Monday, June 30, 2014

Handling Indiana Personal Property Tax Notices

The personal property tax return filing deadline was May 15, 2014.  Should you receive a notice from the assessor’s office, you have forty-five days from the mailing date to respond or appeal.  If you receive a notice and have a question, call or fax a copy to the attention of Stephen A. Sienicki, CPA at FAX (219)736-4876.

Saturday, June 28, 2014

Will Your Shareholder Loan Stand Up to IRS Scrutiny?

Borrowing from your closely held corporation may seem simple, but without proper planning it can be painfully expensive. The IRS often reviews such loans to determine if they’re merely disguised cash withdrawals. For example, the IRS may treat an improperly structured loan as a dividend, which would be taxable to you and not deductible by the corporation.

The IRS generally asks the following questions when evaluating a corporation’s loan to one of its shareholders:

    Does the borrowing shareholder control the corporation? The greater the degree of control, the more closely the loan will be scrutinized.

    Did the corporation require adequate collateral for the loan?

    Is the borrower financially able to repay the loan within a reasonable time period?

    Did the shareholder sign a promissory note with an appropriate interest rate, a reasonable repayment schedule, and a fixed maturity date?

    Has the borrower been making the required payments on schedule?

    If the borrower missed one or more payments, has the corporation tried to collect?

When a corporation lends money to one of its shareholders, the transaction should be structured as though it were being made to an unrelated party – a stranger. The borrower should sign a promissory note that includes payment terms and a final due date. At a minimum, interest should be charged at the IRS statutory rate in effect at the time of the loan. Requiring adequate collateral will be regarded as a favorable indicator by the IRS, although it is not mandatory. The terms of the loan should be voted on by the Board of Directors, and the details should be entered into the corporate minutes. The borrower should make payments according to the agreed-upon schedule.

Since circumstances are different for each corporation and each shareholder, you should always consult your accountant before transferring money from your company. If we can be of assistance, call us.
Call us at (219) 769-3616 with your questions, or email them to

Wednesday, June 11, 2014

Turn Up the Heat on Your 2014 Tax Planning This Summer

While you’re cooling off by the pool this summer, your opportunity to save on taxes might just be heating up. Here are some summertime tips to keep your 2014 tax plans simmering.

If you are a sole proprietor with children, you might consider putting them on the payroll during the summer months. Wages paid to your children under age 18 are not subject to social security and Medicare taxes. What’s more, their earnings are not subject to Federal Unemployment Tax until they turn 21.

If employing your children is not an option, you might still be able to score a deduction by sending them to summer camp. Day camp expenses for kids under 13 can provide a tax credit of up to 35%. Just remember, overnight camps do not qualify, and child-care must be necessary to allow the parents to work.

Summer is also a common time for home selling and moving, so be on the lookout for deductions related to these activities. Carefully file away all home sale or purchase papers for next year’s tax filing. If your move is job-related, there is the potential for additional deductions if you meet the 50 miles or more test.

Perhaps your sights are set instead on some leisure travel. Tacking on a few fun days before or after a business trip might be a tax (and cost) efficient way to pay for a vacation — if you follow all the rules. Travel that is primarily for charitable work might also qualify you for a tax deduction.

And finally, no matter what your summer plans are, this is always a good time for a general tax check-up to ensure your withholdings and estimated tax payments are on target. For assistance with any of these issues, contact our office.

Call us at (219) 769-3616 with your questions, or email them to