S Corporation Shareholders and Disproportionate Distributions
What is a “disproportionate distribution?” A distribution made to a shareholder not in direct proportion to their stock ownership percentage. This is a very important issue: FAILURE TO MAKE DISTRIBUTIONS IN PROPORTION TO OWNERSHIP PERCENTAGE CAN VOID THE S CORPORATION ELECTION. Why is this? Because the IRS considers disproportionate distributions as evidence that the company [...]
CORPORATE OWNED LIFE INSURANCE
Corporate-owned life insurance (COLI) is a life insurance policy on an employee, owner, or director’s life that is owned by the employer, with benefits paid to the employer. Corporate- owned life insurance was originally intended to hedge against the financial cost of losing key employees due to an unexpected death, the cost of training replacements, [...]
MID-YEAR TAX PLANNING–NOT A BAD IDEA
So we are half way through 2011, and it is a good time to check if you are on track tax wise. Are your withholdings too high or too low? Can you contribute more to your retirement plan or to a needy charity? Should you reposition your investments and take advantage of low capital gain rates [...]
Health Care Reform: New W-2 Form Reporting Requirements
The IRS has announced that it will defer the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan, making the reporting by employers optional for the 2011 tax year. The IRS issued a draft Form W-2 for 2011, which employers will use to report wages and employee tax [...]
Estate and Retirement Planning for the Family Business Owner(s)
Advisers to family businesses in times of low interest rates are using a not-so-new way of transferring wealth and providing for retirement cash flow. It is called “sale to a grantor trust,” and it takes advantage of a limited time offer: under current IRS rules, the federal exemption for gift tax is $5 million through [...]
