Tax Guru – Ker$tetter Letter

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Income Shifting

Posted by taxguru on May 15, 2007


Subject: Fiscal Year on your website


Hi Kerry,


I am starting a new LLC and C-Corp to move money back and forth based on this fiscal year principle, however, after reading on your website, I’m not sure I understand your comments “Toward the end of your personal fiscal year (12/31), you bleed off some of your taxable income to your C corp by paying it for something like rent or marketing services.”  I was not aware rent or marketing services is tax deductible on a personal level, correct?  I understand how you can do such a thing between entities, but not between entity and personal.  Could you please explain further?  Thanks.



The payments from your personal funds do need to be deductible in order to make the income shifting plan work.  They should be deducted on whichever schedules apply to the kinds of income you have, such as C, E (Page 1 or Page 2) or F.  If all of your income is from W-2 sources, these payments can be deducted as unreimbursed employee expenses on Schedule A.

Do not try this on your own.  Any properly experienced professional tax advisor should be able to help you set this kind of thing up to work most efficiently for your particular circumstances. 

Good luck.

Kerry Kerstetter



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