Online accounting systems have now advanced to a point where they can give traditional stand-alone accounting software a run for their money. In fact, we have now moved most of our clients to online accounting systems. We did this as we have found that…
Tax Articles
Wages for Research Were Not Reasonable
The research tax credit provides a significant incentive to perform research. The credit is calculated by factoring in wages paid by the business and income from the business subject to self-employment. Given this, can a business owner pay himself an unreasonably large salary and thereby increase the amount of the credit? The court recently addressed… Continue reading Wages for Research Were Not Reasonable
Tax on Nonresident Alien Gambling Winnings
Are non-resident aliens who receive gambling winnings while visiting the U.S. able to deduct the gambling expenses incurred in earning the gambling winnings? And can they avoid the withholding tax on their gambling winnings? The court addresses these issues in Park v. Commissioner, 136 T.C. 569 (T.C. 2011). Facts & Procedural History The taxpayers are… Continue reading Tax on Nonresident Alien Gambling Winnings
Tips for Hiring New Workers
Most businesses require employees. While employees can help get things done, they also require quite a bit of work to ensure that the process goes smoothly. For small businesses, this is often an afterthought. Taking time to bring an employ…
The IRS’s Reach in a Research Tax Credit Audit
The IRS has a track record of taking aggressive stances when auditing research tax credits. But its position in the Bayer Corp. & Subs v. United States, Civil Action Nos. 08-693, 09-351 (W.D. PA 2010), raises the question whether a taxpayer claiming a research tax credit is signing up to disclose their confidential information. Facts &… Continue reading The IRS’s Reach in a Research Tax Credit Audit
The Cash Flow Statement for Accrual Method Businesses
The cash flow statement is a report that shows the cash generated and used during a specified time period. The cash flow statement is particularly important for businesses who keep their books using the accrual method. Cash Flow Statements for Ac…
What is a Project for the Research Tax Credit?
It can be difficult to separate qualified and nonqualified research in computing the research tax credit. The research tax credit rules are generally applied to the “project,” but the term “project” is not even mentioned in the Code. The Trinity Industries, Inc. v. United States, 691 F. Supp. 2d 688, (N.D. Tex. 2010), case provides guidance… Continue reading What is a Project for the Research Tax Credit?
Research Tax Credit: Taking Expenses for Depreciable Property
The IRS exam function often raises a number of questions about the rules for claiming expenses for depreciable property for the research tax credit. The recent TG Missouri Corporation v. Commissioner, 133 T.C. 13, provides much needed clarity in how to apply these rules. Facts & Procedural History TG Misouri is in the trade or… Continue reading Research Tax Credit: Taking Expenses for Depreciable Property
Payment to Terminate Agent Agreement Ordinary Income for Insurance Agent
In Lendard v. Commissioner, T.C. Summary Opinion 2009-165, the U.S. Tax Court concluded that contract payment to an independent insurance agent to terminate his agent contract was ordinary income to the agent. This case is an example of how advanced tax planning could have produced a more favorable outcome. Facts & Procedural History Mr. Lendard… Continue reading Payment to Terminate Agent Agreement Ordinary Income for Insurance Agent
Deere & Company v. Commissioner: Foreign Branch Income is Gross Receipts for Research Tax Credit
In Deere & Company v. Commissioner, 133 T.C. No. 11, the U.S. Tax Court concluded that income from foreign branches must be included in the gross receipts in computing the research tax credit. Facts & Procedural History Deere & Company (“Deere”) was in the business of manufacturing, distributing, and financing a full line of agricultural… Continue reading Deere & Company v. Commissioner: Foreign Branch Income is Gross Receipts for Research Tax Credit