Business Income

The definition of taxable business income is a broad one. To paraphrase the Internal Revenue Code, it includes all income from whatever source it is derived. In general, anything of value received by a business is considered income unless it is specifically excluded by the tax laws.

Nonbusiness Bad Debts

Nonbusiness bad debts are uncollectible obligations to you based on transactions not in the course of operating your trade or business. In order to prove that you are entitled to a bad debt deduction, you must be able to first show that you have a genuine debt. Second, you must be able to prove that a valid debtor-creditor relationship existed at the time the debt arose. Third, you must already have included the amount in your income. Finally, you must show that the debt became totally worthless during the tax year in which you are seeking the deduction.

Employment Taxes

As a taxpayer who runs a business, you have a million things to worry about. Customers, inventory, advertising, competition, and keeping good employees are just a few. On top of it all, the government imposes strict requirements on the collection and payment of employment taxes.

Taxation of Personal Service Corporations

Although most corporations are entitled to calculate their tax using graduated rates, there is an exception for "qualified personal service" corporations, which are subject to a flat tax rate of 35 percent. A corporation is a qualified personal service corporation if it meets certain tests.

Abusive Life Insurance Policies in Retirement Plans

A certain type of tax-qualified retirement plan (a section 412(i) plan) is funded completely through a life insurance contract or an annuity. The employer is entitled to tax deductions for contributions that are used by the plan to pay premiums on an insurance contract covering an employee. The plan may hold the contract until the employee dies, or it may distribute or sell the contract to the employee at a certain time, such as when the employee retires.