Michigan Tax Legal Questions

I am not an expert on international taxation or accounting, so my comment is only directed at US/Michigan law as I know it. The key money is not income. The money is not yours, it is a security deposit and the property of the tenant, possibly to be returned when the lease is over. It only becomes yours under the language of the lease. From an accounting standpoint, since you are holding money that isn't yours, it can be considered a liability, but, if it is, it offset by the asset that you are holding, the money itself. While it is always safest to declare these things, I advise you strongly to verify the accounting rules with a CPA who is familiar with international transactions; you do not want to be wrong about this. Please let me know what you learn further on this.... Read More

You haven't provided enough information to answer the question. The lender has discharged the mortgage, but has it released you from liability to repay the loan? The mortgage is only an instrument to secure your obligation to repay the loan. You would only have discharge of indebtedness income if you were released from the obligation to repay the loan.... Read More

An LLC can chose to be taxed as as partnership/sole proprietorship, a C-corp or an S-corp. the most common tax reasons for choosing one form or the other are: Most small businesses chose partnership/sole proprietorship taxation because it eliminates double taxation and it is very flexible. If a small business earns profits from its employees who aren't owners or from capital assets, S-corp taxation avoids double taxation and social security tax on none personal service income. The downside is S-corps are not flexible, the ownership and profit/loss distribution must follow a strict set of rules. If a small business wants to attract minority shareholders, C-corp taxation is necessary because minority shareholders usually don't want the possibility of getting taxable income without a cash distribution. There is double taxation in C-corp taxation. There are also non-tax reasons for choosing the various forms. The S-corp form requires that voting rights are proportional to ownership, while partnership/sole prop and C-corp forms allow a minority owner to control the business. C-corp income is only reported as personal income if the cash is received by the owner, partnership/sole prop and S-corp income is reported as personal income regardless of whether it's distributed (if the owner pays alimony based on personal income and she/he needs to keep $250,000 a year in the business to buy equipment or for working capital, she/he probably doesn't want to count that $250,000 in the base for determining alimony). If you're situation is more complex than the above or you don't understand the above, then you need to talk to a tax attorney.... Read More

The taxation of a trust distribution is determined by the source of the funds in the trust. 1. All of the trust's taxable income is considered to be distributed first. 2. Distributions in excess of trust income is considered nontaxable principal. So if the trust earned $15,000 in 2015 and distributed $40,000. Your son would have $15,000 in taxable income and $25,000 tax free distribution of principal.... Read More

The easiest way to determine if your tax preparer submitted a fraudulent return is to get a copy of your return from the IRS. Go to irs.gov on the FORMS AND PUBLICATIONS tab fill out a from 4506-T. The IRS will send you the data from your tax return 9this is free, don't ask for a copy of the return - that costs $50.00). Check the return data from the IRS. If the IRS data is wrong, then you've got a fraudulent return problem.... Read More