The Tax Professionals Blog
Deducting Travel Insurance on Your Taxes
Posted by Lee Reams Sr. on
The deductible travel expenses, for a business trip, would include the cost of travel insurance, visa fees, customs fees, and books about the destination (TC Memo 1998-272), and would be deductible on Schedule C as a travel expense for a self-employed individual or as a Schedule A, miscellaneous itemized deduction for an employee.
C or S Corporation and the 3.8% NIIT
Posted by Lee Reams Sr. on
One of the factors to consider in regards to deciding to do business as a C Corporation or utilize the Sub S election (where there are 100 stockholders or less) is the 3.8% net investment income tax. If you are the owner of an S corp. and you are active in your business, and you sell the stock in your business at a gain, you eliminate the requirement to pay the 3.8% Medicare surtax on the gain, which can be a serious sum of money. If the business is currently a C Corp, one possibility would be to switch to an S Corp status prior to the sale, keeping in mind that the election must be made within the first 2 months and 15 days of the corporation’s tax year for the election to apply to that year.
Reporting Hobby Income and Expenses
Posted by Lee Reams Sr. on
When an activity is determined to be a hobby and not a for profit business activity, special reporting rules apply. When Is a Charitable Contribution Appraisal Required?
Posted by Lee Reams Sr. on
Frequently taxpayers make multiple charitable contributions during the year and if the total of those contributions exceeds $5,000, is a qualified appraisal required? Tax Treatment of Below Market ( Gift ) Loans
Posted by Lee Reams Sr. on
Occasionally when preparing tax returns, we encounter situations where there are loans between family members, or occasionally between employer and employee, with no interest being charged or the rate of interest is below market rates. IRC Sec. 7872 deals with issues related to below market loans including: creating interest income, interest payments, investment interest, gift consequences and certain exceptions to the Sec 7872 treatment. Sec 7872 covers a variety of circumstances; however this article deals only with its application to non-business loans between family members or between employer and employee.