By month: April 2007
Guide to Aircraft Deductions for the One-Owner Business
Many people, through keen knowledge of the tax law, have been able to use the law to their advantage and buy personal aircraft. Unfortunately, lawmakers changed the rules for deducting personal aircraft. We summarized the new rules for you.
IRS Simplifies Phone Tax Refund for Businesses
You are entitled to tax refunds for the excise tax you paid on your business long-distance phone services from March 2003 through July 2006. To calculate your tax credit for these 41 months, you may use the actual excise tax from the phone bills, or use the newly released formula.
To calculate the deductions for a business vehicle when you sell it, you must divide the car into business and personal parts, find your adjusted basis for business purposes, and find your loss deduction.
Filing Tax Return Late
Even if you do not owe any money, you move right to the front of the line for an IRS audit if you do not file your taxes on time. Always file a tax return, even if you cannot pay the tax.
Avoiding Recapture of Social Security
A personal-service corporation, like that of an accountant, is taxed at the maximum corporate tax of 35%. Instead, consider the S corporation strategy for saving on Social Security.
Reimburse S Corporation Owner for Section 179 Deduction
If you personally own the vehicle that your corporation uses, the IRS authorizes the reimbursement of the vehicle expenses. To make this work, you must submit an expense report and mileage log to your corporation.
Laser Eye Surgery
The tax law allows you to deduct the cost of laser eye surgery, as long as it produces a business benefit. There are specific details that apply, though, so read carefully.
S Corporation 105 Plan
You get no business benefit from the section 105 plan at the S corporation level. However, you do get a big personal benefit when you steer the medical insurance through the S corporation to give yourself the medical insurance as a guaranteed payment.