Do you give money to your corporation, or take money from it, without leaving a detailed audit trail? Be careful! If you operate without the formal paperwork, and without the proper logging of entries, you can expect big trouble from the IRS and the courts.
What can you do to prevent problems? For starters, I strongly suggest you read my latest article titled Tax Tips: Don’t Use Your Corporation as Your Personal Piggy Bank.
Three ways our fact-filled article can help you:
- You’ll learn the huge implications of the Rowell case. Think of your corporation as a third-party person. If you loaned money to that “person,” what would you expect in return? That’s a question that John D. and Kathleen K. Rowell failed to answer successfully in their dealings with their separately owned corporations, and it caused them big trouble and expense. Get the full story when you read the full article.
- We’ll explain why you should avoid “constructive distributions.” Courts generally treat corporate funds diverted to personal use by a controlling shareholder as constructive distributions to that shareholder for tax purposes. Ouch! Find out more when you read the full article.
- You’ll learn steps you should take now. As the Rowells found out, you should never count on sympathy from the court just because you are the owner of the corporation. Instead, document your loans and advances and you’ll stay out of hot water. We’ve got more information waiting for you when you read the full article.