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Corporate Tax

Case Summaries S Corporations

A Texas landfill goes to Tax Court

Landfill photo by Celestine Ngulube via Unsplash.

A Texas couple recently won a novel U.S. Tax Court case involving tax deductions for landfills.

The married couple operate a landfill outside of Austin using an S corporation which they co-own with relatives.

The IRS disallowed deductions that the couple’s company took for future cleanup costs because the company is a cash-method taxpayer and the IRS contends that the deductions are only available to accrual-method taxpayers.

The tax court disagreed. Continue reading “A Texas landfill goes to Tax Court” »

Basics S Corporations

S Corporation basics

Man at office building by Chris Davis via Unsplash

Note: This is a general information “basics” article. For more information, see FAQ #4.

S Corporations Overview

An S corporation is a business corporation with a limited number of shareholders whose income is taxed through its shareholders rather than the corporation itself.

S corporations are defined in the Internal Revenue Code (26 U.S. Code § 1361) which also provides an extensive list of requirements for eligible types of shareholders. S corporations are often run by families, so there are special rules involving the treatment of related individuals. Continue reading “S Corporation basics” »

Corporate Tax Research Papers

Paper: A moral view of tax planning

Starbucks photo by Hans Vivek.

A pair of Dutch lawyers have an interesting new article out called “Good Tax Governance: A Matter of Moral Responsibility and Transparency.”

In the article, Hans Gribnau and Ave-Geidi Jallai of Tilburg Law School discuss how aggressive tax planning may disadvantage multinational corporations by causing resentment among consumers.

The professors write that because the public views tax avoidance in moral rather than legal terms, the bad PR associated with aggressive tax planning strategies must be a key consideration for implementing a tax planning strategy. Continue reading “Paper: A moral view of tax planning” »

Corporate Tax Law

Caterpillar & The Border Adjustment Tax: Wednesday’s Tax Brief

Construction equipment photo by Ladislav Soukup.

The GOP’s proposal for a Border Adjustment Tax may help out companies such as construction manufacturer Caterpillar, Inc., which is currently facing a federal tax evasion investigation.

Prosecutors accuse Caterpillar of hiding its profits in Switzerland, however the company maintains that its tax arrangements are perfectly legal.

The company reportedly gave a Swiss subsidiary legal rights to its global replacement parts business, which means that the profits accrued in Switzerland instead of the U.S.

The GOP’s Border Adjustment Tax plan would make this type of tax arrangement unnecessary by not taxing the overseas sales of U.S. companies. (Currently, U.S. corporations are taxed on their worldwide income.) Continue reading “Caterpillar & The Border Adjustment Tax: Wednesday’s Tax Brief” »

Corporate Tax Law

Corporate Tax Rates, ACA quirks, John Koskine: Monday’s Tax Brief

Jenna Beekhuis, an office tower in San Francisco

Here are some tax stories on my radar today:

The Affordable Care Act: Leonard E. Burman examines an interesting quirk of the Affordable Care Act (ACA) over at Tax Vox — apparently the “additional Medicare contribution” tax on the investments of high-income households doesn’t go into the Medicare trust fund after all.

The reason? A provision that would have directed the Medicare contribution to support the trust fund wouldn’t have survived reconciliation. (Tax Vox)

See also: Republicans are flirting with class warfare in their healthcare bill,” Henry Aaron, The Hill. Continue reading “Corporate Tax Rates, ACA quirks, John Koskine: Monday’s Tax Brief” »