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J.K. Lasser's Small Business Taxes 2023
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J.K. Lasser's Small Business Taxes 2023
by Barbara Weltman
J.K. Lasser's Small Business Taxes 2023
Cover
Title Page
Copyright
Preface
Introduction
PART 1: Organization
PART 2: Business Income and Losses
PART 3: Business Deductions and Credits
PART 4: Tax Planning for Your Small Business
Appendix A: Information Returns
Appendix B: Tax Penalties
Appendix C: Checklist of Tax‐Related Corporate Resolutions
Appendix D: List of Dollar Limits and Amounts Adjusted for Inflation
Index
End User License Agreement
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Prev
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Cover
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Title Page
Table of Contents
Cover
Title Page
Copyright
Preface
How to Use This Book
Introduction
Special Rules for Small Businesses
PART 1: Organization
CHAPTER 1: Business Organization
Sole Proprietorships
Partnerships and Limited Liability Companies
S Corporations and Their Shareholder‐Employees
C Corporations and Their Shareholder‐Employees
Benefit Corporations
Employees
Factors in Choosing Your Form of Business Organization
Forms of Business Organization Compared
Changing Your Form of Business
CHAPTER 2: Tax Year and Accounting Methods
Accounting Periods
Accounting Methods
Uniform Capitalization Rules
Change in Accounting Method
CHAPTER 3: Recordkeeping for Business Income and Deductions
General Recordkeeping
Specific Substantiation Requirements for Certain Expenses
Records for Depreciation, Basis, Carryovers, and Prepaid Expenses
How Long You Should Maintain Records
PART 2: Business Income and Losses
CHAPTER 4: Income or Loss from Business Operations
Business Income
Income for Service Businesses
Income from the Sale of Goods
Income from Farming
Income from Commercial Fishing
Income from Rentals
Income from Government Programs
Investment‐Type Income
Miscellaneous Business Income
State Income Taxes on Business Income
Noncorporate Excess Business Losses
Net Operating Losses
Other Limitations on Business Losses
Income Earned Abroad
CHAPTER 5: Capital Gains and Losses
What Are Capital Gains and Losses?
Tax Treatment of Capital Gains and Losses for Pass‐Through Entities
Tax Treatment of Capital Gains for C Corporations
Loss Limitations
Sales of Business Interests
Opportunity Zone Investments
Special Situations
CHAPTER 6: Gains and Losses from Sales of Business Property
Section 1231 Gains and Losses
Sale‐Leasebacks
Installment Sales
Recapture
Involuntary Conversions
Abandonment, Foreclosure, and Repossession of Property
Sale of All the Assets of the Business
Opportunity Zone Business Transactions
PART 3: Business Deductions and Credits
CHAPTER 7: Employee Compensation
Worker Classification
Temporary Workers and Outsourced HR
Deductible Employee Compensation
Compensation to Owners
Stock Options and Restricted Stock
Deferred Compensation
Disallowance Repayment Agreements
Golden Parachute Payments
Fringe Benefits
Cafeteria Plans
Employment Tax Credits
CHAPTER 8: Travel, Meals, and Gift Expenses
Local Transportation Costs
Travel within the United States
Foreign Travel
Conventions
Living Away from Home on Temporary Assignments
Meal and Entertainment Expenses
Business Gifts
Reimbursement Arrangements
Recordkeeping Requirements
CHAPTER 9: Car and Truck Expenses
Deducting Car and Truck Expenses in General
Actual Expense Method
Standard Mileage Allowance
Leasing a Vehicle for Business
Arranging Vehicle Ownership
Nonpersonal Use Vehicles
Credit for Clean Energy Vehicles
Dispositions of a Vehicle
Reimbursement Arrangements
Recordkeeping for Vehicle Expenses
CHAPTER 10: Repairs, Maintenance, and Energy Improvements
Ordinary Repairs
Rehabilitation Plans
Qualified Improvement Property
Small Business Safe Harbors
Rotable Spare Parts
Change in Accounting Method
Special Rules for Improvements for the Elderly and People with Disabilities
Lists of Deductible Repairs and Capital Improvements
Energy Improvements
CHAPTER 11: Bad Debts
Bad Debts in General
Collection of Bad Debts
Business versus Nonbusiness Bad Debts
Loans by Shareholder‐Employees
Guarantees That Result in Bad Debts
Special Rules for Accrual Taxpayers
Reporting Bad Debts on the Tax Return
Collection Strategies
CHAPTER 12: Rents
Deducting Rent Payments in General
Rent for Employee Parking
The Cost of Acquiring, Modifying, or Canceling a Lease
Improvements You Make to Leased Property
Rental of a Portion of Your Home for Business
Leasing a Car
Leveraged Leases
CHAPTER 13: Taxes and Interest
Deductible Taxes
Self‐Employment Tax
Nondeductible Taxes
Deductible Interest
Nondeductible Interest and Other Limitations on Deductibility
CHAPTER 14: First‐Year Expensing, Depreciation, Amortization, and Depletion
Section 179 Expensing
Other Expensing Opportunities
Bonus Depreciation
General Rules for Depreciation
Modified Accelerated Cost Recovery System
Depreciation Methods
Limitations on Listed Property
De Minimis Safe Harbor Rule
Putting Personal Property to Business Use
Amortization
Depletion
CHAPTER 15: Advertising Expenses
Ordinary Advertising Expenses
Promotion of Goodwill
Prizes, Contests, and Other Promotional Activities
Help‐Wanted Ads
Websites and Apps
Social Media
CHAPTER 16: Retirement Plans
Qualified Retirement Plans
Added Costs for Retirement Plans
Credit for Plan Start‐Up Costs
Retirement Plans for Self‐Employed Individuals
Regular 401(k)s and Designated Roth Accounts
Pooled Employer Plans (PEPs)
Individual Retirement Accounts
COVID‐19‐Related Rules
Disaster‐Related Rules
State‐Sponsored Plans for the Private Sector
When to Take Action
Plan Problems and Corrections
Comparison of Qualified Retirement Plans
ESOPs
Retirement Plans Owning Your Business
Terminating Plans
Nonqualified Retirement Plans
Glossary of Terms for Retirement Plans
CHAPTER 17: Casualty and Theft Losses
Casualties and Thefts
Condemnations and Threats of Condemnation
Disaster Losses
Deducting Property Insurance and Other Casualty/Theft‐Related Items
Disaster Assistance
CHAPTER 18: Home Office Deductions
Home Office Deductions in General
Actual Expense or Simplified Method
Actual Expense Method
Simplified Method
Special Business Uses of a Home
Mobile Offices
Ancillary Benefit of Claiming Home Office Deductions
Impact of Home Office Deductions on Home Sales
CHAPTER 19: Medical Coverage
Health Care Mandates
Deducting Medical Insurance for Covering Employees
Deducting Health Coverage for Self‐Employed Persons and More‐Than‐2% S Corporation Shareholders
Using Reimbursement Plans
Tax Credit for Contributions to Employee Health Coverage
Shifting the Cost of Coverage to Employees
Health Savings Accounts (HSAs)
Archer Medical Savings Accounts (MSAs)
COBRA Coverage
Wellness Programs
Reporting Health Coverage on W‐2s
Glossary of Terms for Health Coverage
CHAPTER 20: Deductions and Tax Credits for Farmers
Farm Expenses
Interest on Loans
Qualified Business Income Deduction
Farm Losses
Farm‐Related Tax Credits
Nondeductible Farm‐Related Expenses
CHAPTER 21: Qualified Business Income Deduction
General Rules
Qualified Trade or Business
Qualified Business Income
Basic Limitations
Specified Service Trades or Businesses
Other Limitations
Partnerships and S Corporations
Understatement Penalty
CHAPTER 22: Miscellaneous Business Deductions
Other Business Expenses in General
Moving Expenses
Educational Expenses
Charitable Contributions Made by Your Business
Licenses and Permits
Dues and Subscriptions
Legal and Professional Fees
Bank and Merchant Fees
Supplies, Materials, and Office Expenses
Uniforms and Clothing
Insurance
Commissions
Outsourced Workers
Payments to Directors and Independent Contractors
Penalties, Fines, and Damages
Meal Costs for Day‐Care Providers
Expenses of Persons with Disabilities
Dividends‐Received Deduction
Foreign Housing Deduction
Other Expenses
Checklists of Deductible and Nondeductible Items
CHAPTER 23: Roundup of Tax Credits
Employment‐Related Credits
Work‐Related Personal Credits
Capital Construction—Related Credits
Other Tax Credits
General Business Credit
Credits Offsetting Employment Taxes
PART 4: Tax Planning for Your Small Business
CHAPTER 24: Income and Deduction Strategies
Tax‐Saving Tips
Audit‐Proofing Your Return
Common Errors and How to Avoid Them
Tax Assistance
CHAPTER 25: Distributions from Your Business
Distributions from a Sole Proprietorship
Distributions from a Partnership
Distributions from an S Corporation
Distributions from a C Corporation
CHAPTER 26: Tax Strategies for Opening or Closing a Business
Initial Tax Decisions to Make
Investing Your Own Resources
Debt versus Equity Financing
Tax Identification Numbers
Choose Your Accounting Solution
Tax Reporting for the First Year
How to Write Off Start‐Up Costs
Setting Up a Business Bank Account and Credit Card
Moving a Business
Aborted Business Ventures
Bankruptcy
Winding Up a Small Business
Tax Reporting in the Final Year
CHAPTER 27: Tax Strategies for a Sideline Business
Reporting Sideline Business Income
Hobby Activities
Business Expenses
CHAPTER 28: Tax Strategies for Multiple Businesses
Advantages and Disadvantages of Multiple Entities
When to Run Multiple Activities within One Business
Treatment of Multiple Corporations
Tax Rules for Owners of Multiple Businesses
CHAPTER 29: Alternative Minimum Tax
Alternative Minimum Tax Basics
Deduction Limits for Alternative Minimum Tax
Credit Offsets
Minimum Tax Credit
CHAPTER 30: Other Taxes
State Income Taxes
Employment Taxes
Self‐Employment Tax
Additional Medicare Taxes for Individuals
Sales and Use Taxes
Excise Taxes
CHAPTER 31: Filing Tax Returns, Paying Taxes, and Making Refund Claims
Income Tax Deadlines and Extensions
Online Filing of Business Income Tax Returns
Estimated Taxes
Making Tax Payments
Claiming Refunds
Filing Other Business Returns
CHAPTER 32: Retirement and Succession Planning
Retirement Planning
Social Security Planning
Exit Strategies
Financing Options to Fund Buyouts
Consulting Agreements
Estate Taxes
Estate Planning Concerns
CHAPTER 33: Working with CPAs and Other Tax Professionals
Types of Tax Professionals
Finding a Tax Professional
Tips for Selecting a Tax Professional
CHAPTER 34: Handling Audits with the IRS
Types of Audits
Appeals
Litigation
Mediation
Taxpayer Bill of Rights
Taxpayer Advocate Service
Special Audit Rules for Partnerships
Appendix A: Information Returns
Dividends
Large Cash Transactions
Payments to Independent Contractors
Health Plans
Pension and Retirement Plan Distributions
Retirement and Employee Benefit Plans
Small Cash Transactions
Wages
Merchant Transactions
Foreign Accounts
Appendix B: Tax Penalties
Failure to File a Tax Return or Pay Tax
Failure to File Retirement Plan Returns and Notices
Failure to File Correct Information Returns
Failure to File Correct Payee Statements
Accuracy‐Related Penalties
Preparer Penalties
Penalty Relief
Appendix C: Checklist of Tax‐Related Corporate Resolutions
Appendix D: List of Dollar Limits and Amounts Adjusted for Inflation
Items Adjusted Annually for Inflation
Items Fixed by the Tax Code
Items Set by the IRS
Index
End User License Agreement
List of Tables
Introduction
TABLE I.1 Examples of Tax Definitions of Small Business
Chapter 1
TABLE 1.1 Filing Deadlines, Extensions, and Forms for 2022 Returns
TABLE 1.2 Comparison of Forms of Business Organization
Chapter 5
TABLE 5.1 2022 Taxable Income Breakpoints for Capital Gains Rates
*
Chapter 7
TABLE 7.1 Employee Income from Excess Coverage
TABLE 7.2 Annual Lease Value (ALV) Table for Cars
Chapter 8
TABLE 8.1 North American Area
TABLE 8.2 Sample Expense Diary
Chapter 9
TABLE 9.1 Straight‐Line Half‐Year Convention*
TABLE 9.2 MACRS Half‐Year Convention*
TABLE 9.3 Straight‐Line Mid‐Quarter Convention*
TABLE 9.4 MACRS Mid‐Quarter Convention*
TABLE 9.5 Dollar Limit on Depreciation of Passenger Cars (including Light Tr...
TABLE 9.6 Sample Deductions under the Standard Mileage Allowance for 2022
TABLE 9.7 Dollar Amounts for Passenger Automobiles with a Lease Term Beginni...
TABLE 9.8 Deemed Depreciation
TABLE 9.9 Depreciation in Year of Sale*
TABLE 9.10 Business Mileage Log
TABLE 9.11 Sample Log
Chapter 10
TABLE 10.1 Examples of Repairs versus Capital Items
TABLE 10.2 Guidance on Standards for the Elderly and People with Disabilitie...
Chapter 14
TABLE 14.1 Property Class Life under GDS versus Actual Recovery Period
TABLE 14.2 MACRS Rates—Half‐Year Convention
TABLE 14.3 MACRS Rates—Mid‐Quarter Convention (200% Rate)
TABLE 14.4 When to Change to Straight‐Line Method
TABLE 14.5 Rates for Residential Realty Years (27 Years), Straight‐Line, Mid...
TABLE 14.6 Rates for Nonresidential Realty Years (31.5 Years), Straight‐Line...
TABLE 14.7 Rates for Nonresidential Realty Years (39 Years), Straight‐Line, ...
TABLE 14.8 Recovery Periods under Alternative Depreciation System (ADS)
TABLE 14.9 Percentage for Mineral Properties
TABLE 14.10 Depreciation Worksheet
Chapter 16
TABLE 16.1 Safe Harbor Contributions by Employer (You) for Employees in 401(...
TABLE 16.2 Active Participants' MAGI Phase‐Outs for Deducting IRA Contributi...
TABLE 16.3 MAGI Phase‐Outs for Making Roth IRA Contributions in 2022
TABLE 16.4 Comparison of Retirement Plans in 2022
Chapter 20
TABLE 20.1 Recovery Periods for Farm Property
Chapter 22
TABLE 22.1 Applicable Percentage for Additional Contribution
TABLE 22.2 Standard Meal and Snack Rates for 2022
TABLE 22.3 Checklists of Deductible and Nondeductible Expenses
Chapter 23
TABLE 23.1 Guide to Tax Credits
Chapter 24
TABLE 24.1 Forms for Filing Extensions
TABLE 24.2 IRS Publications of Interest
Chapter 26
TABLE 26.1 States with Intrastate Equity Crowdfunding
TABLE 26.2 Checklist of Actions for Closing a Business
Chapter 28
TABLE 28.1 Locations Where Series LLCs May Be Formed
Chapter 29
TABLE 29.1 2022 Exemption Amounts
Chapter 30
TABLE 30.1 Your Employment Tax Obligation on Common Fringe Benefits for 2022...
TABLE 30.2 Deposit Schedule
TABLE 30.3 Threshold Amounts for Additional Medicare Taxes
Chapter 31
TABLE 31.1 Usual Filing Deadlines
TABLE 31.2 Usual Filing Extensions*
TABLE 31.3 Forms for Amended Income Tax Returns
TABLE 31.4 Filing Deadlines for Employment Tax Returns
Chapter 32
TABLE 32.1 Rollover Options
TABLE 32.2 Full Retirement Age
Appendix B
TABLE B.1 Penalties for Small Businesses for Information Returns
TABLE B.2 Penalties for Small Businesses for Payee Statements
TABLE B.3 Tax Return Preparer Penalties
List of Illustrations
Chapter 1
Figure 1.1 Schedule C, Profit or Loss From Business
Figure 1.2 Schedule K‐1, Partner's Share of Income, Deductions, Credits, etc...
Figure 1.3 Form 8832, Entity Classification Election
Figure 1.4 Part II of Schedule E
Figure 1.5 Form 1120, U.S. Corporation Income Tax Return
Chapter 4
FIGURE 4.1 Computation of Partner's Basis in Partnership Interest
FIGURE 4.2 S Corporation Shareholder Basis in Stock and Debt Basis Limitatio...
Chapter 7
FIGURE 7.1 Sample Form for Section 83(b) Election
Chapter 14
FIGURE 14.1 Form 4562, Depreciation and Amortization
Chapter 16
Figure 16.1 Form 5305‐SEP, Simplified Employee Pension
Figure 16.2 Form 5304‐SIMPLE, Savings Incentive Match Plan for Employees of ...
Figure 16.3 Form 5500‐EZ, Annual Return of One‐Participant Retirement Plan
Chapter 18
FIGURE 18.1 Simplified Method Worksheet for Home Office Deduction
FIGURE 18.2 Form 8829, Expenses for Business Use of Your Home
FIGURE 18.3 Worksheet to Figure the Deduction for Business Use of Your Home...
Chapter 20
FIGURE 20.1 Sample Exemption Certificate
Chapter 21
FIGURE 21.1 Form 8995, Qualified Business Income Deduction—Simplified Comput...
FIGURE 21.2 Form 8995‐A, Qualified Business Income Deduction
FIGURE 21.3 QBI Loss Tracking Worksheet
Chapter 30
Figure 30.1 Schedule SE
Chapter 31
Figure 31.1 Estimated Tax Worksheet
Guide
Cover Page
Title Page
Copyright
Preface
Introduction
Table of Contents
Begin Reading
Appendix A Information Returns
Appendix B Tax Penalties
Appendix C Checklist of Tax‐Related Corporate Resolutions
Appendix D List of Dollar Limits and Amounts Adjusted for Inflation
Index
Wiley End User License Agreement
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