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Small Business Tax

Section 179 vehicles should be a key part of your small business tax deduction strategies. Can Section 179 property fit in with your business tax strategies?

Let Business Management Daily help you get each and every rental property depreciation credit and business tax deduction you’re entitled to.

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Q: In 2003, I started a sideline business selling items on eBay. If my regular salary at work exceeds the Social Security tax wage base, do I have to pay self-employment tax on my eBay earnings? S.J.S., via e-mail

An S corporation operates a "pass-through" entity, meaning all corporate income and deduction items pass through to shareholders, who then report those amounts on their personal returns. Result: You owe personal income tax on your share of S corp profits.

Q: I'm in the middle a dispute about a landscaping bill. The other day, someone from the landscaping company called my company and asked to speak to my boss. Is that legal? C.N., Glen Burnie, Md.

Q: You wrote a story that said any mortgage interest for periods of "personal use" of a rental property is deemed personal interest and therefore nondeductible. (See 10/6/03 issue.) But couldn't that personal portion be treated as "second residence" mortgage interest and therefore be deducted? J.W., via e-mail

The IRS turns a skeptical eye toward what it deems "unreasonable compensation" paid to C corp owner-executives. The taxman can decide your salary is too large and label part of it as a nondeductible dividend.

Gain fast tax relief from a NOL.

 

Pay no tax instead of low tax.

... older Americans

Q: I've been working for 28 years at the same company and have accumulated a hefty pension. But I just read that the Pension Benefit Guaranty Corporation (PBGC) is running out of money. Will my pension still be protected? D.Z., Albuquerque, N.M.

Say your parents or in-laws are semiretired and still earning a bit of income, but you're helping them financially. They also watch your young children while you and your spouse work.

You probably can't claim a dependency exemption for your parents because their income surpasses a certain level.

Q: I have Series EE Savings Bonds worth close to $100,000. I don't want to leave them in my estate where they will be hit with income and estate taxes. Can I avoid the untaxed appreciation in value by transferring the bonds to a charitable trust? R.B., Houston, Texas

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