Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for October 26th, 2008

S Corp Payments

Posted by taxguru on October 26, 2008

Q:

Subject:  S corp’s

Hi I just found your site and read about S vs C Corp’s.  We have been an S Corp for years.  Some questions I have is:  money taken out by shareholder ( my wife and I) should that be ledgered under personal income or shareholder loans?  Is that money taxable?  My CPA says it is not taxable.  Why would I ever pay myself in wage form if this is the case.  I see as our profits get up to 65,000 or more maybe we should start a C Corp.  How so you smooth out the money in a C Corp.  I don’t understand.  Maybe I should get a new CPA? 

Thanks

 

 

A:

 

If you’ve been operating an S corp for any period of time and your professional tax advisor hasn’t explained to you all of the details of how cash distributions are treated, it does sound like s/he has dropped the ball.  That all should have been explained to you prior to your even setting up the S corp.

Likewise, if your professional tax advisor isn’t aware of how to effectively utilize a C corp to smooth out your taxable income, it is time to find someone who understands this very basic tool of tax planning.

Good luck.

Kerry Kerstetter

 

 

 

 

 

 

Posted in corp | Comments Off on S Corp Payments

Accelerating capital gain taxes?

Posted by taxguru on October 26, 2008

I received this from a reader back in early September:

Subject:  possible link of interest for your blog

http://www.fulcruminquiry.com/Investment-Calculator.htm

This is an online interactive calculator that addresses whether one should sell now to take advantage of lower capital gains rates that now exist. 

David Nolte
Fulcrum Inquiry

I Wrote back:

David:

Thanks for passing that along.  It’s an interesting calculator, albeit with too many assumptions required to be realistically practical.

I was surprised not to see any part of your discussion or calculation that takes into account the zero percent LTCG rate for sales in 2008, 2009 & 2010. That is a very real issue, as opposed to the possible future rate increases, and is a question we tax pros have been receiving frequently for the past year or so.

Your calculator could cover such an analysis as whether the transaction costs of selling now to tax advantage of the zero percent bracket justify it, plus the fact that there will still be tax on the portion of the gains that are above the new zero percent rate bracket.

Kerry Kerstetter

 

To date, no reply has been received

 

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

 

Posted in CapGains | Comments Off on Accelerating capital gain taxes?

Sharing the wealth…

Posted by taxguru on October 26, 2008

Courtesy of Say Anything:

Posted in comix, Dims | Comments Off on Sharing the wealth…