Small Business Taxes & Management



Small Business Taxes & ManagementTM--Copyright 1999-2014, A/N Group, Inc.


We've created a number of important tax and business forms to aid you in drafting corporate resolutions, fringe benefit plans, preparing your return, planning, etc. While every effort has been made to make the material presented here as accurate as possible, these forms are not a substitute for competent tax or legal advice. We'll be adding to this list regularly. In many cases we've completed the forms with sample data, entered in italics.


Self-Insured Medical Reimbursement Plan

You can provide a self-insured medical plan to officers and employees. The business simply reimburses employees for expenses incurred. You can put a floor or cap on the amount of the reimbursement. The amounts should not be income to the employees. If you discriminate in favor of highly compensated employees, some or all of the reimbursement will be taxable to them.

Promissory Note

Without a formal note, borrowings between related parties can be recharacterized by the IRS. This note should work in most circumstances.

Board Meeting Authorizing Loan from Shareholder

You should have board approval for any borrowings from shareholders.

S Corporation Shareholder Basis Worksheet

Your basis in an S corporation is critical in determining your ability to deduct losses and computing your gain on the sale of the stock.

Excessive Compensation Repayment Agreement

If the IRS claims the salary of an employee/shareholder of a regular (C) corporation is excessive, it can deny a deduction for a portion of the salary. The excess would be considered a dividend. You may be able to avoid that problem by a board resolution requiring the employee to pay back the amount deemed excessive.

Restriction on Transferability of Shares

In a closely held corporation you may want to restrict the transferability of shares to prevent taking on dissident shareholders.

Partnership and LLC Basis Worksheet

If you don't have sufficient basis in a partnership or LLC you can't deduct passthrough losses. Worse, distributions from the entity could produce taxable income. Use this form to calculate your basis.

Policy Statement for Vehicles not Used for Personal Purposes

You may be able to avoid keeping vehicle logs if you can meet the rules under Reg. Sec. 1.274-6T. .

Policy Statement for Vehicles not Used for Personal Purposes Except Commuting

This policy statement is similar to the one immediately above, but allows employees to use the vehicle for commuting to and from work.

Earnings and Profits Computation Worksheet

While intended for professionals, everyone who does business as a regular (C) corporation or an S corporation that converted from a C, should have some familiarity with the rules.

Board of Directors Resolution Adopting Defined Contribution Plan

Adopting a defined contribution pension plan? Use this form to have it formally adopted by the board of directors.

Election to Not Claim 50% Bonus Depreciation Allowance

Electing not to claim the special additional depreciation allowance on new equipment? Attach this to your tax return.

Election to Forego the Carryback Period for Net Operating Loss

Generally, you must first carryback a net operating loss to the earliest available year. You might be better off by carrying the loss forward if you'll be in a higher bracket in future years. On a corporate return, you can make this election by just checking a box. On your individual return, you'll have to include a statement. Here's a sample one.

Election to Deduct Presidentially Declared Disaster Loss in Prior Tax Year

If you incur a disaster loss related to a Presidentially declared disaster loss, you can deduct the loss in the year it occurred or deduct it in the prior year by either simply claiming it on an unfiled return or file an amended return. For example, in March, 2004 your incur casualty loss when your home's roof collapses as a result of a heavy snowfall. Your home is located in the area declared by the President as a disaster area as a result of heavy snows. Normally you'd deduct the loss on your 2004 return, but under this special rule, you can deduct the loss on your 2003 return. If you haven't filed the return, you can simply deduct it on the return; if you've filed, you can file an amended return. Why take the loss in the prior year? In addition to getting the tax benefit earlier, there's a good chance your income for the year of the loss will be much less than for the prior year. That will mean your deduction will be worth more in the prior year. Caution. There are time limits on making the election and the election becomes irrevocable unless you get IRS premission. You must elect to take the deduction in the prior year and attach a statement to the return. Here's a sample statement.

Notice of Employer's Election Not to Withhold Income Taxes for Vehicle Fringe Benefit

The value of the personal use of a company-owned vehicle must be included in the income of the individual using the vehicle. Normally, an employer must not only include this value on the employer's W-2, the employer must also withhold employment and income taxes on the amount. The employer can make an election not to withhold income taxes. There are a number of situations where doing so can simplify payroll reporting. Here's the notification that must be provided to the employee.

Election to Reduce Basis of S Corporation Shares by Items of Loss Before Nondeductible Expenses

Basis in an S corporation is first increased by items of income and decreased by distributions, losses and deductions in the following order:

  1. Distributions by the corporation;
  2. Any decrease in basis attributable to noncapital, nondeductible expenses and oil and gas depletion deductions; and
  3. Any decrease in basis attributable to items of loss or deduction.

You (the shareholder) can make an election to change the ordering rules such that losses (3) can be taken into account before nondeductible items (2). That could allow you to deduct losses on your personal return that might otherwise have been suspended. For example, you had $5,000 in nondeductible T&E expenses and a net loss of $26,000 during the year. The $5,000 would normally have to be deducted from basis before any losses. That could reduce your basis such that some of your losses might not be nondeductible. By making the election to change the order, you would reduce basis for the loss first. Note. This election applies to all susequent years unless you receive IRS permission to change.

Identification of Replacement Property for Like-Kind Deferred Exchange

If you're doing a deferred like-kind exchange of property (i.e., you won't receive the replacement property immediately) you must identify the replacement property within 45 days of relinquishing the property you owned. You must send a notification of the replacement property within the 45 days to either the person obligated to transfer the replacement property (generally the exchange intermediary) or any other person involved in the exchange. Make sure you have proof of delivery.

Election to Amoritize Start-Up Expenses

Business start-up expenditures generally are nondeductible. They include a variety of expenditures incurred before the day an active trade or business begins. Examples include amounts paid or incurred in connection with investigating the creation or acquisition of an active trade or business, creating an active trade or business, or any activity engaged in for profit and for the production of income before the day on which the active trade or business begins in anticipation of such activity becoming an active trade or business. For example, you pay a marketing firm $22,000 to research potential markets and competing products, and $24,000 for preopening expenses including the salaries of a manager and employee to purchase inventory and stock the shelves for opening day. These expenditures would not be deductible before opening day if this is a new business. Note. The rules are more complex than indicated above. Were it not for the election to amortize these expenses, they would be nondeductible. They may be amortized over a period of not less than 180 months; the first $5,000 may be deducted if the total is less than $50,000. The $5,000 amount is reduced dollar-for-dollar for amounts over $50,000.


Copyright 1998-2014 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Articles in this publication are not intended to be used, and cannot be used, for the purpose of avoiding accuracy-related penalties that may be imposed on a taxpayer. The information is not necessarily a complete summary of all materials on the subject.--ISSN 1089-1536

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--Last update 08/24/15