Small C and S Corporations : Avoiding IRS Suspicions of Improper Personal Gain

by Crouch, Holmes F.

• ISBN13: 9780944817605
• ISBN10: 0944817602
• Format: Paperback
• Copyright: 2000-09-01
• Publisher: Allyear Tax Guides

Summary

Contains information not found in IRS publications, FedWorld online services, or tax software programs, covering the characteristics of a corporation with annual gross receipts under 5 million dollars. Discusses the various tax situations and deductions that apply to a C and S company of that type. Softcover.

Table of Contents

Corporation Bona Fides	1	(1)
The Liability Limitation Issue	2	(1)
Articles of Incorporation	3	(3)
Why Incorporate in Delaware?	6	(1)
Adoption of Bylaws	7	(1)
Shares & Share Certificates	8	(4)
Shareholder Meetings & Minutes	12	(1)
What Constitutes ``True'' Minutes	13	(1)
Dilemma When No Minutes	14	(3)
Inquiries the IRS Makes	17
Election of S Status	1	(1)
Subchapter S Overview	2	(2)
How S Status Defined	4	(2)
Counting the Shareholders	6	(2)
Unanimous Consent Required	8	(1)
Timing of the Election	9	(1)
Elect on Form 2553	10	(3)
Revocation by Majority Vote	13	(2)
Reinstatement after Termination	15
Forms 1120 and 1120S	1	(1)
Introductory Differences	2	(2)
Income & Deduction Blocks	4	(1)
Pages 2 and 3 Compared	5	(4)
Capital Gains & Losses	9	(2)
How Tax Items Compare	11	(1)
How Tax Rates Compare	12	(2)
Schedule K-1 (Form 1120S)	14	(4)
Schedule L: Balance Sheets	18
Compensation of Officers	1	(1)
Business Necessity Essential	2	(3)
Active Business Requirement	5	(1)
What is a ``Reasonable'' Salary?	6	(2)
General Factors for Decisions	8	(2)
Special Factors for Scrutiny	10	(2)
The ``Dexsil'' Appeals Case	12	(2)
The ``Leonard Pipeline'' Case	14	(2)
Treatment of Excess Compensation	16
When Undercapitalized	1	(1)
What is Expected of You	2	(2)
Stockholder Reluctance	4	(1)
Below-Market Loans	5	(3)
Section 1244 Stock	8	(1)
Conditions for 1244 Stock	9	(4)
Payroll Withholdings & Taxes	13	(1)
The 100% Trust Fund Penalty	14	(2)
Responsible Person Defined	16	(2)
Scrutiny of Employee Benefits	18	(1)
Immediate Assessment Authority	19
Methods of Accounting	1	(1)
Selection of Tax Year	2	(2)
Change of Tax Year	4	(1)
Dominance of Section 446	5	(2)
Must Clearly Reflect Income	7	(2)
Cash vs Accrual Methods	9	(1)
Inventory Capitalization	10	(2)
Valuing Ending Inventory	12
Balance Sheet Balancing	1	(1)
Clarification of Bad Debts	2	(1)
Asset Listing Review	3	(3)
Now, the Liabilities Side	6	(1)
Stockholders' Equity	7	(2)
Accumulated Earnings	9	(2)
Treasury Stock Explained	11	(2)
Reconciliations	13	(2)
C Corporations	15	(2)
S Corporations	17
Cautions RE PHC Status	1	(1)
S Corporations Unaffected	2	(1)
Avoid Confusion with PSC	3	(2)
Overview of PHC Statutes	5	(1)
PHC Income Defined	6	(1)
Adjusted Ordinary Gross Income	7	(2)
The 60% PHC Income ``Test''	9	(2)
The 50% Ownership Test	11	(1)
Constructive Ownership of Stock	12	(1)
Overview of Schedule PH	13	(3)
Computing Undistributed PHC Income	16	(1)
Cheaper to Distribute	17
Foreign Activity Questions	1	(1)
The Most Common Question	2	(2)
Form TD F 90-22.1	4	(3)
The Next Common Question	7	(1)
Commentary on Foreign Trusts	8	(3)
C Corporations: Question A	11	(2)
If ``Yes'' to Question A: Form 5471	13	(1)
C Corporations: Question B	14	(2)
Concluding Commentary	16
Items Not Deductible	1	(1)
Starting at the Top	2	(1)
When Business Purpose Not Shown	3	(2)
Life Insurance Premiums	5	(2)
Using the Corporation as Intermediary	7	(1)
Company Sponsored Entertainment, Etc	8	(3)
Example: Clear Business Purpose	11	(1)
Executive Travel Expenses	12	(3)
Luxury Autos, Boats, Planes	15	(2)
Personal Use Affidavits	17
Basis in Stock Held	1	(1)
Shareholders Ledger Not Relevant	2	(1)
Contributions to Capital	3	(3)
When Services Exchanged	6	(2)
Founder Shares: Basis In	8	(2)
Additional Stock for Cash	10	(1)
Taxable Stock Dividends	11	(2)
Nontaxable Distributions Reduce Basis	13	(2)
Basis in Gifted Stock	15	(2)
Basis in Inherited Stock	17
Sell, Merge, or Go Public	1	(18)
Preliminary Decisions to Make	2	(2)
Instructions to Committee	4	(1)
Effect of Sale on Shareholders	5	(2)
Effect of Sale on Corporation	7	(2)
Treatment as ``Sale of Assets''	9	(2)
Stock-for-Stock Exchanges	11	(1)
Types of Reorganizations	12	(2)
The Merger Process Exemplified	14	(2)
Precautions When ``Going Public''	16	(2)
Tax Law Statement	18	(1)
Issuance Goal: 10 Times Assets	19