Jump to content
ATX Community

Leaderboard

Popular Content

Showing content with the highest reputation on 01/16/2017 in all areas

  1. I am right handed but taught myself to run the mouse with my left hand. It save me time when inputting data. By doing so, I can keep my right hand on the number keys and move from line to line or cell to cell with the left hand. I am so used to it that it confuses me when I sit at somebody's computer which has the mouse sitting on the right hand side of the keyboard.
    4 points
  2. Copied from Forbes: Late December’s Fleischer v Commissioner involves facts that are common among many small business service-providing taxpayers wishing to minimize self-employment liability by setting up S Corporations and funneling service income to those corporations. Unfortunately for Fleischer, the Tax Court found that he faced a sizable self-employment tax liability as it reallocated income that was reported on the S Corporation’s 1120-S to his Form 1040. The case is in the category of who is the appropriate taxpayer, an issue that sometimes gets murky when taxpayers are dealing with closely or solely-held separate entities. I will summarize and simplify the facts somewhat and hone in on why the taxpayer lost despite the plans of both a CPA and lawyer advising on his tax structure. The Facts of Fleischer: Setting up an S Corp to Avoid Self-Employment Tax Fleischer is a licensed financial consultant. Based on the advice of his CPA and lawyer, he set up an S Corporation. Fleischer was the president, secretary, treasurer and sole shareholder of the corporation. Fleischer entered into an employment agreement with the S Corporation, and pursuant to that agreement the S Corp paid him a salary in his capacity as financial advisor. In his individual capacity, Fleischer also entered into contracts with financial service companies Mass Mutual and LPL. Those contracts generated significant commissions, which Mass Mutual and LPL reported to the IRS and to Fleischer individually on various Form 1099’s over the years. The key to the employment tax savings when all works well in this structure is that the S Corp pays a salary less than the gross receipts it receives. The shareholder/employee has employment tax liability to the extent only of the wages that the S Corp pays to the shareholder/employee. Fleisher paid employment tax on his wages from the S Corp. And while Fleisher’s status as sole shareholder meant that all of the S Corp’s income would flow through to him, the nature of the income matters. Individuals who earn service income directly have to pay Social Security and Medicare taxes, which are often referred to collectively as the self-employment tax. [Note that the tax rate for Social Security taxes is 12.4% and the rate for Medicare taxes is 2.9%; for 2017 Social Security taxes are levied only on the first $127,200 while the Medicare rate applies to all service income]. If the S corporation, rather than the individual, earns that income, then the S corporation does not have a separate employment tax liability and the shareholder does not have self-employment tax liability on his share of the S corporation’s income. Fleischer’s S Corp paid him a salary of about $35,000. The net income the S Corp earned varied over the years, going as high in one year as about $150,000. When, as was the case here, the S Corp’s wages paid are less than its net service income, the shareholder/employee can potentially avoid the self-employment income tax if that income were earned directly by the shareholder/employee or the employment tax if the S Corporation does not pay a salary commensurate with the corporation’s net income. Underlying this form, however, is the IRS’s ability to allocate the income to the party who truly earns the income. In addition, the compensation the S Corporation pays to its shareholder/employee must be reasonable; if too low IRS can argue that some of the distributive share should be characterized as compensation (Peter Reilly discusses one such situation in S Corporation SE Avoidance Still a Solid Strategy). The taxpayer’s reporting of the income and the mere creation of a separate entity do not give the taxpayer unlimited discretion to treat the income in the way most favorable to the taxpayer. As an important aside, the consequences of an LLC earning service income differ from that of an S Corporation. When an LLC earns service income, the distributive share of partnership income allocated to members of an LLC is generally subject to self-employment tax. This is a key difference between S Corporations and LLCs in this context The IRS position has been pretty consistent for some years. However as a practical matter the audit rate for S Corporations has been very low, less than 1 % I believe. As a result, I think that there are probably thousands of similar S Corporation returns that have been filed who are using this exact strategy. I don't know if the IRS even has enough manpower to audit all of these returns ?
    3 points
  3. Something else I learned here - I did not even know left handed playing cards were a thing. Makes sense, once I looked them up and saw how they worked.
    3 points
  4. I converted my Num Lock to a Tab key so I can tab from line to line if the Enter key doesn't move to the next line.
    3 points
  5. I should have bought one of those mice years ago. Got pretty good with the righty, just had to switch my watch to the other wrist, it was in the way. Reminds me of my aunt Josey telling me the Brooklyn nuns in the 1920s tied her left hand behind her back forcing her to write with her right. I've found many left handed products and bringing out my left handed playing cards with friends gives me an edge.
    3 points
  6. We aren't going to discuss states' voting requirements.
    2 points
  7. She is acting as an agent of the LLC/S corp. In this case, the only reasonable salary is 100% of the net profit of the S corp, unless she can provide a good reason for the S corp retaining cash. But if she's distributing all the cash, she's just evading SE tax.
    2 points
  8. 2 points
  9. I have this mouse and use the heck out of the forward/back buttons on the internet. And I always try them in ATX until I remember I have to do Ctrl+B to go back and click the forward button to go forward. But this year the mouse buttons work! Great time/aggravation saver. If you have a cheapo mouse, you might want to consider this upgrade.
    1 point
  10. I hate cordless mice but they do make left handed mice: http://support.logitech.com/en_us/product/mx610-lefthand-laser-cordless-mouse
    1 point
  11. I've spent the past 15 years doing my damnedest to become ambidextrous. I've made good progress. It teaches patience too, which I certainly need.
    1 point
  12. Great way to start the week, with a good laugh. He looks like a record holder.
    1 point
  13. These days, with email and texting capability, there's no reason to give info to a third party (with the possible exception of a valid subpoena). Email a password protected file toe the client and let them do whatever they wish with it. I have never yet seen a situation in which a third party had a valid reason for obtaining info directly from me. Not that they haven't tried. I've had a couple of bankers to offer silly excuses for getting info from me,, but I risked losing the client rather than cave in.
    1 point
  14. Good luck to you Nico, everyone deserves a second chance. A friend of mine had a felony, did time and it was a big wake up call for him. He is now such a model citizen it makes me look bad. He's even got me picking up litter on Earth Day. All the best.
    1 point
×
×
  • Create New...