Tax Guru – Ker$tetter Letter

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Archive for March 27th, 2007

Reference Sources

Posted by taxguru on March 27, 2007

Q:

Subject: Regarding your article
 
Mr. Kerstetter,
 
I realize you must be extremely busy, and I hope to take as little of your time as possible.  Thank you in advance for whatever small amount of time you may have to share with me.
 
Regarding your article (http://taxguru.org/corps/scorp.htm), I wonder if you might point me to more information on the following section:

“Double Taxation

The biggest fear of c-corporations has to do with double taxation, where after-tax earnings are distributed to shareholders as non-deductible dividends. This is rarely a problem with small corporations because there are plenty of ways to pull money out of the corp in a manner that is deductible, and thus only taxed once.

    Compensation – wages or consulting income
    Interest Payments
    Lease Payments
    Royalty Payments
    Contributions to Retirement Accounts”

Specifically, I’m looking for background on the following questions:

1)     What size corporation is a “small” one?

2)     Are wages and consulting income treated differently?

3)     Are there interest, lease, and/or royalty payments that may be payable to the owners of a corporation so as to avoid the double taxation?

Any information/direction you can provide in these areas will be greatly appreciated; I’m willing to do the research, but I don’t know where to look.

Thanks once again for your time!

 

A:

You can find a lot of info on these subjects in the QuickFinder books, as well as The TaxBook from TMI.

I have also been impressed with the coverage of these topics in the TaxCoach Software reports.

Good luck.  I hope this helps.

Kerry Kerstetter

 

 

TaxCoach Software: Are you giving your clients what they really want?

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