Most foreign countries require a local corporation to run a business. But there is a problem. The IRS denies the foreign tax credit and a deduction of a business loss to the privately owned businesses. Without the foreign tax credit, you will pay tax twice on the same profit. First in the foreign country and…
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IRS Extends Timeline for Streamlined Installment Agreements
Examiners are now authorized to prepare streamlined installment agreements for taxpayers having a tax deficiency of $25,000 or less that can be paid within 72 months, according to the Internal Revenue Service Small Business/Self-Employed Division. Tax deficiencies include tax, penalties, and interest, according to the memorandum (SBSE-04-0412-021). The time frame to pay under a streamlined…
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A Federal Tax Case Brought in Virgin Islands May Be Transferred
The District Court of the Virgin Islands has “exclusive jurisdiction” over Virgin Island tax cases only vis-a-vis Virgin Island local courts and therefore it could transfer a case to another federal district court, the U.S. Court of Appeals for the Third Circuit held April 12 (Birdman v. Office of the Governor,3rd Cir., No. 10-4189, 4/12/12).…
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IRS Can Reclassify S Corp Distributions as Wages
IRS Knows the Game The IRS is aware of the strategy of using modest S corporation salaries to reduce federal employment taxes for shareholder-employees. The tax-saving advantage is lost if the government successfully asserts that S corporation cash distributions are actually disguised salary payments. Then, the corporation can be hit with back employment taxes, interest,…
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