US Corporate Tax System
()
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.
Read more from Intro Books Team
Introduction to Business Management Rating: 5 out of 5 stars5/5Management Information System Rating: 0 out of 5 stars0 ratingsCrash Course Financial Analysis Rating: 0 out of 5 stars0 ratingsChild Development Theories Rating: 0 out of 5 stars0 ratingsDesign Thinking Rating: 0 out of 5 stars0 ratingsProduction Management Rating: 4 out of 5 stars4/5Cash Flow Analysis Rating: 3 out of 5 stars3/5Managerial Economics Crash Course Rating: 5 out of 5 stars5/5Investment Banking Crash Course Rating: 4 out of 5 stars4/5Mechatronics Rating: 4 out of 5 stars4/5Balanced Scorecard for Performance Measurement Rating: 3 out of 5 stars3/5Crash Course Business Agreements and Contracts Rating: 3 out of 5 stars3/5Psychology of Color Rating: 4 out of 5 stars4/5Learn and Understand Business Analysis Rating: 4 out of 5 stars4/5Crash Course Financial Modelling Rating: 5 out of 5 stars5/5Industry 4.0 Rating: 4 out of 5 stars4/5Introduction to Pricing Strategies Rating: 5 out of 5 stars5/5Managerial Accounting Rating: 0 out of 5 stars0 ratingsIntroduction to Chemistry Rating: 0 out of 5 stars0 ratingsFinancial Statement Analysis Fundamentals Rating: 0 out of 5 stars0 ratingsLearning Theories Rating: 5 out of 5 stars5/5Diplomacy Rating: 4 out of 5 stars4/5Introduction to Strategy Rating: 3 out of 5 stars3/5Project Finance Rating: 0 out of 5 stars0 ratingsTeaching Methods Rating: 0 out of 5 stars0 ratingsFundamentals of Physics Rating: 0 out of 5 stars0 ratingsArtificial Intelligence in Banking Rating: 0 out of 5 stars0 ratingsBusiness English Rating: 0 out of 5 stars0 ratingsHistory of Israel - Palestine Conflict Rating: 4 out of 5 stars4/5Basic Project Management Rating: 0 out of 5 stars0 ratings
Related to US Corporate Tax System
Related ebooks
Business Skills: Finance, Money Management, and Marketing Rating: 0 out of 5 stars0 ratingsStreetwise Incorporating Your Business: From Legal Issues to Tax Concerns, All You Need to Establish and Protect Your Business Rating: 0 out of 5 stars0 ratingsBusiness Structures and Incorporation Rating: 4 out of 5 stars4/5Red to Black: Secrets of a Savvy Cfo to Run Your Business Successfully Rating: 0 out of 5 stars0 ratingsHow To Start Your Own Tax Preparation & Consulting Business Rating: 5 out of 5 stars5/5Painless Financial Literacy Rating: 0 out of 5 stars0 ratingsTaxes Made Easy! Rating: 0 out of 5 stars0 ratings101 Businesses You can Start with low capital Rating: 0 out of 5 stars0 ratingsDeduct It!: Lower Your Small Business Taxes Rating: 0 out of 5 stars0 ratingsAccounting: A Comprehensive Guide to Small Business Accounting, Budgeting, and Bookkeeping Rating: 0 out of 5 stars0 ratingsBusiness Skills: Practical Knowledge for Business Leaders and Entrepreneurs Rating: 0 out of 5 stars0 ratings2020 Guide to Small Business Tax Planning Rating: 0 out of 5 stars0 ratingsMoneybags Series 101: Seven Important Tax Questions for a Business Owner Rating: 5 out of 5 stars5/5Financial Accounting for Entrepreneurs Rating: 0 out of 5 stars0 ratingsFinancial & Tax Planning for Small Businesses Rating: 0 out of 5 stars0 ratingsHome Business Taxes: The Basics Rating: 0 out of 5 stars0 ratingsIncome Tax Terminology: The Complete Guide to Income Tax in India Rating: 0 out of 5 stars0 ratingsTax Reform Rating: 0 out of 5 stars0 ratingsHarvest Your Equity: Avoid Tax Traps and Bring Home the Most Money from Employee Stock Options and RSUs Rating: 0 out of 5 stars0 ratingsPrivate Equity: Access for All: Investing in Private Equity through the Stock Markets Rating: 0 out of 5 stars0 ratingsWhat Successful Accountancy Owners Won't Tell You Rating: 0 out of 5 stars0 ratingsEducation Tax Credit Essentials Rating: 0 out of 5 stars0 ratingsIncome Taxation Essentials Rating: 4 out of 5 stars4/5Public Finance: Legal Aspects: Collective monograph Rating: 0 out of 5 stars0 ratingsCredit Score Crash Course Rating: 0 out of 5 stars0 ratingsMastering Quickbooks Online: Step-By-Step Journey To Financial Management And Accounting Success Rating: 0 out of 5 stars0 ratings
Law For You
The Pro Se Litigant's Civil Litigation Handbook: How to Represent Yourself in a Civil Lawsuit Rating: 5 out of 5 stars5/5Criminal Law Rating: 0 out of 5 stars0 ratingsLegal Writing: QuickStudy Laminated Reference Guide Rating: 0 out of 5 stars0 ratingsWin In Court Every Time Rating: 5 out of 5 stars5/5Law For Dummies Rating: 4 out of 5 stars4/5The Paralegal's Handbook: A Complete Reference for All Your Daily Tasks Rating: 4 out of 5 stars4/5The ZERO Percent: Secrets of the United States, the Power of Trust, Nationality, Banking and ZERO TAXES! Rating: 5 out of 5 stars5/58 Living Trust Forms: Legal Self-Help Guide Rating: 5 out of 5 stars5/5Legal Words You Should Know: Over 1,000 Essential Terms to Understand Contracts, Wills, and the Legal System Rating: 4 out of 5 stars4/5How to Think Like a Lawyer--and Why: A Common-Sense Guide to Everyday Dilemmas Rating: 3 out of 5 stars3/5The Everything Guide To Being A Paralegal: Winning Secrets to a Successful Career! Rating: 5 out of 5 stars5/5Estate & Trust Administration For Dummies Rating: 0 out of 5 stars0 ratingsCritical Race Theory: The Cutting Edge Rating: 4 out of 5 stars4/5Patents, Copyrights and Trademarks For Dummies Rating: 4 out of 5 stars4/5Know Your Rights: A Survival Guide for Non-Lawyers Rating: 0 out of 5 stars0 ratingsLegal Demand Letters: A+ Guides to Writing, #10 Rating: 4 out of 5 stars4/5Drafting Affidavits and Statements Rating: 4 out of 5 stars4/5The Socratic Method: A Practitioner's Handbook Rating: 4 out of 5 stars4/5Legal Writing in Plain English: A Text with Exercises Rating: 3 out of 5 stars3/5Executor's Guide, The: Settling a Loved One's Estate or Trust Rating: 0 out of 5 stars0 ratingsVerbal Judo, Second Edition: The Gentle Art of Persuasion Rating: 4 out of 5 stars4/5Win Your Case: How to Present, Persuade, and Prevail--Every Place, Every Time Rating: 5 out of 5 stars5/5Family Trusts: A Guide for Beneficiaries, Trustees, Trust Protectors, and Trust Creators Rating: 5 out of 5 stars5/5The LLC and Corporation Start-Up Guide: Your Complete Guide to Launching the Right Business Rating: 5 out of 5 stars5/5The Science Fiction Collection Rating: 0 out of 5 stars0 ratingsTrans: When Ideology Meets Reality Rating: 3 out of 5 stars3/5Jews Don’t Count Rating: 4 out of 5 stars4/5
Reviews for US Corporate Tax System
0 ratings0 reviews
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