Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (3213)	10/19/2001 8:03:41 PM
From: Mark Adams	Respond to of 24758

Grace, Thanks for the comments. I'm aware of the reasonable and customary and prudent business decision qualifications. For example, my suggestion that a board meeting in Hawaii would be a legitimate business expense might be challenged, unless 3/4 of the board happened to reside there, or perhaps the state served as the HQ. I appreciate your taking the time to flesh out the details for others though. As I was thinking about the market forces moving sole prop and partnerships towards various flavors of corporate as a result of a corporate tax change, I remembered an article published some time back about a couple of guys in seattle, who the IRS rule against for going the opposite way. They were paying themselves outrageous salaries to avoid dual taxation. Must have had really bad advisors. Since corporate income is taxed at 15% for the first 50k (based on grapevine info, assuming your not a PSC/PHC) it would make sense to minimize your salary unless the corp income exceeded 82k (where FICA tax stops). I would think most privately held corps make less than 50k profit. So I would expect it would be in most owners interest to minimize their salary if possible. You've described a couple of mechanisms for that. The corp has to be careful that the IRS doesn't impute income if they get too creative. It is clear that a substantial shift might take place if corp taxes went to zero. People may no longer pay their children wages to shift income into lower brackets, retaining it inside the corp shell instead. A local furniture store puts on their kids as part of their advertisements on a regular basis. Kids are cute, but I'm sure they are also taking advantage of the tax code.