TaxEar›Part 2

Part 2: Businesses

The IRS outline for this part has 3 domains. Each topic below is a page; those marked published have been written from primary sources and verified.

2.1 Business Entities

2.1.1 Business Entities and considerations

2.1.1.aSole proprietorshipspublished
2.1.1.bPartnerships and qualified joint ventures (QJV)published
2.1.1.cCorporationspublished
2.1.1.dS corporationspublished
2.1.1.eLLCspublished
2.1.1.fTax-exempt entities and associationspublished
2.1.1.gEntity type default classifications and electionspublished
2.1.1.hEmployer identification numberpublished
2.1.1.iAccounting periods (tax year)published
2.1.1.jAccounting methodspublished
2.1.1.kReporting requirements (e.g. Forms W2, W-4, Form 1099)published
2.1.1.lHobby versus business determination and loss limitationspublished

2.1.2 Partnerships

2.1.2.aPartnership income, expenses, distributions, and flow-through (e.g.,self- employment income)published
2.1.2.bFamily partnershipspublished
2.1.2.cPartner's dealings with partnership (e.g., exchange of property, guaranteed payments)published
2.1.2.dContribution of property and/or services to partnership (e.g., partnership's basis, property subject to indebtedness)published
2.1.2.eBasis of partner's interestpublished
2.1.2.fDisposition of partner's interestpublished
2.1.2.gPartnership formation (e.g., partnership agreement, general vs. limited partners, capital contributions)published
2.1.2.hDissolution of partnership (e.g., sale, death of partner)published
2.1.2.iFiling requirements, due dates, penalties, and audit notice requirementspublished
2.1.2.jPartnership cancellation of debtpublished
2.1.2.kPartnership level audit and opt-outpublished

2.1.3 Corporations in general

2.1.3.aFiling requirements, due dates, and penaltiespublished
2.1.3.bEarnings and profitspublished
2.1.3.cShareholder dividends, distributions, and recognition requirementspublished
2.1.3.dSpecial deductions and credits (e.g., dividends received deduction, charitable deduction)published
2.1.3.eLiquidations and stock redemptionspublished
2.1.3.fAccumulated earnings taxpublished
2.1.3.gEstimated tax paymentspublished
2.1.3.hCorporate minimum tax creditpublished

2.1.4 Forming a corporation

2.1.4.aServices rendered to a corporation in return for stockpublished
2.1.4.bIRC Section 351 exchangepublished
2.1.4.cTransfer and/or receipt of money or property in addition to corporate stockpublished
2.1.4.dTransfer of property subject to indebtednesspublished
2.1.4.eControlled groupspublished
2.1.4.fClosely held corporationspublished

2.1.5 S corporations

2.1.5.aRequirements to qualify (e.g., qualifying shareholders)published
2.1.5.bElection procedurepublished
2.1.5.cIncome, expenses and separately stated itemspublished
2.1.5.dTreatment of distributionspublished
2.1.5.eShareholder’s basis (e.g., loan basis, distributions and losses in excess of basis, services for stock)published
2.1.5.fRevocation, termination and reinstatementpublished
2.1.5.gDebt dischargepublished
2.1.5.hNon-cash distributionspublished

2.2 Business Tax Preparation

2.2.1 Business Income

2.2.1.aGross receipts and other incomepublished
2.2.1.bCost of goods sold (e.g., inventory practices, expenditures included, uniform capitalization rules)published
2.2.1.cNet income, net operating losses, and loss limitations including passive activity and at-risk limitationspublished
2.2.1.dCancellation of business debtpublished

2.2.2 Business expenses, deductions and credits

2.2.2.aOfficers and employees’ compensation (e.g., deductibility, fringe benefits, rules of family employment, statutory employee, necessary and reasonable)published
2.2.2.bBusiness rental deduction, including self-rentalspublished
2.2.2.cDepreciation, amortization (start-up and organizational cost), IRC Section 179, depletion, bonus depreciation, and correcting errorspublished
2.2.2.dBusiness bad debtspublished
2.2.2.eBusiness travel, meals, and gift expensespublished
2.2.2.fVehicle use and expensespublished
2.2.2.gInterest expensepublished
2.2.2.hInsurance expensepublished
2.2.2.iTaxes (e.g., deductibility of taxes, assessments, penalties; proper treatment of sales taxes paid, excise)published
2.2.2.jEmployment taxespublished
2.2.2.kCasualties, thefts, and condemnationspublished
2.2.2.lQualified business income (QBI) (SSTB, calculations, phase out, UBIA)published
2.2.2.mEligibility and deductibility of general business credits (e.g., disabled access credit, R&D credit, small business healthcare tax credit, foreign tax credit)published
2.2.2.nNet operating loss deductionpublished
2.2.2.oHome officepublished

2.2.3 Business assets

2.2.3.aBasis of assetspublished
2.2.3.bDisposition of property or assetspublished
2.2.3.cLike kind exchangepublished
2.2.3.dConverted propertypublished
2.2.3.eCapitalization and repair regulations (e.g., elections)published

2.2.4 Analysis of financial records

2.2.4.aProper business type, and the use of classification codes and year to year comparisonpublished
2.2.4.bIncome statementpublished
2.2.4.cBalance sheet (e.g., proofing beginning and ending balances, relationship to income statement and depreciation)published
2.2.4.dMethod of accounting and changes (e.g., accrual, cash, hybrid, Form 3115)published
2.2.4.eDepreciation recovery (e.g., recapture, IRC Section 280F)published
2.2.4.fPass-through activity (e.g., K-1, separately stated items, non-deductible expenses)published
2.2.4.gReconciliation of tax versus books (e.g., M-1, M-2, M-3)published
2.2.4.hRelated party activitypublished
2.2.4.iLoans to and from ownerspublished

2.2.5 Advising the business taxpayer

2.2.5.aReporting and filing obligations (e.g., extended returns and potential penalties, international information returns, Form 1099 series, Form 8300)published
2.2.5.bPayments and deposit obligations (e.g., employment tax, excise tax)published
2.2.5.cRecord-keeping requirements (e.g., mileage log, accountable plans)published
2.2.5.dRelated party transactionspublished
2.2.5.eSelection of business entity (e.g., benefits and detriments)published
2.2.5.fComingling (e.g., personal usage of business accounts, separation of business and personal accounts)published
2.2.5.gAdvice on accounting methods and procedures (e.g., explanation of requirements)published
2.2.5.hTransfer of property in or out of the business (e.g., contributed property, distributions)published
2.2.5.iLife cycle of the business (e.g., formation, dissolution)published
2.2.5.jType of industry (e.g., specified service business owners)published
2.2.5.kWorker classification (i.e. independent contractor versus employee, outside sales, full-time vs part-time)published
2.2.5.lDeductions and credits for tax planning (e.g., timing of income and expenses, NOL, depreciation versus IRC Section 179 versus bonus depreciation)published
2.2.5.mACA compliancepublished

2.3 Specialized Returns and Taxpayers

2.3.1 Trust and estate income tax

2.3.1.aTrust types (e.g., simple/complex, grantor, irrevocable, tax shelters, foreign)published
2.3.1.bDistributable net income and accounting incomepublished
2.3.1.cExclusions, exemptions, and deductionspublished
2.3.1.dFraudulent trustspublished
2.3.1.eIncome (e.g., allocations, corpus versus income)published
2.3.1.fSeparately stated items (items reported on the K-1)published
2.3.1.gFiling requirements, tax years, and penaltiespublished

2.3.2 Exempt organizations

2.3.2.aQualifying for and maintaining tax-exempt status (e.g., IRC 501(c))published
2.3.2.bApplying for IRS tax-exempt status (e.g., Form 1023, Form 1024)published
2.3.2.cFiling requirements (e.g., Form 990 series)published
2.3.2.dUnrelated business taxable incomepublished

2.3.3 Retirement plans

2.3.3.aEmployer and employee contributionspublished
2.3.3.bReporting requirementspublished
2.3.3.cPlans for self-employed persons (e.g., SEP and SIMPLE)published
2.3.3.dProhibited transactionspublished
2.3.3.eQualified and non-qualified planspublished
2.3.3.fNon-discrimination rulespublished

2.3.4 Farmers

2.3.4.aFarm income (e.g., self-raised livestock, crop insurance proceeds, subsidies, patronage dividends, conservation payments)published
2.3.4.bDepreciation for farmerspublished
2.3.4.cDisaster-area provisions (drought, flood, other weather-related conditions)published
2.3.4.dFarm rentalpublished
2.3.4.eFarm tax computation (e.g., Schedule J, Schedule SE, estimated tax)published

2.3.5 Rental Property

2.3.5.aReal estate professional qualificationspublished
2.3.5.bCommercial rentals versus residential rentalspublished
2.3.5.cMixed used property/vacation homepublished
2.3.5.dPassive loss limitation (e.g., special $25,000 allowance, MAGI limits)published
2.3.5.eRental income (e.g., deposits, pre-paid rent, not rented for profit)published
2.3.5.fRental expenses (e.g., allocation between personal and rental, repair versus capitalized)published