Employee or Independent Contractor – How To Decide
- July 15th, 2010
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Unfortunately, a business cannot just arbitrarily decide how to pay its workers. Whether or not a worker is classified as an “employee” from whom taxes must be withheld by the employer or an “independent contractor” whom the employer pays his full pay is determined by IRS regulations. As a general rule, the more control an employer has over the worker’s time and method of doing his job, the more likely it is that the IRS will call him an employee.
Audits of Cash Intensive Businesses
- July 15th, 2010
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When a tax examiner audits a cash intensive business, she is primarily looking to see if the taxpayer is reporting all of his income since there is no paper trail, such as a check, at the point of sale. An IRS Audit Technique Guide lists several indicators which the tax examiner can explore to see if all income is being reported.
Partition of Real Estate – One owner wants to sell; the other doesn’t
- July 15th, 2010
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What happens when two or more people own real property and one wants to sell but the others do not? The law does provide a way out of this dilemma. It is called a Partition Action. One must file a suit in Circuit Court to partition the property, naming the other owners as defendant(s). A hearing will be held, usually before the Master In Equity. It is a non-jury proceeding.
Non-Deductible Business Losses – the Hobby Loss
- July 15th, 2010
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As you know, business losses are deductible on a corporate tax return or on schedule C of a personal tax return. However the IRS looks closely at losses, especially on Schedule C, and may determine them to be “hobby losses” under certain conditions thereby denying the losses as a deduction.