the rework while the goods remain unsold?
Reworking products generally requires the same capitalization analysis as producing them.
Our factory was idle for part of the year. Can we expense all overhead instead of allocating it to inventory?
An idle factory does not automatically make every production overhead item currently deductible.
We sold equipment and immediately leased it back. Can we report a sale and deduct every payment?
Selling Equipment and Leasing It Back. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
The lender took back equipment and waived the remaining debt. Is there one tax calculation or two?
Equipment Repossession With Debt Forgiveness. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Our equipment lease includes service and insurance. Can we treat the entire payment as rent?
Equipment Lease Payments With Maintenance Included. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We bought key-person life insurance before obtaining employee consent. Does that affect the tax treatment?
Employer-owned life-insurance proceeds can lose favorable exclusion treatment if the statutory notice and consent requirements were not satisfied before…
Our company owns employee life policies but received no death benefit. Can annual Form 8925 reporting still apply?
Annual Form 8925 reporting can apply while employer-owned life-insurance contracts are in force even when no death benefit was received.
We withhold a refundable tool deposit from wages. Does that reduce taxable payroll?
A refundable tool deposit withheld from pay does not ordinarily reduce the employee's taxable wages.
We promised an employee a net bonus. Is the tax we pay on top also taxable compensation?
Employer-paid employee taxes can themselves be additional taxable wages, so a net bonus usually requires a gross-up computation.
An employee repaid a signing bonus next year. How do we correct payroll?
Employee Repays a Signing Bonus the Following Year. Review the facts, records and next steps for your business.
We paid an employee during jury duty and kept the jury fees. How should payroll and the books reflect that?
Continuing an employee's salary during jury service generally remains wage compensation.
We reimbursed an employee, but the invoice remains payable. How do we prevent a second deduction?
Expense Reimbursement Also Left in Accounts Payable. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We pay employees a monthly expense allowance. Is it tax-free?
Employee Expense Allowances Without Receipts. Review the facts, records and next steps for your business.
An employee stole business funds and insurance paid later. How do we avoid double counting the loss?
Employee Theft and Later Insurance Recovery. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Can staff at one of my companies get tax-free employee discounts from another company I own?
Common ownership alone does not make every cross-company employee discount excludable.
An employee died before we paid earned wages. Do we report the payment like normal payroll?
Wages earned before death but paid afterward have special reporting rules.
Can we give an employee a catalog selection instead of cash and treat it as a tax-free achievement award?
A catalog selection can qualify for employee achievement-award treatment only if the award meets the applicable tangible-personal-property,…
Our company stopped trading but still earns bank interest. Can we skip its return?
Dormant Company With Only Bank Interest. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We moved stock into a permanent showroom display. Is it still inventory or a business asset?
Products Taken From Stock for Long-Term Demonstration. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
The estate received fees for work the partner completed before death. Are those payments covered by a basis step-up?
Income in respect of a decedent generally does not receive the ordinary date-of-death basis step-up that eliminates later income.
Card deposits include staff tips. How do I keep them out of owner sales without losing payroll records?
Customer Tips Included in Business Card Settlements. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Customers supply materials we process. Should their value appear in our inventory and sales?
Customer-Owned Materials in a Manufacturing Business. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
A customer paid my business loan directly instead of paying our invoice. Is that still revenue?
Customer Pays Your Business Lender Directly. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
A customer funded project escrow that we cannot withdraw yet. Is it our income?
Customer Project Escrow and Business Income. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
A customer is holding disputed retainage. Do I report the whole invoice as income?
Disputed Retainage and Cash-Method Income. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
A customer canceled an order for custom goods. When can we write off the unsellable inventory?
Custom Inventory After a Customer Cancels. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
We held a business convention on a cruise. Do the ordinary hotel-conference deduction rules apply?
Business conventions on cruise ships face special conditions and an annual deduction limit under Section 274(h).
I will buy my partner's shares using life-insurance proceeds. Does the stock basis automatically equal the policy payout?
In a cross-purchase arrangement, the surviving owner's basis in purchased shares generally follows the actual purchase cost, not automatically the…
I created a course personally before incorporation. Can my company pay me royalties to sell it?
Licensing an Owner's Course to the Operating Company. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
Can our corporation deduct legal and placement costs for issuing shares to investors?
Costs incurred to issue corporate shares generally are capital transaction costs rather than ordinary deductible legal expenses.
Our C corp lost money on securities but earned operating profit. Can the investment loss offset that profit?
A C corporation generally can deduct capital losses only against capital gains, subject to the corporate carryback and carryforward rules.