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Showing 53 posts in Tax.

U.S. Tax Court: Value of Bank Reward Points is Taxable

U.S. Tax Court: Value of Bank Reward Points is TaxableWith holiday travel season upon us, you may be thinking about redeeming some reward points you’ve earned from your bank for a free airline ticket. After a recent U.S. Tax Court ruling, the ticket may not be as free as you think.

In the case of Shankar v. Commissioner, IRS, the U.S. Tax Court sided with the IRS and held that the value of an airline ticket purchased with “Thank You” reward points is taxable as gross income.

Parimal Shankar received 50,000 “Thank You” points from Citibank in 2009. Citibank sent him and the IRS a Form 1009-MISC, which reported the ticket value of $668 as “other income.” Shankar did not report the income. The IRS sought payment of the tax and assessed a $563 deficiency. Shankar disputed the IRS’s position, filed a petition with the U.S. Tax Court, and the case went to trial. Read More ›

Categories: Income Tax, Tax

Michigan Sales and Use Tax Audits

Every year, the Michigan Department of Treasury audits Michigan businesses for compliance with the Sales and Use tax laws. Oftentimes, those audits result in tax assessments that are disputed by the taxpayer. But, how does a taxpayer navigate the audit process and challenge a tax assessment? Read More ›

Categories: Sales Tax, Tax, Use Tax

Failure to Follow Michigan Tax Requirements Creates Personal Liability for Corporate Officers

A commonly-recognized feature of many business entities is the "shield" that protects officers, members, managers, and partners from personal liability for the business's actions. However, that "shield" does not protect the officers of a company from all liability. Importantly, if a business fails to pay its taxes, then the key officers of the business can be held personally liable for the unpaid taxes of the business. Read More ›

Categories: Compliance, Sales Tax, Tax

Kickstarter and Crowdfunding can provide much needed business funds – and a big tax bill

business fundsKickstarter is a crowdfunding platform for creative projects. Project creators set a funding goal and deadline for their project, and if people like the project, they can pledge money to help make it happen. From movies to books, electronic gadgets to fashion, a wide range of projects raise funds (and in many cases don't raise funds) on Kickstarter. One guy even raised over $50,000 to make potato salad.

While Kickstarter has been a great fundraising platform for a wide range of people who may have had no alternative source of financing, an issue that many people overlook is the tax implications from a successful Kickstarter campaign. Read More ›

Categories: Crowdfunding, News & Events, Tax

If You’re Claiming a Charitable Deduction, Make Sure You Follow the Rules

claiming a charitable deductionTax season is over for most individual taxpayers. But it is not too early to start planning your 2014 deductions.

One way to lower your tax liability is to deduct charitable contributions made during 2014. However, to defend your charitable deduction before the IRS, you must retain documentation that supports it. Read More ›

Categories: Tax

Your 501(c)(3) Status Has Been Revoked – What Now?

Many nonprofit corporations are exempt from federal income tax pursuant to Section 501(c)(3) of the Internal Revenue Code. Until relatively recently, many of those tax-exempt nonprofits were not required to file annual Form 990 series returns. That all changed with the Pension Protection Act of 2006. Now, all tax-exempt nonprofits are required to file an annual Form 990 series return. If a tax-exempt organization fails to do so for three consecutive years, then its federal income tax exemption is automatically revoked - - no questions asked.

How Do You Know If Your Tax-Exempt Organization Has Lost Its
501(c)(3) Status?

The IRS maintains a list of organizations that have had their 501(c)(3) status revoked.  Read More ›

Categories: Nonprofit, Tax

IRS: Bitcoins Are Property, Not Currency

bitcoinsIn guidance issued on Tuesday, March 25, 2014, the IRS warned that virtual currencies, such as Bitcoin, are to be treated as property and not as currency for tax purposes.

"General tax principles that apply to property transactions apply to transactions using virtual currency," the IRS said in the guidance statement. Read More ›

Categories: News & Events, Tax

Corporate Sponsorships for Your 501(c)(3) Organization

Tax-exempt 501(c)(3) charitable organizations can raise money by asking businesses to "sponsor" an event or initiative. These sponsorships can provide much needed revenue to the charity and can help to support an event that allows the charity to raise even more money.

The business that sponsors the event or initiative benefits from the public recognition and from the deduction that it receives for the sponsorship amount, either as a charitable contribution under Internal Revenue Code ("IRC") Section 170 or as an advertising expense under IRC Section 162. Read More ›

Categories: Nonprofit, Tax

Avoid Potential Tax Penalties on Foreign Bank Accounts and Investments

U.S. investors and businesses can be subject to severe tax penalties for failing to properly report their foreign bank accounts, investments and subsidiaries to the Internal Revenue Service (IRS). The potential penalties can be more than $10,000 per year, and can be assessed in addition to taxes and interest! Read More ›

Categories: Tax

Are you missing out on these exemptions?

There have been several recent tax changes to Michigan tax law. New exemptions may be valuable to you. Consult a tax professional for advice as to how to make the most of available tax benefits.

Sales Tax Exemption for Vehicle Trade-Ins

Starting Dec. 15, 2013, up to $2,000 of the value of a motor vehicle or recreational vehicle traded-in to pay for a new or used motor or recreational vehicle may be exempt from sales tax. The agreed-upon value must be separately stated. Starting Jan. 1, 2015, the exemption limit is increased by an additional $500 per year.

Use Tax Exemption for Vehicle Trade-Ins

Also starting Dec. 15, 2013, up to $2,000 of the value of a motor vehicle or recreational vehicle traded-in to pay for a new or used motor or recreational vehicle may be exempt from use tax. Learn about other exemptions here> 

Categories: Sales Tax, Tax, Use Tax