Everand Logo

Welcome to Everand!

  • Discover millions of ebooks, audiobooks, and so much more with a free trial

    Only $11.99/month after trial. Cancel anytime.

    US Corporate Tax System
    US Corporate Tax System
    US Corporate Tax System
    Ebook32 pages27 minutes

    US Corporate Tax System

    By IntroBooks Team

    ()

    Switch to audiobook
    Read preview

    About this ebook

    What is a business? This seems like a pretty straightforward
    question, one hardly worth spending any time on at all. But, in
    fact, it is absolutely the first question to ask when you're
    starting up, and essential for getting started on the right foot.
    You may find this statement surprising, but it is observed that
    the US Revenue Agency and the typical American taxpayer do
    not always agree! A key area of disagreement concerns the
    question "What is a business? In fact, the US Revenue Agency
    (RA), the courts and taxpayers have been arguing a lot about
    what is and what is not a business over the past few decades.
    What would seem to be a straightforward question has been a
    very difficult fundamental question to answer.
     
    And the problem has historically come about because RA does
    not want to allow a taxpayer to deduct losses year over year
    in a questionable business. As a result, in the past, the tax
    department considered a business to be any activity that you
    conduct for a profit or a reasonable expectation of a profit. If
    the business could not demonstrate that it could become
    profitable, RA would deny the losses. On May 23, 2002, the
    Supreme Court of USA ruled on two cases, Stewart v. The
    Queen and the Queen v. Walls, which changed all the rules.
     
    As a result of the Supreme Court of USA's decision, RA now
    only considers the concept of "reasonable expectation of profit"
    if there is a personal element with respect to your business. If
    there is no personal or hobby element and assuming of course
    your business is not a sham, then URA will generally no longer
    question whether or not you are in fact in business.
     
    If, however, there is a personal or hobby element in your
    business, then it must be determined if your business is carried
    on in a sufficiently commercial manner as to indicate that there
    would be a source of income, and therefore a business. In this
    case, RA would look at whether or not there is a reasonable
    expectation of profit from your enterprise so that it may be
    considered a legitimate business. It would appear, however, that
    the federal government was not entirely happy with the
    Supreme Court of USA's decision in the Stewart and Walls
    cases, for on October 31, 2003 the Department of Finance
    released proposed amendments that would essentially reverse
    the court's decision and legislate the former URA's assessing
    practices.
     
    That is, to deny business losses and other expenses unless
    there is a reasonable expectation of profit from that business or
    related activity. Originally, it was intended that if this proposed
    new section of the Income Tax Act became law, it would be
    effective for taxation years starting after 2004. What the
    Department of Finance found was that during the period of
    public consultation, many individuals and groups expressed
    serious concerns that a test to determine whether a reasonable
    expectation of profit exists may unintentionally limit a number
    of ordinary commercial expenses.

    LanguageEnglish
    PublisherIntroBooks
    Release dateDec 2, 2019
    ISBN9781393581529

    Read more from Intro Books Team

    Related to US Corporate Tax System

    Related ebooks

    Law For You

    View More
    View More

    Related podcast episodes

    Related articles

    • Article

      Forming A Limited Company

      Feb 6, 2020

      Forming A Limited Company
      3 min read

    • Article

      Should You Do Your Own Taxes or Hire a Professional?

      Jan 30, 2020

      For some people, tax season poses little worry, and the process occurs painlessly. Simply populate the requisite fields on your 1040 with info from your W-2, claim the standard deduction, sign on the dotted line and e-file. After that, the check is

      4 min read

    • Article

      8 Tax Terms You Need To Know

      Aug 26, 2022

      Send suggestions for topics and requests for info to yourmoney@you.co.za. We may answer your questions in this column but won’t reply personally. IF YOU’RE younger than 65 and will earn more than R91 250 between 1 March 2022 and 28 February 2023, you

      3 min read

    • Article

      The Use Of Trusts For Business And Trading

      May 15, 2021

      BANKRUPTCIES in South Africa averaged 229 companies a month from 1980 until 2020. In August last year, an all-time high of 511 companies declared bankruptcy, compared to the record low of 63 companies in May 1988. The projected bankruptcies for 2021

      3 min read

    • Article

      From The Editor

      Oct 8, 2021

      as I opened my emails before writing this, one (of the many) press releases that awaited my attention was about the “dawn of a cashless future”. I have some deep reservations about this utopia where money is transferred through watches, cards, taps a

      2 min read

    • Article

      Busting Trust Myths

      Sep 3, 2020

      “Trust busting” is the term often used to describe instances where a court finds in favour of a claimant trying to access trust assets. Here, though, I do not want to talk about “trust busting”. Instead I want to bust some trust myths. There has been

      2 min read

    • Article

      Don't Settle for Anything Less Than True Diversification

      Dec 11, 2018

      Diversification is a big word, but it can be simply defined: Don't put all your eggs in one basket. That sounds easy enough to understand and accomplish, but it can be trickier than you might think. That's because there's a big gap between how Wall

      3 min read

    • Article

      To Trust Or Not To Trust

      Aug 1, 2019

      To Trust Or Not To Trust
      6 min read

    • Article

      The Crash And After

      Apr 16, 2020

      The Crash And After
      6 min read

    • Article

      Meet The Bookkeeper’s Friend

      Jul 1, 2020

      For many small businesses, 2020 has unquestionably challenged the resolve of the most resilient, with research accounting software provider MYOB revealing that 58% of SMEs say the Covid-19 pandemic has negatively impacted their business. But don’t be

      4 min read

    • Article

      The 11 Reits In My Portfolio

      Aug 13, 2021

      I take the view that fears about the future of offices and retail are overdone – people will work from home more and many weak retail companies will go bust, but good-quality space will still remain in demand. Rents may drop in some cases, but Reit s

      2 min read

    • Article

      Seven Keys To Investing Successfully For Retirement

      Apr 24, 2021

      YOUR early working years can be hectic, with long days spent navigating a fast-changing world, and your partner, perhaps even a young family, placing multiple demands on you. How are you supposed to plan for the long term, choose an investment portfo

      2 min read

    • Article

      Estate Planning 101: 5 Lessons for New Parents

      Aug 6, 2018

      Whether you are adopting or giving birth to a child, overseeing a minor's life is fraught with expansive (and expensive) tasks: Feeding, fretting, toileting and procuring seem to consume the new parent. So, while it is understandable why new parents

      5 min read

    • Article

      Life In The Fast Lane

      Dec 3, 2020

      Life In The Fast Lane
      4 min read

    • Article

      Paul’s Verdict

      Sep 1, 2021

      You reckon you are getting older, Mel! I recently hit 66. It’s pretty funny, though. Fortunately, both my wife, Vicki, and I are in great health, but our three adult kids are now worrying about us and people stand for me on the train or bus, which is

      2 min read

    • Article

      D Is For ‘Defence’

      Jul 28, 2022

      If I could swap places with someone for a quick second, it would be with Tom Cruise. No one else could fly in the face of the pandemic the way he did last month with a movie that pulled a record $1 billion in box office tickets. His financial pay-off

      1 min read

    • Article

      Financial Health Checklist for Small Business Owners

      Jun 29, 2021

      If you’re a small-business owner, you know that the daily decisions you make impact your bottom line. Are you exercising the same care for your finances that you apply to the services you offer your clients? The following is a checklist you can use t

      1 min read

    • Article

      HOW TO... Get Off A Blacklist

      Sep 23, 2019

      HOW TO... Get Off A Blacklist
      2 min read

    • Article

      The Roots of Entrepreneurial Success

      Jan 1, 2020

      You have been involved in start-ups for many years as a founder, co-founder and Chief Technology Officer. In your experience, does entrepreneurship demand specific traits, or can anyone with a great idea do it? I don’t subscribe to the idea that it t

      6 min read

    • Article

      The Future Of Accounting: Co-habitation With Bots

      Sep 10, 2021

      “humans need not apply.” Imagine reading those words on a job-seeker website portal. The smart technology era introduced us to computer systems that can be programmed to do the tasks that most human workers do daily. Computers can see (computer visio

      4 min read

    • Article

      Financial Services in the New Age

      Mar 22, 2024

      Nearly every sector we know of is undergoing deep-rooted change thanks to rapid technological developments. The banking and financial services industry is no exception. In these changing times, where the use of Generative AI (Gen AI) is becoming wide

      2 min read

    • Article

      Where I Would Invest $10k

      Oct 28, 2020

      Given I am a financial adviser, it would come as no surprise that I have a clear plan about where I invest my savings – some invested for retirement, some for nearer-term goals and so on. So, I will assume that this $10,000 is a windfall that I put i

      1 min read

    • Article

      Get Smart About Social Security

      Nov 1, 2017

      GETTING THE MOST out of Social Security is all about waiting as long as possible to start filing for benefits, right? Not quite—especially if, as a business owner, you get to decide how you are paid. You can actually live on a lot more money in ret

      4 min read

    Related categories

    Reviews for US Corporate Tax System

    0 ratings

    0 ratings0 reviews

    What did you think?

    Tap to rate

    Review must be at least 10 words

      Book preview

      US Corporate Tax System - IntroBooks Team

      US Corporate

      Tax System

      IntroBooks #378

      readintrobooks.com

      Copyright © 2017 IntroBooks

      All rights reserved.

      PREFACE

      What is a business? This seems like a pretty straightforward question, one hardly worth spending any time on at all. But, in fact, it is absolutely the first question to ask when you're starting up, and essential for getting started on the right foot. You may find this statement surprising, but it is observed that the US Revenue Agency and the typical American taxpayer do not always agree! A key area of disagreement concerns the question "What is a business? In fact, the US Revenue Agency (RA), the courts and taxpayers have been arguing a lot about what is and what is not a business over the past few decades. What would seem to be a straightforward question has been a very difficult fundamental question to answer.

      And the problem has historically come about because RA does not want to allow a taxpayer to deduct losses year over year in a questionable business. As a result, in the past, the tax department considered a business to be any activity that you conduct for a profit or a reasonable expectation of a profit. If the business could not demonstrate that it could become profitable, RA would deny the losses. On May 23, 2002, the Supreme Court of USA ruled on two cases, Stewart v. The Queen and the Queen v. Walls, which changed all the rules.

      As a result of the Supreme Court of USA’s decision, RA now only considers the concept of reasonable expectation of profit if there is a personal element with respect to your business. If there is no personal or hobby element and assuming of course your business is not a sham, then URA will generally no longer question whether or not you are in fact in business.

      If, however, there is a personal or hobby element in your business, then it must be determined if your business is carried on in a sufficiently commercial manner as to indicate that there would be a source of income, and therefore a business. In this case, RA

      Enjoying the preview?
      Page 1 of 1