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Archive for the ‘S Corporations’ Category

Tax Court Holds Income was Improperly Attributed to S Corporation

Published: March 28th, 2017

By: Stephen R. Looney

In a recent case, the Tax Court addressed the issue of whether income should be reported by a Taxpayer providing services or an S corporation established by the Taxpayer. Taxpayers often seek to report income generated from services provided through an S corporation on such S corporation’s tax return, but as the case below demonstrates, […]

IRS’s Informal S Corporation No-Rule List Includes Three New Items

Published: March 16th, 2017

By: Stephen R. Looney

A taxpayer may, for a fee, request a written letter ruling from the IRS interpreting and applying tax laws to the taxpayer’s represented set of facts. However, there are some issues in which the IRS will not issue a letter ruling. Taxpayers should note that the IRS has recently added three new issues to its […]

Reverse Like-Kind Exchange Qualifies For Section 1031 Non-Recognition Treatment

Published: November 16th, 2016

By: Stephen R. Looney

In Bartell v. Comm’r,[1] the Tax Court held that a reverse like-kind exchange made by a drug store chain which did not qualify for the safe harbor under Rev. Proc. 2000-37,[2] still qualified for non-recognition treatment under Section 1031. The Revenue Procedure was inapplicable because the replacement property was purchased before the publication of the […]

Tax Court Finds Compensation Paid to Shareholder-Employees Reasonable

Published: July 28th, 2016

By: Stephen R. Looney

In Johnson, Inc.,[1] the Tax Court held that the amounts paid to the shareholder-employees of a C corporation constituted reasonable compensation deductible under Section 162 and that amounts paid by the taxpayer-corporation to an entity controlled by two of its shareholders was deductible as an ordinary and necessary business expense under Section 162. Facts of […]

Starting a Business – An Alphabet Soup of Choices (of Entity)

Published: April 18th, 2016

By: Dana M. Apfelbaum

Starting and running a business requires making many important decisions. The very first decision faced by many business owners is what kind of entity should be formed to operate their business. In Florida, there are a number of available options. While the decision can be daunting, the variety in flavor of business entities provides the […]

Compensation to Law Firm Shareholder-Employees Disallowed by Tax Court

Published: March 17th, 2016

By: Stephen R. Looney

In Brinks,[1] the Tax Court once again applied the independent investor test to recharacterize compensation paid by a professional corporation, a law firm, to its shareholder-employees as nondeductible dividend distributions, and held the corporation liable for accuracy-related penalties for mischaracterizing the dividends as deductible compensation. This case should serve as a warning for many mid-size […]

IRS Issues Proposed Regulations Eliminating Requirement That Service Provider File Copy of Section 83(b) Election with Tax Return

Published: August 11th, 2015

By: Stephen R. Looney

On 7/17/2015, the IRS issued proposed regulations regarding the Section 83(b) election.  Under the general rule of Section 83(a), if, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the excess of the fair market value of the property as of […]

Compensation Reclassification Risks for C and S Corporations in Journal of Taxation

Published: June 16th, 2015

By: Stephen R. Looney

Stephen R. Looney, Shareholder and Chair of Dean Mead’s Tax department, co-authored the article titled, “Compensation Reclassification Risks for C and S Corporations”. The article was published in the Journal of Taxation, May 2015 edition. The full article is provided here: Compensation Reclassification Risks for C and S Corporations.