Way to avoid Corp tax

intercompany interest charges - having an intercompany, such as a headquarter or a parent company that lends debt into a company so that the company would set the interest rate to pay interest to offset the profit. Note that the company that receives the interest would be paying taxes on the profit if the interest …

Incentive Stock Options and Tax Implication

Incentive stock options grant you the right to purchase a certain number of shares of stock at an established price There are two types of stock options Statutory stock options incentive stock options (ISOs) - special, more favorable tax treatment when all the rules and holding periods are met because taxable transaction occurs by selling the stocks …

Ways to Recognizing Gains/losses on Stocks

An investor has the option to choose a tax method that he/she wishes, such methods include FIFO, LIFO, highest cost, lowest cost, specific loss, average cost, etc. The investor may choose the tax method prior to purchasing a security. FIFO Pro - could be a long-term capital gain Con - usually result in a higher …

Hobby Income

Hobby income is reported in Line 21 Other Income of Form 1040, while hobby expenses are reported in Sch A under Job Expenses and Certain Misc Deduction subject to 2% of AGI limitation. Hobby or Business? The taxpayer must consider the following 9 issues: Whether you carry on the activity in a businesslike manner and …

Self employment income

At risk - at risk losses are deductible because they are not nonrecourse loans or loss stop by a guarantee. All at-risk amounts are then used to offset the taxable income in the year. If the loss is greater than the taxable, NOL is then created. An NOL can carry forward to offset 80% of …

Tax Filing Status

Determined if you are married or unmarried on the last day of the tax year: Unmarried Single Head of Household Qualified Widow with a child (year of death MFJ following 2 years of QW) Married Married Filing Jointly Married Filing Separately Head of Household (a married couple did not live together in the last 6 …

Amended Tax Return

Federal 1040X form 1040X with forms and schedules that support the changes attached to the front of 1040X: W-2, W-2C, W-2G, 1042-S, 8288-A attached to the back of 1040X: any other source documentation NY IT-201-X IT-201-x with schedules or forms documentation applicable, such as Form 1040x with schedule and forms that support the changes  

Form 8829 Home Office

Home office expense is the amount of portion that is exclusively used on a regular basis for business purposes. There are 2 ways of home office Simplified method - each square foot is $5. Maximum square feet is 300, so the total deduction is $1,500 Regular method - home office expense is calculated after gross income deducts all other expenses …

1040NR – Nonresident Aliens

US Citizens - Form 1040 Resident Aliens - Green card test or substantial presence test. SPT requires taxpayers to be present 31 days in the tax year, and 183 days during 3 year period (100% current year, 1/3 of first precede year, 1/6 of second precede year) Nonresident Aliens - For any period that you're neither …

Business Car Expenses

Taxpayers have two options to calculate car-related expenses: standard mileage rate must not operate 5 or more cars at the same time must not have claimed depreciation deduction other than straight-line method must not have claimed section 179 must not have claimed special depreciation allowance must not have claimed actual expenses after 1997 for a …