| Family Partnerships |
| 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. More... |
| Federal Taxation of Workers' Compensation Income |
| Generally, gross income received by an individual is taxable by the federal government. A notable exception is for workers' compensation income. Workers' compensation, either received by the injured worker or his survivors, is completely exempt from federal taxation as long as it is paid under a Workers' Compensation Act or a statute that operates in the nature of a Workers' Compensation Act by providing income for injuries or illness suffered in the course of the worker's employment. Basically, the statute must restrict the payment of benefits to work-related disabilities.More... |
| Deductibility of Meals Provided to Employees |
| If you are an employer who provides meals for your workers, you may be able to deduct some or all of the cost of the meals. Generally, you are limited to a deduction of only 50 percent of the cost of those meals. However, under certain circumstances, you may be able to deduct the entire cost.More... |
| Civil and Criminal Penalties |
| Federal income laws require the timely filing of tax returns and payment of taxes. When a taxpayer fails to file or pay as required, he or she may be assessed penalties on top of any interest and unpaid taxes. These penalties are not deductible.More... |
| Small Employer Pension Plan Start-up Costs Credit |
| In order to encourage small businesses to establish and maintain retirement savings accounts for employees, Congress has enacted a law that gives a tax credit to eligible small businesses for some of the costs of establishing new eligible retirement plans. The credit equals half of the start-up costs incurred, not to exceed $500 in any tax year, and it may be claimed for qualified costs incurred in each of the three years beginning with the tax year in which the plan becomes effective. More... |
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