The IRS must learn in-house terminology being used by the business when they begin auditing or examining, as well as how the business maintains their records. In the case of executive compensation, the IRS is especially interested in arrangements in which the company deducts the high salary of one of its top executives using an  Continue Reading »

Tax Day is right around the corner for Maine businesses and individuals, and the filing deadline to submit 2015 individual federal income tax returns is Monday, April 18, 2016, rather than the traditional April 15 date. Washington, D.C., will celebrate Emancipation Day on Friday, April 15, which pushes the deadline to the following Monday for most  Continue Reading »

When purported loan payments are recast as corporate distributions to shareholders, there can be negative tax consequences. The courts, in some cases, have ruled that withdrawals from two closely held corporations were constructive corporate distributions rather than loan proceeds and repayments. As such, the withdrawals triggered taxable dividends and capital gains for the shareholders. Corporate Distribution  Continue Reading »

Because of their advantageous tax-free treatment, structured settlements are typically associated with the payment of personal injury damages. However, some business purchases and buyouts can also benefit from structured settlements using annuity payments from an insurance company. While payments from these non-personal injury cases are not tax-exempt, the recipient only owes taxes on the amount of  Continue Reading »

One of the most contentious issues in business valuation is the discount for lack of marketability (DLOM). Reasons include that the DLMO varies significantly, depending on the rights and restrictions attached to the business interest, and also because it can lower a business interest’s value by as much as 35% or more. Here’s more on  Continue Reading »

Maine business owners are often surprised when they receive their valuation report from a hired appraiser. Often times the expert is hired to determine the fair market value of a business interest for, say, divorce or gift and estate tax purposes, and the client wonders, “Is this all I would receive if I were to  Continue Reading »

The research credit is looking good for some small Maine companies, and it’s back for good. The Protecting Americans from Tax Hikes (PATH) Act of 2015, signed into law by the president on December 18th, does much more than extend this credit. Under the PATH Act, the research credit is restored retroactive to January 1, 2015,  Continue Reading »

During a divorce, when either spouse owns a private business interest, the divorce settlement is only as reasonable as the value of the business and the compensation of its owners. Replacement compensation can become a controversial issue, especially when the spouse owns a private business and has the control to set his or her salary, benefits  Continue Reading »

Overpayments of sales and use taxes may be caused by various situations. For example, retailers and suppliers have been aggressive about charging sales tax to avoid audit deficiencies because field auditors in many states, like Maine, have become more aggressive about assessing taxes, interest, and penalties. Sales tax may be charged in some cases even when a  Continue Reading »

Federal law does not obviously require an “investment policy statement” (IPS), but the statute governing retirement plans (ERISA), does expect that plan trustees will have a specific policy in mind. In summary, there is an assumption that investments being offered to participants have been carefully weighed, and will be monitored for performance, as well as  Continue Reading »