Abstract
The business of America is business.
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Notes
- 1.
Treasury Regulation §1.183-2(b).
- 2.
Business licenses are generally issued by cities and counties, though some states (such as Nevada) also require them.
- 3.
A fictitious business statement is required when you conduct a business in anything other than your own name. In most jurisdictions, these statements are issued by counties.
- 4.
A business conducted out of a home may be subject to zoning and/or homeowners association restrictions. Consult an attorney familiar with your jurisdiction and legal issues to determine whether this is a concern.
- 5.
A married couple living in a community property state jointly conducting a business can file their business as a sole proprietorship. The income and expenses of the business would be split onto two Schedule C’s. I discuss this in the note in the next section.
- 6.
2011 Internal Revenue Service Data Book: October 1, 2010, to September 30, 2011, accessed at http:// www.irs.gov/pub/irs=soi/11databk.pdf , page 22.
- 7.
A few jurisdictions, such as Illinois, do charge tax on partnerships. Illinois calls its tax the “Partnership Replacement Tax.”
- 8.
2011 Internal Revenue Service Data Book, page 22.
- 9.
There are a few publicly traded partnerships.
- 10.
These figures based on 2012 tax rates.
- 11.
Everything related to medical care, medical insurance, and reimbursements therein is subject to change based on the Affordable Care Act. While the Act was recently held to be constitutionally valid by the Supreme Court, challenges to specific provisions are certain. Additionally, many Republicans vow to repeal the measure at their first opportunity. Thus, anything written concerning health insurance and medical expenses while accurate as of the date of writing could be inaccurate as you read this book.
- 12.
Other business entities can make a §444 election to use a fiscal year; however, this is rarely of value to the business.
- 13.
Among the requirements: The stock must be held for at least five years, at least 80% of the assets of the entity must be used in a trade or business, and the business cannot be a personal service provider.
- 14.
The most common exception is if the business converted from a C corporation and is subject to the Built-In Gains Tax. See the discussion on converting business types later in this chapter. Additionally, California taxes S corporations at 1.5%, and New York City does not recognize S corporations for their business tax (S corporations are treated the same as C corporations).
- 15.
The FICA (Federal Insurance Contributions Act, or Social Security payroll tax) wage base for 2012 is $110,100.
- 16.
Defined as someone who owns at least 2% of the stock of an S corporation.
- 17.
Each month, the IRS publishes the minimum required loan rates, or Applicable Federal Rates (AFRs). These are published as Revenue Rulings and can be downloaded from the IRS website at http:// www.irs.gov/app/piclist/list/federalRates.html .
- 18.
LIFO stands for Last In, First Out. Under this method of inventory, items purchased most recently are considered sold first rather than the oldest items. LIFO is discussed in detail in Chapter 5.
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© 2013 Russell Fox
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Fox, R. (2013). The Business Entity. In: Tax Strategies for the Small Business Owner. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4302-4843-9_1
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DOI: https://doi.org/10.1007/978-1-4302-4843-9_1
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