What is a constructive dividend?
A constructive dividend is a payment, allowance, loan or other form of financial benefit from a corporation to a shareholder that is not intended to be a dividend payment but that ends up being classified by the IRS as a dividend. Examples of constructive dividends include excess salaries paid to shareholder employees, sale of assets below FMV, excessive rents and royalties, loans to shareholders that does not require interest payments.
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What are the rules for carrying forward net operating losses?
Business losses may be deducted against other income sources; however, they will be subject to limitations. Noncorporate taxpayers may be subject to excess business loss limitations. The at-risk limits and the passive activity limits are applied before calculating the amount of any excess business loss. An excess business loss is the amount by which the […]
How to estimate quarterly required tax payments?
Estimated tax payments will be required to taxpayers if they have reached certain levels of adjusted gross income. In order to properly plan for your tax liability, the taxpayer should be aware of the appropriate estimated tax payments that will be due the IRS on a quarterly basis. If the taxpayer fails to make estimated […]
How to decide if the gain or loss is part of continuing operations or it is non-operating?
Under U.S. GAAP, the financial statements classify income between income from continuing operations and non-operating income. There is a level of subjectivity that is involved in determining whether the gain or loss should be considered part of continuing operations or it should be part of non-operating. The visual below provides some key phrases or buzzwords […]