Do you operate your business as a C or S corporation, or a multi-member limited liability company (LLC)?

Did you create one of those three entities to add liability protection?

While great from a liability perspective, a separate entity creates complications, such as the related-party matching rule. This rule places an accrual-method business on the cash method for deducting payments to related cash-method taxpayers.

The rule isn’t about bad intent or a tax avoidance motive. Different ownership thresholds apply to different relationships, and constructive ownership provisions extend the reach of the rule, which can lead to unexpected consequences. ... Log in to view full article.