Month of April, 2008

Tricks and Traps of Family Limited Partnerships. Family limited partnerships have been an effective way to transfer property to your heirs and protect your assets at the same time. But lately I’m seeing more and more FLPs that have been set up wrong, which puts all of the assets at risk and increases the chances of being targeted for an audit. Please join me for this important online workshop.

The latest tax cutting bill from Congress reminds me of 2001. The Economic Stimulus Act is designed to hopefully jump start the economy by giving tax cuts to business owners and put some spending cash in the hands of consumers, just like in 2001. In 2001, the country was reeling from the change from dot com to dot bomb. Now, in 2008, the country is reeling from the change of real estate boom to real estate bust. Or rather, the fall out from the mortgage meltdown.

One of the hot topics on the First Class Lounge Forum this week has been the question of whether the person we might have working for us should be an independent contractor or employee. There are actually two sides to this question. If you have an independent contractor working for you, you don’t need to cover them for payroll taxes or benefits.

But, here’s the trick. You don’t get to choose whether the person working for you is an independent contractor or employee. The IRS chooses and sometimes they change their mind.

A lot of my clients start off with a small business that one person works while the spouse still has a full time job. That all leads up to a frequently missed deduction when it comes to medical insurance. In this case, the spouse has a job with medical insurance but has pay withheld to cover extra family members on the insurance policy.

We’ve had our VPN (virtual private network) server limping along for months now. It’s at absolute capacity, but we never had time to take it down and get a new server up.

Well, looks like our server has decided it’s time to go, whether we think it should or not. We’ll be experiencing some email problems at TaxLoopholes throughout the weekend as we get our new server up. It should be cleared up by Monday afternoon, 4/7/08.

Having a successful business is great. Being that successful business … is not so great. You don’t work; you don’t get paid. And the better the work you do, the more people want you to do the work. For early-stage business owners, especially those of us who earn a living through service-based work, turning down new business is not an option. Turn a job down and you risk closing a door.

All corporations start off as C Corporations. If you want to change to an S Corporation, you file a Form 2553 with the IRS to make the election. So far, so good.

The IRS has certain requirements on who can own the shares of an S Corporation. For example, there is a limit on how many shareholders you can have and the owners have to be individuals. Your LLC can’t own shares in an S Corporation, for example. That’s where a do-it-yourselfer got in trouble. Read on to learn how you can avoid this simple mistake.

If you’ve read my books, articles or columns, heard me on the radio for “Tax Wednesdays” or seen me in person, you’re bound to know that I love the home office deduction. I talk about it a lot. I also hear a lot of bad information about reasons why not to take the home office deduction.

One of the issues that I hear about is what happens when you sell your home after you’ve taken the home office deduction. Read on to learn more about this deduction plus review the rules on what it takes to get a legitimate home office deduction.

Foreclosures are on the rise and there are opportunities for savvy investors. But tax and legal changes make this a brand new ball game. Learn the rules PLUS the possible tax credits for foreclosure investors.

If you’re operating an MLM as a part-time business to augment your regular W-2 job, take note! The IRS is taking a look at these businesses with an eye to abusive deductions. If your business doesn’t measure up, you could have a potential problem on your hands.