List of Expenses

[JohnH]

NC recognizes "Ltd" as one of the legally acceptable appendages for a corp name.
(Incorporated, Inc, Corporation, Corp, Company, Co, Limited, Ltd).

I have seen people use it when they wanted to add a bit of "international cachet" to their business name (or at least they imagined that it did).

[Ashland]

In our area,

Ltd. is often used at the end of an LLC's name, instead of LLC.

[AuditorTurnedGood]

[QUOTE=erchess;87324]I believe that a single member LLC can file as a Sole Proprietorship, a C Corp, or an S Corp. How will you decide which she should file as? QUOTE]

Well, in this case, I think it's best to stick with Schedule C for the time being. She already has a couple of S-Corps with her husband that are, to be polite, sucking wind, and I have my doubts the new business is going to last all that long. Moreover, and likely most important, I don't believe she has the business accumen to run an S-Corp the way it needs to be run. (I have had to have several conversations with her about why she needs to deposit all the income from the existing S-Corps into the S-Corp checking accounts - I have my doubts).

ATG

[ChEAr$]

Well, in this case, I think it's best to stick with Schedule C for the time being. She already has a couple of S-Corps with her husband that are, to be polite, sucking wind, and I have my doubts the new business is going to last all that long. Moreover, and likely most important, I don't believe she has the business accumen to run an S-Corp the way it needs to be run. (I have had to have several conversations with her about why she needs to deposit all the income from the existing S-Corps into the S-Corp checking accounts - I have my doubts).

ATG

When a client has a brand new corporation formed, I try to sit him down and "read the riot
act" to him, emphasizing that already in this room there are THREE people; he, I and
the corporation. Then i explain how a corporation IS a real person under the law and go
on and on about arms length transactions and that under the law, HE is a fiduciary and
has a responsibility to manage the corporation and keep the funds separate from any
other people, including himself.

Lawyers don't usually do this and I think we accountants should.

[taxcraft]

[QUOTE=ChEAr$;87243]and to the point.

Deductible expenses, I tell new clients, are what are "ordinary and necessary" to the
successful operation of a business.

I have rewritten "ordinary and necessary" to mean that deductible business expenses are those that either "make or keep you competitive." If its not helping you to compete it may be dubious.

[taxcraft]

Deductible Business Expenses

While teaching taxes and accounting I found that many ideas were easier to explain if reworded......but not changing the meaning.
Tax law says deductible business expenses are those that are "ordinary and necessary." I take this to mean that deductible business expenses are those that "make or keep you competitive." If it does not help you compete its probably nondeductible. This is easier to grasp than "ordinary and necessary." Competiveness includes your performance, licensing, tools, atmosphere, appearence, etc. Do not take this in a narrow minded way.

[luke]

emailed

[QUOTE=AuditorTurnedGood;87307]The business is a real estate consultancy organized as a single member LLC in this case. I e-mailed her and told her the basics of usual and nessecary expenses, and pointed out the auto and meals/ent rules. At the end of all that, I told her to save all her reciepts and I would deal with them at year end. We'll see how it goes. Thanks again all!


I dont mean to cause any trouble but I hope that your "email" to her contained the required disclaimer that she is NOT to rely on any advice provided, etc etc (from Circular E) - otherwise it could come back to you later that "YOU told her it was OK to deduct..." and then YOU have to make that call to your E&O provider!

[AuditorTurnedGood]

It didn't contain the disclaimer

but it wasn't written advice on a specific federal tax issue, not was is a reliance or marketed opinion, meaning a disclaimer wouldn't be appropriate anyway, at least not in the light of Circular 230 - maybe I need to read up on Circular E.

I gave her the text book defenitions (pretty much right from the regs), so if she comes back after me, I actually haven't provided any advice besides regurgitating the regs. I can't be held responsible for what she or someone else does with the information.

ATG