Last week I focused upon a few things that every small business should consider in minimizing its tax and liability exposure. This week I will focus upon a few approaches which are considered a bit more aggressive. Next week we will conclude our series with a brief case study.
All amounts contained in a pension or similar plan are exempt from any judgment issued against you. As you may have noticed, OJ seems to have continued his lifestyle of the rich and famous and this is precisely why. To the extent you can place funds into such a plan and then borrow against it, if necessary, you will have shielded significant assets from any judgment.
Many of us have home offices. With the advent of email and the Internet, many of us in an information intensive business have what is virtually a mobile office. In addition to deducting the cost of the home office, many taxpayers also deduct the cost of driving between their office and home office. This should be done at the required rate per mile, rather than depreciation of the vehicle, etc.
IRS audits are painful ~ One of the few absolute truths in life. The most difficult aspect of an audit is frequently providing receipts for deductions. The Code allows for a per diem expense allowance, rather than having to produce all receipts. Consider using this allowance, rather than attempting to document all necessary expenditures.
LEGAL TIPS:
(1) Place as much money as possible in retirement plans. These sums are exempt from any judgment against you and can typically be borrowed against.
(2) Consider strategies such as rates per mile or per diem travel allowances, rather than increasing the paperwork burden.
As they use to say at the beginning of “Hill Street Blues,” “be careful out there” when it comes to tax planning. There is no doubt that if you experience a “difficult” audit, the probability of the IRS paying you additional visits is increased significantly. Next week I will conclude this series with a brief case study.
If you have any questions concerning the above, please feel free to contact Lawrence Horwitz, either by telephone: (949)450-4942; or email: Larry Horwitz
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