| SIMPLE IRA Plans |
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| In order to reduce the costs of administering an individual retirement arrangement (IRA), Congress created the SIMPLE IRA plan, a Savings Incentive Match Plan for Employees of Small Employers. The establishment of a SIMPLE IRA allows employees to choose to defer a portion of their salaries into the plan for retirement.More... |
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| Deductibility of Legal and Litigation-related Expenses for a Business |
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| If a taxpayer incurs legal expenses in connection with a business transaction or primarily to preserve an existing business, its reputation, or its goodwill, then the legal expenses are generally deductible. The Internal Revenue Service will use the same tests for deductibility as for other business deductions, which precludes a current deduction for a legal expense incurred in the acquisition of goodwill or any other capital asset. In order for legal fees to be deductible, there does not have to be litigation, and the success of the taxpayer does not affect the deductibility of legal expenses.More... |
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| Research and Experimental Costs in a Business |
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| Frequently, a business incurs costs for activities that are intended to provide information to help eliminate uncertainty about the development of a new product or the improvement of an existing product. Whether costs qualify as research and development costs depends exclusively on the nature of the activity to which the costs relate, not to the nature of the product being developed or to the level of technological advancement. More... |
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| Preparing for an Audit |
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| Substantiation is the key to a successful audit of your small business tax return. The Internal Revenue Service has the right to look at any records used to prepare the return, so get ready to bring them in. But do not bring in a crate of receipts for the auditor to wade through. This is one situation where neatness really does count. The more receipts and paperwork the auditor has to search through, the more errors he or she can find. When the examiner asks about automobile deductions, your ability to produce a file labeled "car" not only builds the appearance of credibility but also prevents the auditor from finding potentially problematic items in your crate. In addition, going through all that paperwork to organize it refreshes your memory concerning the year in question.More... |
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| Determination Letters |
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| If an employee retirement plan is qualified under the Internal Revenue Code, it is entitled to favorable tax treatment. Benefits include the employer's deduction of contributions made in accordance with the plan document and the accumulation of tax-free earnings. In addition, participants in the plan are not required to include their contributions into income until they receive a plan distribution. Because of these tax advantages, many employers look for advance assurance that the terms of their plans satisfy the statutory qualification requirements. More... |
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