Choosing a business entity comes down to two questions. State law decides liability protection, and the IRS classification decides tax. Sole proprietors and partners pay self-employment tax on all profit, S corporation owners pay payroll tax only on a reasonable…
A partner who sells an interest has a gain equal to cash received plus debt relieved, less outside basis. Most of it is capital gain under section 741, but the share tied to receivables, inventory and recapture is ordinary under…
There is no percentage rule and no safe harbor. An S corp owner who works in the business is an employee, and the IRS can recharacterize distributions as wages to the extent they are reasonable pay for services performed. Nine…
Five things changed on Schedule C for 2025 and 2026: the mileage rate rose to 72.5 cents, bonus depreciation became a permanent 100%, the Section 179 limit reached $2,560,000, the QBI phase-in ranges widened, and a new tip deduction arrived….
