To Forgive Is Not Always Divine
For tax purposes don’t think that you’re off the hook if another party forgives or cancels a debt. Under the “cancellation of debt” (COD) provision in the tax law, this seemingly generous act could result in an unexpected tax bill. Basic rules: If an amount you owe is forgiven or canceled, you must generally report it…
What Does it Mean if the IRS Files a Lien?
It’s bad enough when borrowers can’t pay off amounts owed to commercial creditors such as banks and other financial institutions. But people can find themselves in really hot water if they owe the IRS money. What could happen? The IRS can establish a legal claim to a person’s property, including a house or car, as…
Inadequate Records Lead to Unfavorable Results for Taxpayers
Federal tax law allows deductions for many items, such as legitimate business expenses and charitable donations. But, if you claim deductions on your tax return, you also must maintain adequate records to support them. If your tax return is audited, missing or incomplete records could lead to additional taxes, interest and penalties, as these three…
A Simple Step to Cutting Costs
At the time, the vice president of manufacturing at Hyde Manufacturing, in Southbridge, MA, said he thought “we were under-utilizing our people’s skills.” It was in the late 1980s and the vice president was Ken Rizner. His thoughts then led to a transformation in work in the 300-employee plant. “I always thought we were using…
Keep Your Database Clean
This is one of those Believe It or Not stories: Years ago, a charity generated solicitation letters from a computerized database. One letter addressed to a state Humane Society stated: “Dear Miss Society.” Whoops! On the surface, member or database management may seem like an impersonal clerical function, but how it’s handled can have a…
How the IRS Proves Fraud and Why It Can Be Devastating
In general, a tax assessment by the IRS is presumed to be correct. A taxpayer can overcome the presumption with proof. That situation is reversed when the IRS asserts fraud. In those instances, the IRS must prove, by clear and convincing evidence, that fraud exists. Badges of Fraud Tax fraud is a very serious issue….
When Divorced Empty Nesters Remarry
Later-life remarriages differ from earlier-life remarriages — especially when adult children factor into the equation. If you or your parents plan to tie the knot again, here are some roadblocks that might stand in the way of your family’s happily-ever-after. Emotional Issues Marriage is a life-altering commitment. You’re not just merging lives with your spouse…
Buy-Out Provisions Can Cause Higher Valuation
The buy-out provisions in a partnership or membership agreement are designed to maintain control of the firm and help partners cash out their interests. However, those same provisions can be used in ways that you may not have anticipated. For example, the provisions of one law firm’s membership agreement were used to justify a substantially higher…
Real Estate Investors: Let’s Talk about Like-Kind Exchanges
Are you thinking about divesting a real estate investment and then replacing it with another property? If you sell appreciated property outright, you’ll incur a taxable gain, which lowers the amount available to spend on the replacement property. But you may be able to defer your tax bill (or even make it disappear) with a…
Investigate Zoning Laws Before Committing to a Location
Location, location, location. You know how important it is for your business. So when choosing a location, you probably research foot traffic, car traffic and the occupancy rates of the neighboring buildings. But if you don’t research zoning laws, all your good business judgment could go to waste. Before you sign a lease or buy…