Under certain circumstances, Congress permits income splitting among numerous family members to avoid higher tax brackets by the use of the “family partnership.” If capital is a material income-producing factor in the business, a family member will be recognized as a partner for federal income tax purposes only if he or she acquires a genuine capital interest in a partnership through a bona fide transaction. He must actually own the partnership interest, and he must actually control it. The transfer may be accomplished by gift or by a purchase. Capital is an income-producing factor if the operation of the business requires substantial inventories or investments in buildings, machinery, or equipment.
Nobody likes getting mail from the Internal Revenue Service unless, of course, it is a check. But do not panic – the news is not always bad! There are many reasons why the IRS might send you a notice, ranging from a request for payment, a notification of a change in your account, or simply a request for information.
If you are a farmer who had a loss from the operation of your business, you might be eligible for favorable tax treatment of that loss. Generally, a taxpayer is entitled to carry back a net operating loss to the two tax years before the loss year and to deduct it from the income of those years. In that way, the taxpayer may get a refund of all or part of the income taxes paid in those prior years. If the net operating loss is not used up in the carryback period, the taxpayer is permitted to carry it forward for the next 20 years.
You have decided to close your business. What you really want to do is just pick up your box of personal belongings, shut the door, and walk away. But unfortunately, it is not quite that simple.
Prior to the enactment of Internal Revenue Code Section 501(c)(19) in 1972, war veterans’ organizations were grouped together with all other veterans’ organizations and recognized as tax-exempt under the social welfare and social club sections of the Code. Under the original version of the statute, an organization formed under Section 501(c)(19) could carry on programs involving Americanism, youth activities, community activities, and educational programs on issues of national security and foreign affairs. In addition, veterans’ organizations could receive exempt income by providing certain insurance benefits for members or their dependents.