TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

Basic Entities in the United States - Partnerships Partnerships are similar to a sole proprietorship in that the individuals have personal liability. This means that each partner is liable for their own actions and the actions of the other partners. That is a big negative of the partnership versus a limited liability entity. For tax purposes, partnerships are generally disregarded and the attributes of income and deductions are passed through to the individuals. That is why they are referred to as "pass-through" entities The partnership will file a federal partnership tax return as well state all partnership tax returns, but it usually does not have any taxable income at the partnership level. Rather, the taxable income is solely pass-through to the partners. Partnerships can also have some interesting tax issues. For example if people simply contribute cash to the partnership for their interest, it is easy. But if one person contributes cash and another person contribut...

Once again, New Jersey is being unnecessarily dragged through the mud. First, the unfounded attacks against Gov. Christie. Then, not correctly attributing the SuperBowl to the correct State (the Meadowlands is in NJ, not NY), and now Rob Andrews is getting the "tommy-gun" from the press in an attempt to ignore the real issues in our Federal Government. Rob Andrews is resigning from Congress under an ethical cloud.    This is unfortunate since he certainly has been a highly energetic and active Congressmen for Southern New Jersey.  Even though I disagree with many of his viewpoints, he certainly always had an open door to me and any other constituents. Years ago, I sponsored a dinner honoring James Corbett, a retiring member of the Camden office of the SBA.  Rob was gracious enough to come speak at the event, and lend his staff for event assistance. He was a hard-working Freeholder Director before he got into Congress and he never forgot how important local...

Pres. Obama has been pushing for changes to the Internal Revenue Code that would limit the tax benefits of pass-through entities. Most small businesses are limited liability companies or S corporations and the profits and losses pass-through to the individual members or shareholders. These are merely preliminary proposals and most likely the House of Representatives will not let these proposals be pushed through Congress. There is been a lot of recent talk about the lack of small business loans and it is been pointed out that the Small Business Administration is a good source for guaranteed business loans for the smallest of businesses. That is simply not true! Since 2005, the average size of the Small Business Administration loan under its loan guarantee program has gone from approximately $160,000 to approximately $342,000. In 2005, the government backed loans totaled almost 96,000. Last year, only 44,000 loans were guaranteed. Also, the smaller banks, that are many times the best...

  Drone Attack In its continuing quest to collect more taxes, the IRS is targeting small business. For the past several years, individuals instead of being audited by a live human being, are being audited by computer and unresponsive mail audits. In order to get more money, the IRS is expanding this secret surveillance to audit small businesses. By using the Robo audits, the IRS can attack more small businesses, and attempt to collect more money. The way this works is the IRS uses many of its matching computer information documents. For example, if you are retaurant and tips are put on credit card receipts, the IRS will track those tips, determine an average percentage and apply that as additional wages to your employees. This way they can collect more taxes from the employer in the form of 941 employment taxes, and they can also go after the employee to collect more income tax. The problem with these audits is that there is no educated human being to speak to concerning t...