J.K. Lasser's Small Business Taxes 2018

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Barbara Weltman. J.K. Lasser's Small Business Taxes 2018

Preface

Introduction

PART 1. Organization

CHAPTER 1. Business Organization

Sole Proprietorships

Partnerships and Limited Liability Companies

S Corporations and Their Shareholder-Employees

C Corporations and Their Shareholder-Employees

Employees

Factors in Choosing Your Form of Business Organization

Forms of Business Organization Compared

Changing Your Form of Business

Tax Identification Number

CHAPTER 2. Tax Year and Accounting Methods

Accounting Periods

Accounting Methods

Uniform Capitalization Rules

CHAPTER 3. Recordkeeping for Business Income and Deductions

General Recordkeeping

Specific Substantiation Requirements for Certain Expenses

Records for Depreciation, Basis, Carryovers, and Prepaid Expenses

How Long You Should Maintain Records

PART 2. Business Income and Losses

CHAPTER 4. Income or Loss from Business Operations

Business Income

Income for Service Businesses

Income from the Sale of Goods

Income from Farming

Income from Commercial Fishing

Investment-Type Income

Miscellaneous Business Income

State Income Taxes on Business Income

Net Operating Losses

Limitations on Business Losses

Income Earned Abroad

CHAPTER 5. Capital Gains and Losses

What Are Capital Gains and Losses?

Tax Treatment of Capital Gains and Losses for Pass-Through Entities

Tax Treatment of Capital Gains for C Corporations

Loss Limitations

Sales of Business Interests

Special Situations

CHAPTER 6. Gains and Losses from Sales of Business Property

Section 1231 Gains and Losses

Sale-Leasebacks

Installment Sales

Recapture

Involuntary Conversions

Abandonment, Foreclosure, and Repossession of Property

Sale of All the Assets of the Business

PART 3. Business Deductions and Credits

CHAPTER 7. Employee Compensation: Salary, Wages, and Employee Benefits

Worker Classification

Temporary Workers and Outsourced HR

Deductible Employee Compensation

Compensation to Owners

Stock Options and Restricted Stock

Deferred Compensation

Disallowance Repayment Agreements

Employee Benefits

Golden Parachute Payments

Cafeteria Plans

Employment Tax Credits

CHAPTER 8. Travel and Entertainment Expenses

Local Transportation Costs

Travel within the United States

Foreign Travel

Conventions

Living Away from Home on Temporary Assignments

Meal and Entertainment Expenses

Business Gifts

Reimbursement Arrangements

Recordkeeping Requirements

CHAPTER 9. Car and Truck Expenses

Deducting Car and Truck Expenses in General

Actual Expense Method

Standard Mileage Allowance

Leasing a Car for Business

Arranging Vehicle Ownership

Employee Use of an Employer-Provided Car

Vehicle Trade-In

Trucks and Vans

Credit for Plug-In Electric Vehicles

Reimbursement Arrangements

Recordkeeping for Vehicle Expenses

CHAPTER 10. Repairs, Maintenance, and Energy Improvements

Ordinary Repairs

Rehabilitation Plans

Small Business Safe Harbors

Rotable Spare Parts

Change in Accounting Method

Special Rules for Improvements for the Elderly and Handicapped

Lists of Deductible Repairs and Capital Improvements

Energy Improvements

CHAPTER 11. Bad Debts

Bad Debts in General

Collection of Bad Debts

Business versus Nonbusiness Bad Debts

Loans by Shareholder-Employees

Guarantees That Result in Bad Debts

Special Rules for Accrual Taxpayers

Reporting Bad Debts on the Tax Return

Collection Strategies

CHAPTER 12. Rents

Deducting Rent Payments in General

The Cost of Acquiring, Modifying, or Canceling a Lease

Improvements You Make to Leased Property

Rental of a Portion of Your Home for Business

Leasing a Car

Leveraged Leases

CHAPTER 13. Taxes and Interest

Deductible Taxes

Nondeductible Taxes

Deductible Interest

Nondeductible Interest and Other Limitations on Deductibility

CHAPTER 14. First-Year Expensing, Depreciation, Amortization, and Depletion

First-Year Expensing

Other Expensing Opportunities

General Rules for Depreciation

Modified Accelerated Cost Recovery System

Depreciation Methods

Bonus Depreciation

Limitations on Listed Property

De Minimis Safe Harbor Rule

Putting Personal Property to Business Use

Amortization

Depletion

CHAPTER 15. Advertising Expenses

Ordinary Advertising Expenses

Promotion of Goodwill

Prizes, Contests, and Other Promotional Activities

Help-Wanted Ads

Websites and Apps

Social Media

CHAPTER 16. Retirement Plans

Qualified Retirement Plans

Added Costs for Retirement Plans

Retirement Plans for Self-Employed Individuals

Regular 401(k)s and Designated Roth Accounts

Individual Retirement Accounts

MyRAs

State-Sponsored Plans for the Private Sector

When to Take Action

Actions to Avoid

Comparison of Qualified Retirement Plans

ESOPs

Correcting Plan Defects

Retirement Plans Owning Your Business

Nonqualified Retirement Plans

Glossary of Terms for Retirement Plans

CHAPTER 17. Casualty and Theft Losses

Casualties and Thefts

Condemnations and Threats of Condemnation

Disaster Losses

Deducting Property Insurance and Other Casualty/Theft-Related Items

Certain Disaster Victims

Disaster Assistance

CHAPTER 18. Home Office Deductions

Home Office Deductions in General

Special Requirements for Employees

Actual Expense or Simplified Method

Actual Expense Method

Simplified Method

Special Business Uses of a Home

Mobile Offices

Ancillary Benefits of Claiming Home Office Deductions

Impact of Home Office Deductions on Home Sales

CHAPTER 19. Medical Coverage

Health Care Mandates

Deducting Medical Insurance for Employees

Deducting Health Coverage by Self-Employed Persons and More-Than-2% S Corporation Shareholders

Using Reimbursement Plans

Tax Credit for Contributions to Employee Health Coverage

Shifting the Cost of Coverage to Employees

Setting Up Health Savings Accounts (HSAs)

Archer Medical Savings Accounts (MSAs)

COBRA Coverage

Wellness Programs

Reporting Health Coverage on W-2s

Reporting Health Coverage on Forms 1095

CHAPTER 20. Deductions and Tax Credits for Farmers

Farm Expenses

Timber Gains

Farm Losses

Farm-Related Tax Credits

Nondeductible Farm-Related Expenses

CHAPTER 21. Domestic Production Activities Deduction

Background

Qualified Producers

Figuring the Deduction

CHAPTER 22. Miscellaneous Business Deductions

Other Business Expenses in General

Job-Seeking Expenses

Moving Expenses

Educational Expenses

Charitable Contributions Made by Your Business

Licenses and Permits

Dues and Subscriptions

Legal and Professional Fees

Bank and Merchant Fees

Supplies, Materials, and Office Expenses

Uniforms and Clothing

Insurance

Commissions

Outsourced Workers

Payments to Directors and Independent Contractors

Penalties, Fines, and Damages

Meal Costs for Day-Care Providers

Expenses of Disabled Persons

The Dividends-Received Deduction

Foreign Housing Deduction

Other Expenses

CHAPTER 23. Roundup of Tax Credits

Employment-Related Credits

Capital Construction–Related Credits

Other Tax Credits

General Business Credit

PART 4. Tax Planning for Your Small Business

CHAPTER 24. Income and Deduction Strategies

Tax-Saving Tips

Audit-Proofing Your Return

Common Errors and How to Avoid Them

Tax Assistance

CHAPTER 25. Tax Strategies for Opening or Closing a Business

Initial Tax Decisions to Make

Investing Your Own Resources

Debt versus Equity Financing

Tax Identification Numbers

Tax Reporting for the First Year

How to Write Off Start-Up Costs

Setting Up a Business Bank Account and Credit Card

Moving a Business

Aborted Business Ventures

Bankruptcy

Expenses of Winding Up a Small Business

Tax Reporting in the Final Year

CHAPTER 26. Tax Strategies for a Sideline Business

Reporting Sideline Business Income

Hobby Losses

Business Expenses

CHAPTER 27. Tax Strategies for Multiple Businesses

Advantages and Disadvantages of Multiple Entities

When to Run Multiple Activities within One Business

Treatment of Multiple Corporations

Tax Rules for Owners of Multiple Businesses

CHAPTER 28. Alternative Minimum Tax

Alternative Minimum Tax Basics

Deduction Limits for Alternative Minimum Tax

Credit Offsets

Minimum Tax Credit

CHAPTER 29. Other Taxes

State Income Taxes

Employment Taxes

Self-Employment Tax

Sales and Use Taxes

Excise Taxes

CHAPTER 30. Filing Tax Returns and Paying Taxes

Income Tax Deadlines and Extensions

Online Filing of Business Income Tax Returns

Estimated Taxes

Making Tax Payments

Filing Other Business Returns

Using Tax Professionals

Chapter 31. Retirement and Succession Planning

Retirement Planning

Exit Strategies

Financing Options to Fund Buyouts

Consulting Agreements

Estate Taxes

Estate Planning Concerns

CHAPTER 32. Working with CPAs and Other Tax Professionals

Types of Tax Professionals

Finding a Tax Professional

Tips for Selecting a Tax Professional

CHAPTER 33. Handling Audits with the IRS

Types of Audits

Appeals

Litigation

Mediation

Taxpayer Bill of Rights

Taxpayer Advocate Service

APPENDIX A

Information Returns

Dividends

Large Cash Transactions

Payments to Independent Contractors

Pension and Retirement Plan Distributions

Retirement and Employee Benefit Plans

Small Cash Transactions

Wages

Health Coverage

Merchant Transactions

Foreign Accounts

APPENDIX B

Tax Penalties

Failure to File a Tax Return or Pay Tax

Failure to File Correct Information Returns

Failure to File Correct Payee Statements

Accuracy-Related Penalties

Preparer Penalties

Penalty Relief

APPENDIX C

Checklist of Tax-Related Corporate Resolutions

APPENDIX D

List of Dollar Limits and Amounts Adjusted for Inflation

Items Adjusted Annually for Inflation

Items Fixed by the Tax Code

Items Set by the IRS

WILEY END USER LICENSE AGREEMENT

Отрывок из книги

According to a 2017 report from the National Federation of Independent Business (NFIB), 84 % of small businesses use paid tax preparers to file their returns. So why do you need to read up on taxes? The answer is simple: You, not your accountant or other financial adviser and not software, run the business, so you can't rely on someone else to make decisions critical to your activities. The National Small Business Association (NSBA) found that 67 % of small businesses say that federal taxes have a significant or moderate impact on the day-to-day operation of their businesses. You need to be informed about tax-saving opportunities that continually arise so you can strategically plan to take advantage of them. Being knowledgeable about tax matters also saves you money; the more you know, the better able you are to ask your accountant key tax and financial questions that can advance your business, as well as to meet your tax responsibilities.

This is a great time to be a small business. Not only is small business a major force in our economy but it also is the benefactor of numerous tax rules that make it easier to write off expenses and minimize the taxes you owe. This edition of the book has been revised to include all of the new rules taking effect for 2017 returns. Your business needs to use every tax-saving opportunity to survive and thrive at this time. The book also provides information about future changes scheduled to take effect in order to give you an overall view of business tax planning. Most importantly, it addresses the many tax questions I have received from readers as well as visitors to my website, www.barbaraweltman.com.

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Under the 2 % rule, only the portion of total miscellaneous deductions in excess of 2 % of adjusted gross income is deductible on Schedule A. Adjusted gross income is the tax term for your total income subject to tax (gross income) minus business expenses (other than employee business expenses), capital losses, and certain other expenses that are deductible even if you do not claim itemized deductions, such as qualifying IRA contributions or alimony. You arrive at your adjusted gross income by completing the Income and Adjusted Gross Income sections on page 1 of Form 1040.

If you fall into a special category of employees called statutory employees, you can deduct your business expenses on Schedule C instead of Schedule A. Statutory employees were discussed earlier in this chapter.

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