State laws must also be taken into account and defined as to how income is to be allocated between the couple. Section 66 other IRC sets forth a specific rule for treatment of community income where the spouses live apart. IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for 2011, under Filing Status, explains how to determine the filing status before being able to determine filing requirements, standard deduction and correct tax. Filing status also determines whether a taxpayer is eligible to claim certain other deductions and credits. Filing married filing separately is permissible and can be used if each married taxpayer wants to be responsible only for their own tax or if it results in less tax than filing a joint return.
Taxpayer requested a letter ruling on whether or not the discounts received constitute as constructive dividends received. The IRS indeed ruled the discounts received by the taxpayer constituted as constructive dividends under section 316 and the distribution applied to section 301. A constructive dividend is a form of payment made by a corporation to its shareholders that resulted in any measurable economic benefits to the shareholder. It can either be a direct or an indirect form of payment and mostly occurs in closely held corporations. These payments can also be distributed both advertently and inadvertently.
One thing is certain, the IRS taxes all income. There are number of factors that help to determine whether or not your hobby should be considered as a business. To use eBay safely, the following questions should be considered: 1. Do you run the operation in a businesslike manner? Do you keep a track of records for your profit and loss?
Partnership agreements define the ways that any profits and losses are shared between partners. Advantages and disadvantages are similar to those of a proprietorship. The major advantage of a partnership is its low cost and ease of formation. With regards to liabilities, partners can potentially lose all their personal assets, including those not invested in the business, because under partnership law, each partner is liable for the business’s debts. Corporations are legal entities created under state law and are separate and
Accrual basis on accounting is the method of accounting that most business and professionals are required to use by law because of its matching principles. It provides better picture of a company’s profits during an accounting period. Cash basis accounting is a very simple form of accounting. In cash basis accounting, revenues are recorded when cash is actually received from customers and expenses are recorded when they are actually paid, no matter when they were actually invoiced. According to "Accrual" (2012),” Cash-basis accounting does not recognize promise to pay or expectations to receive money or service in the future, such as payables, receivables, and prepaid expenses”.
This would be important for accounts receivable - money that is owed by a customer for products/services. Representing a company in small claims court requires one to be familiar with the law and how it relates to accounting practices. In the Mack v. Edenwold Fertilizer Services Ltd. case, if Mack had a knowledgeable accountant that was familiar with the law, he may have been advised not to sue as the illegality of the situation would have resulted in a loss. In turn, this advise would have saved Mack both time and
This would allow the Courts to lift the corporate veil.----- 3. A ‘single economic entity’ argument is based on the fact that two or more companies are part of one economic group, while a ‘factual agency’ argument is based on the degree of control over a company by another (legal or natural) person. Rejection of one argument does not mean rejection of the other. 4. Hashem v. Shayif- It appears from the judgment that the only case in which the corporate veil could be lifted was where the company was a façade.
Businesses will charge the GST when the service or product is passed on to the consumer. If your turnover is less than $75,000 then you don't have to register for GST although you may do so. All other businesses, with minor exceptions, need to register for GST. The GST Act 1999 governs the GST - A New Tax System (Goods and Services Tax) Act 1999 http://www.austlii.edu.au/au/legis/cth/consol_act/antsasta1999402/ Question 2 What are audits and why are they carried out? (25 words) An audit is an official inspection of a business.
For this, you must have expertise in finance. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. | Advantage | Disadvantage | Sole proprietorship: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Partnership: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Corporation | -unlimited life-easy transferability of ownership interest-limited liability | -corporate earnings may be subject to double taxation- more complex and time- consuming than creating a proprietorship or a partnership | c. How do corporations go public and continue to grow?
Computed by deducting the cost of capital from the after-tax profit, it is said to be the best measure of the true profitability of an enterprise because it is tied to cash flow and not earnings per share. Many analysts would agree that EVA is more positively associated with a company’s stock price than ROE or EPS. Keith confirmed his findings with an industry analyst, which posed him with the decision of whether of not to implement this calculation into OSI accounting practices. Furthermore, would it be a beneficial tool to be used for evaluating the new manager’s incentive compensation plans? The EVA trend seems to be almost mandatory for the larger companies, but there is no reason that it shouldn’t work just as well for their smaller firm.