IRS Trouble Solvers - November 2021

COUNTING BLESSINGS THIS HOLIDAY SEASON An Attitude of Gratitude

“AFTER ALL, TRUE GRATITUDE ENCOMPASSES BEING THANKFUL FOR WHERE YOU’VE COME FROM AND WHERE YOU’RE HEADED.”

As a day devoted to celebrating the harvest and the many blessings we share, Thanksgiving is one of my favorite holidays. In years past, I would celebrate Thanksgiving with the family at my dad’s house. More recently, we switched things up, and my family went to celebrate Christmas at my dad’s and Thanksgiving with my wife’s family. This year, however, things will be a bit different as it’ll be the first Thanksgiving that we spend without both my mother and father. Earlier this year, I lost my dad, and the magnitude and heartbreak of that loss, coupled with a difficult and uncertain year, has led me to reflect on all that is good in my life: my health, family, friends, and the core fundamentals that oftentimes can go forgotten.

and collection efforts on behalf of the IRS, the anxiety just seems to continue piling up. We are thankful we can help to alleviate some of that stress for our clients and that we can provide them with an opportunity to get themselves back on solid financial footing. When you view a problem as an opportunity, you are able to move forward to develop a solution. Every time a client brings an issue to our attention, it’s an opportunity for us to craft a strategy specific to their situation. The only way to overcome an issue is to develop a plan, be thankful for what you have, and take action based upon those resources. Every day, we have the opportunity to make a difference in the lives of our clients, and for that, I am grateful. I am thankful for those who have become like family. At IRS Trouble Solvers, our team of individuals is unlike any other. We share a family-like bond and support each other with compassion. We come from many different backgrounds and a variety of states across the nation, but we have much in common: a communal passion for going above and beyond to take care of our clients in any way possible. Here, the client always comes first, and our team comes together to make that happen. As I pull up a chair to my Thanksgiving table this year, I plan to take some time to reflect on everything that adds positivity to my life. As a tough year winds down, I still have so much to be thankful for. Each year, I look forward to the beautiful holiday celebration feast, and as I enjoy my sweet potato pie this Thanksgiving, I will be counting my blessings with those I hold dear. From the IRS Trouble Solvers family to yours, happy Thanksgiving! We wish you happiness, love, and good health. -Ben Golden

Thanksgiving offers an opportunity to enjoy time spent with loved ones, catch up, and reminisce about old times and all that you’ve accomplished. After all, true gratitude encompasses being thankful for where you’ve come from and where you’re headed. The foundation of our individuality is rooted in our past and the choices we made that molded us into who we are today. For me, family is a large part of my foundation, and for them, I am entirely grateful. This past year has been tough on society as a whole. As we navigate the pandemic, personal hurdles can seem to be a little more difficult to overcome. Many people are working tirelessly just to keep their businesses afloat and are under tremendous pressure. Not to mention, when you add in the additional stressor of the increased aggression

NOV 2021

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WHICH IS RIGHT FO S CORP, C CO

Every business owner will ultimately need to decide which type of business entity best suits them. The decision will depend on a variety of factors including taxation, liability, the raising of capital, and control. S corporations, C corporations, and LLCs (limited liability corporations) have some major differences, mainly in the way the business is taxed. It is important that you are properly informed before you make any decisions to best set your business up for success. First, it is important to understand that an S corporation is more of a tax status than a business structure. An LLC is dependent upon state law, and an S corp is dependent on federal tax law. In order to be taxed as an S corporation, your business must meet the restrictions of Subchapter S of the Internal Revenue Code. To become an S corporation, your business must be registered as an LLC or C corporation. C corporations are taxed under Subchapter C of the Internal Revenue Code and are particularly popular for larger businesses. C corporations are subject to two layers of taxation — once at the shareholder level and once at the corporate level.

The holidays are right around the corner, and while many people can’t wait to eat turkey and swap presents, others only see stress on the horizon. Especially for those hosting parties, between decorations, big dinners, excited kids, and visiting family, it can all feel overwhelming. If celebrations are happening at your house this year, here are three tips to lessen the strain and keep up the holiday cheer. Recharge First Ensure you’re rested and recharged before the holidays by taking time to relax, getting enough sleep, and engaging in activities that make you feel good. When you’re rushing to get everything done, it can be tempting to skip self-care routines, but that will cost you in the long run. Your daily exercise and other health activities keep you balanced and ready to face challenges head-on. Get Started Early Holidays always arrive faster than we expect, so begin preparing early. If shopping for presents is a pain point, don’t wait until the last minute. Decorate earlier than you need to — or better yet, get the kids to do it for you. There’s only so much cooking you can do ahead of time, but ensuring you have all of the equipment and nonperishable ingredients you need a few weeks in advance will reduce both your workload and anxiety. Don’t Expect Perfection The sooner you let go of the idea of a “perfect” holiday, the sooner you’ll be able to have a happy one. Face it: Something will go wrong. Whether it’s an overcooked dish, a child throwing a temper tantrum, or your uncle talking politics at the dinner table, nothing will ever go just how you planned. So, embrace the imperfections. Whether you’re celebrating this year with a group of two or 20, holidays can be a stressful time — but they don’t have to be. With these tips, your festivities may not be picture-perfect, but they will be a lot of fun. 3 Tips for a Merrier Time Have a Low- Stress Holiday

An LLC is extremely common because it is considered to be a low-maintenance legal entity. An LLC protects the business owner’s personal

ROASTED TURKEY

Impress your Thanksgiving guests with this perfectly roasted — and easy — turkey!

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The client came to us, having been behind on filing his 1040s on time, with an IRS assessment of over $165,000 liability inclusive of penalties and interest. Several years previously, he had owned a self-directed IRA, took a distribution of $150,000 that he in turn invested the total distribution in his employer’s promissory notes. Subsequently, the value of the promissory notes became worthless. CASE SNAPSHOT Type of IRS Issue: Assessment of taxes due on a defunct investment Tax Year in Question: 2017 IRS Claimed Liability: $165,000 Savings: $165,000 During the time the client was behind in filing their 1040s, the IRS issued an erroneous Form 1099-R and filed a Substitute For Return (SFR) which included the erroneous $150,000 in taxable income and assessed a $15,000 penalty for early withdrawal. This SFR also included the WIN OF THE MONTH Individual Who Invested $150,000 of a Self-Directed IRA Into Employer’s Promissory Notes

assets in the event that the business is ever sued, as the plaintiff or creditor can only go after business assets. LLCs are typically subject to one layer of taxation, which can add up to a significant amount of savings over the lifespan of the business. Typically, LLCs are considered the most flexible because, as a business owner, you can choose how the business’s income will be taxed — you can choose between S corporation or C corporation taxation. With an LLC, you can choose how financial interests are divided and how the business is managed. However, LLC owners need to pay self-employment taxes on all income. In an LLC, the income flows through to the owners. In an S corporation, income and deductions are calculated at the corporate level before the income makes it to the shareholders. OR YOUR BUSINESS? ORP, OR LLC

The differences between LLCs, S corporations, and C corporations are complex. To best determine which business structure best suits your business, contact

your trusted tax professional. At IRS Trouble Solvers, we are always here to offer advice and guidance!

INGREDIENTS

client’s business income, but none of his expenses, thereby overstating the client’s taxable income by $216,358. With our assistance, the client then filed his missing tax return, reporting the

1 whole turkey, thawed

2 cups chicken or vegetable broth

Salt and pepper to taste

Schedule C and 1099-R distribution but also deducting the $150,000 as a loss due to the worthlessness of the investment as well as including all the business expenses the client had. Using the newly filed returns, we were able to appeal the IRS ruling, by proving the worthlessness of the underlying promissory notes and validity of his Schedule C, thereby reducing taxable income by $216,358

DIRECTIONS

1. Preheat the oven to 450 F. 2. Remove packaging and giblets from inside of the turkey. 3. Place the turkey in a broiling pan breast-side up and rub it with salt and pepper. Pour the broth around the turkey. 4. Place the pan in the oven and turn the temperature down to 350 F. Turkey should cook for 12–15 minutes per pound, typically 3–4 hours. 5. Remove the turkey from the oven every 45 minutes and baste it with the broth. 6. Once finished, let the turkey rest for 15–20 minutes before carving and serving.

and obtaining the non-assertion of the $15,000 penalty for early withdrawal, thereby saving the client $165,000!

Inspired by TheKitchn.com

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IRS Trouble Solvers ™ ®

108 W. Schick Road, #370 Bloomingdale, IL 60108

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INSIDE THIS ISSUE

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Thanksgiving Reflections

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Lowering Holiday Stress Choosing the Right Business Entity Roasted Turkey

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Win of the Month

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Comparison Shop Like a Champ This Holiday Season

DURING THE HOLIDAY SEASON Comparison Shop Like a Champ

The holiday season can be expensive. Sure, you might describe this time of year with less cynical words like “magical” or “warm,” but unfortunately, most stores don’t accept magic or warmth as legal tender. Whether it be for gifts or for holiday meals and treats, most people want to get the most for their money while saving their time and energy. That’s what makes comparison shopping in the age of technology so worthwhile. In case you didn’t already guess its meaning, “comparison shopping” is simply when you compare prices of the same or similar products at different stores or online retailers. You’ve probably done comparison shopping without knowing you were doing it. However, once you truly embrace the concept, you can increase your savings. Plus, by using the bevy of online price comparison tools, you can do so without scrambling around to every store in town.

If you want to comparison shop like a champ this holiday season, here are a few general tips.

The best deal isn’t always the lowest price. If you’re buying gifts online, be sure to take shipping costs into account. They might end up making the cheaper option more expensive in the end. You should also take a look at the return fees, in case these could drive the price up significantly. Look at the per unit price for food. If you’re buying groceries for Thanksgiving dinner, sometimes the item that’s more expensive at face value is actually cheaper per unit. That can mean you’ll save money overall by buying in bulk. Be wary of markups. Black Friday can leave you feeling frenzied, and that’s not always when stores have their best deals. In fact, many of them mark up their prices (sometimes “discounting”

them back to their regular price) in preparation for that day. It’s a good rule of thumb to be wary of massive “sales” at big retail locations. If you want to know where you can compare prices, take a look at any one of these apps: Google Shopping, PriceGrabber, Shopping.com, Idealo, Shopzilla, BuyVia, NowDiscount, ScanLife, or ShopSavvy.

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