March 28, 2017

When you buy a business, you have much to consider.

To start with, you need to consider the type of entity that owns the business now and the type of entity you will use to operate the business. On top of that, every asset of the business you are going to buy impacts your tax results.

Let me suggest that you purchase the assets of the business rather than an ownership interest, for two reasons:

  1. You generally a...

March 21, 2017

I know that you expect to receive money from a lawsuit or settlement because of an injury. I also know that the last thing you want to do is pay taxes on this settlement.

And for once, the tax law helps you: there’s a generous tax exclusion available for awards and settlements in injury lawsuits.

However, you must receive the money due to “physical injury or illness” to qualify for tax-free treatment.

Physical Inj...

March 14, 2017

Are you thinking about buying a building and renting space to your business?

When you do this, you enter a special area of tax law that I will call the “self-rental trap.”

Rental activities occupy their own section of the tax code, and much of it is not pretty. Here’s the overall rule, which you likely know: rental activities are passive activities.

And you likely know that you have a number of hurdles you need to...

March 7, 2017

Forming a business partnership is usually tax-free. Of course, this is tax law, so you must meet the basic requirements for a tax-free formation, and you need to avoid the situations that cause you to owe taxes on the transfer of property.

Requirements to Qualify

To qualify for tax-free creation of a partnership, you must exchange property for a partnership interest.

Overall, the partnership rules are extremely fl...

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