A recent private letter ruling highlights the danger of using a form or template blindly. PLR 202219005 involved a limited liability company (the “Company”) that sought, but failed, to be taxed as a S-corporation. On the effective date of the Company’s organization, the Company duly adopted a written operating agreement. The problem was the written…
Recently the North Carolina General Assembly changed the law to permit pass-through entities (partnerships and s-corporations) to pay entity level tax, thereby joining a majority of states (29 at last count) in doing so. The change is effective for tax years beginning January 1, 2022. As with most states, paying tax at the entity level…
Yesterday I wrote about a case involving constructive dividends. Today it is disguised dividends. The issue in Clary Hood, Inc. v. Comm.,T.C. Memo. 2022-15, was whether the salary and bonus paid to the company’s president (Mr. Hood) was excessive under IRC 162(a)(1) and was therefore a disguised dividend. Recall that compensation, if reasonable and not…
From the hardly noticed case of Sherwin Community Painters, Inc. v. Commissioner, T.C. Memo. 2022-19, come some interesting tidbits. First, just the facts. Sherwin Community Painters, Inc. is a C-corporation with a single shareholder. As its name implies, Sherwin was a painting contractor. The case arose from the Service’s disallowance of certain business deductions claimed…
The IRS just released four separate Private Letter Rulings (“PLRs”) addressing the inadvertent termination of a taxpayer’s S-election. It is often said the devil is in the details, which is demonstrated aptly by these four PLRs. Fortunately for the taxpayer, in each case the Service found that the terminations were inadvertent, which means the taxpayer…
A recent decision by the Eleventh Circuit Court of Appeals highlights the danger of mixing business and personal funds. In In re Tomberlin (USCA11 Case: 2010776)(presently unpublished until the time to request rehearing has expired), the Eleventh Circuit held that by depositing his personal paycheck into a business account of a business he owned to…
Hard to believe, but there is still about $130 billion left in the PPP program. Updated guidance by the SBA/Treasury removes much of the uncertainty and makes the program a definite win for small businesses. The recently revised guidance makes it clear that: 1. Good faith certification of need is PRESUMED for loans less than…
Yesterday Treasury Secretary Mnuchin and SBA Administrator Jovita Carranza issued a joint statement regarding the imminent release of updated guidance. Although we are awaiting the release of the full guidance, at this point we know: 1. THE LAST DATE ON WHICH A PPP LOAN APPLICATION CAN BE SUBMITTED TO A LENDER IS JUNE 30, 2020.…
As part of the stimulus package relief, businesses with fewer than 500 employees are eligible for up $10 million dollars in loans, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities. The federal government has allocated $370 billion for this program. SO LONG AS THE COMPANIES EITHER: (1)…
Last week I shared with you Treasury’s and the IRS’ decision to extend the PAYMENT date for 2019 federal income taxes to July 15 as a result of COVID-19. This means payments for 2019 federal income taxes will be timely if paid by July 15, not the normal deadline of April 15. This also means…