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Small Business Tax Guide #377426

Course Overview

Credit

Amount

CPA

CFP^®

7.5

EA / OTRP

Course Author: Steven M. Bragg, CPA Field of Study (CPA): Taxes Field of Study (CFP): Tax Planning Field of Study (EA/OTRP): Federal Tax Law

Course Description

Course publication/revision date: This course was updated on 4/9/26.

The owner of a small business who has a reasonable knowledge of tax issues can save a substantial amount of money. The Small Business Tax Guide keeps you informed of the tax rules, so that you can take advantage of what the law allows. To this end, the Guide covers such matters as vehicle expense deductions, accelerated depreciation, payroll tax requirements, the deductibility of fringe benefits, the home office deduction, tax considerations for a family business, and much more.

Table of Contents

Chapter 1 - Tax Essentials1

Introduction	1
The Sources of Tax Law	1
Statutory Law: Internal Revenue Code	1
Statutory Law: Treaties	2
Administrative Law: Treasury Regulations	2
Administrative Law: Revenue Rulings	3
Administrative Law: Revenue Procedures	4
Administrative Law: Private Letter Rulings	4
Administrative Law: Technical Advice Memorandums	4
Administrative Law: Notices	4
Administrative Law: Announcements	5
Tax Commentary	5
Judicial Interpretations	6
The Internal Revenue Service	6
Types of Taxes	7
The Marginal Tax Rate	7
The Nature of Income	8
Deductible Business Expenses	9
Timing of Business Expense Deductions	9
Common Business Expense Deductions	10
Absolutely Not Deductible Business Expenses	14
Vehicle Expense Deductions	14
The Standard Mileage Method	15
The Actual Expense Method	15
Commuting Costs	16
Tax Credits	16
Summary	17
Review Questions	18

Chapter 2 - Long-Term Business Assets19

Introduction	19
The Nature of Long-Term Business Assets	19
Immediate Depreciation Methods	19
De Minimis Safe Harbor	20
Bonus Depreciation	20
Section 179 Expensing	22
The Recapture Rule	23
Regular Depreciation	24
Straight-Line Depreciation	25
Accelerated Depreciation	26
First-Year Depreciation Rules	27
Depreciation Reporting	28
Inventory Deductions	28
Tax Basis of Assets	29
Tax Advantages of Leasing Assets	30
Summary	30
Review Questions	31

Chapter 3 - Business Losses32

Introduction	32
Loss Recognition by Owners	32
Loss Recognition by Incorporated Businesses	33
Summary	34
Review Questions	35

Chapter 4 - Payroll Issues36

Introduction	36
Is Someone an Employee or a Contractor?	36
Employee Withholding Liability	37
The Independent Contractor Designation	37
People in Business for Themselves	39
Family Employees	39
Payroll Tax Withholdings	40
Social Security Tax	42
Medicare Tax	43
Wage Bracket Method	43
Percentage Method	45
Tax Deductions for the Self-Employed Person	46
Tax Remittances	47
Types of Tax Deposit Schedules	47
Monthly Deposit Schedule	48
Semiweekly Deposit Schedule	48
$100,000 Next-Day Deposit Rule	49
Remittance Method	50
The Form 941 Quarterly Federal Tax Return	50
Federal Tax Deposit Penalties	55
Federal Unemployment Taxes	56
FUTA Tax Calculation	57
FUTA Tax Deposits	57
Summary	61
Review Questions	62

Chapter 5 - Fringe Benefits63

Introduction	63
Adoption Assistance	63
Athletic Facilities	63
Cell Phones Provided by Employer	64
De Minimis Benefits	64
Disability Insurance	64
Educational Assistance	65
Employee Discounts	66
Flexible Spending Accounts	66
Health Savings Account	70
Life Insurance	71
Lodging on Business Premises	72
Meals	73
Medical Insurance	74
No-Additional-Cost Services	75
Pension Plans	77
Defined Contribution Plan	77
Defined Benefit Plan	78
Personal Retirement Account	78
Retirement Planning Services	79
Stock Options	79
Transportation Benefits	81
Working Condition Benefits	81
Vehicles	82
Education	83
Outplacement Services	83
How to Value Benefits	83
Cents per Mile	83
Commuting	84
Lease Value	85
Unsafe Conditions Commuting	87
Rules for Withholding, Depositing, and Reporting Benefits	87
Taxability of Benefits	88
Summary	89
Review Questions	90

Chapter 6 - Types of Business Entities91

Introduction	91
Sole Proprietorship	91
Advantages and Disadvantages	93
General Partnership	93
Family Partnerships	94
The Partnership Agreement	94
Partnership Elections	95
Original Basis and Adjusted Basis	95
Inside Basis vs. Outside Basis	95
Partnership Taxation	96
Partnership Tax Year	97
Guaranteed Payments	97
Contributed Services	97
Property Contributions	97
Related-Party Transactions	97
Sale or Exchange of Partnership Interests	98
Partnership Distributions	98
Partnership Liquidations	98
Partnership Termination	98
Advantages and Disadvantages	99
Limited Partnership	99
Advantages and Disadvantages	100
C Corporation	100
Personal Service Corporations	100
Start-Up Expenses	101
Organizational Expenses	101
Inventory Treatment	102
Capital Gains and Losses	102
Dividends Received Deduction	102
Charitable Contributions	103
Accumulated Earnings Tax	103
Corporation Termination	103
Tax Return	103
Advantages and Disadvantages	103
Limited Liability Company	104
Advantages and Disadvantages	105
S Corporation	105
Requirements to Form an S Corporation	106
Payroll Tax Reduction	106
Shareholder Basis	107
Income Distributions	108
Property Distributions	108
The Sale of S Corporation Stock	108
Termination of S Corporation Status	108
S Corporation Liquidation	109
The Annual S Corporation Tax Return	110
Advantages and Disadvantages	110
Business Type Comparison	112
Summary	114
Review Questions	115

Chapter 7 - Tax Considerations for a Family Business116

Introduction	116
The Legal Structure	116
Family Business Tax Issues	116
Summary	118
Review Questions	119

Chapter 8 - The Home Office Deduction120

Introduction	120
Definition of a Home	120
Qualifying for a Deduction	120
Exclusive Use Test	121
Regular Use Test	122
Trade or Business Use Test	122
Principal Place of Business Test	122
Additional Qualification Scenarios	125
Calculating the Deduction	125
Deducting Actual Expenses	125
Deducting Using the Simplified Method	131
Deduction for a Daycare Facility	135
Sale or Exchange of the Home	137
Worksheets to Derive the Home Office Deduction	137
How to Take the Home Office Deduction	139
Recordkeeping Recommendations	141
Summary	141
Review Questions	142

Chapter 9 – Merger and Acquisition Tax Issues143

Introduction	143
Tax Issues in an Acquisition	143
Tax Issues for the Seller	143
Tax Issues for the Acquirer	144
Issues with Stock Purchases	144
General IRS Requirements to Avoid Gain Recognition	145
The Type "A" Acquisition	145
The Type "B" Acquisition	146
The Type "C" Acquisition	146
The Type "D" Acquisition	147
Triangular Mergers	147
The Triangular Merger	148
The Reverse Triangular Merger	148
The Asset Acquisition	148
Summary	149

Chapter 10 - Problems with the IRS152

Introduction	152
IRS Audits	152
Appealing an Audit Finding	153
Taking Your Case to Court	153
The Need for Recordkeeping	154
The Need for Tax Advice	155
Actions to Take	155
Tax Collector Actions	156
The Separation Between Personal and Business Assets	157
Dealing with Large Tax Bills	158
The Taxpayer Bill of Rights	158
Summary	159
Review Questions	160

Answers to Chapter Questions161

Glossary171

Index174

Course Details

Course Details, Learning Objectives, Table of Contents

Course Details

Author: Steven M. Bragg, CPA

Steven Bragg, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a Bachelor’s degree in Economics from the University of Maine. He has been a two-time president of the Colorado Mountain Club, and is an avid alpine skier, mountain biker, and certified master diver. Mr. Bragg resides in Centennial, Colorado. He has written more than 300 books and courses, including New Controller Guidebook, GAAP Guidebook, and Payroll Management.

Course Exam Questions (online): 50 (multiple-choice)

Program Delivery Method: NASBA QAS Self-Study

Available Formats of Course Text: Downloadable PDF, Printed/Mailed

Course Level, Prerequisites, and Advance Preparation Requirements

License	Course Level	Prerequisites	Advance Preparation Requirements
CPA	Overview	None	None

* This program is appropriate for professionals at all organizational levels.

Sponsor ID Numbers

National Registry of CPE Sponsors I.D.: 107615

State CPA Board Sponsor ID Numbers (where applicable)

Florida Division of Certified Public Accounting: 0004761

Hawaii Board of Public Accountancy: 14003

New York State Board for Public Accountancy: 002146

Ohio Accountancy Board: CPE .51 PSR

Pennsylvania State Board of Accountancy: PX178025

Texas State Board of Public Accountancy: 009349

Learning Objectives

As a result of studying the course material, you should be able to meet the objectives listed below:

Identify the types of laws and how they are created.
Specify the characteristics of the marginal tax rate.
Describe how the constructive receipt concept works.
Identify what constitutes a capital expense.
Specify how to deal with start-up and organizational costs.
Identify which business expenses can be immediately deducted.
Recall the characteristics of tangible and intangible assets.
Specify the various types of listed property.
Describe the rules pertaining to Section 179 expensing.
Specify the characteristics of depreciable assets.
Specify the rules used to control the amount of net operating losses recognized.
Specify the characteristics of contractors and employees.
Recall how the Form W-4 is used.
Recall the payroll tax requirements for a self-employed person.
Specify the methods used to calculate payroll for employees.
Identify the deposit schedules used to send payroll taxes to the government.
Recall the circumstances under which the Form 941 must be filed.
Recall the calculation method for the federal unemployment tax.
Specify the tax implications of the various employee benefit types.
Identify the factors that indicate whether an operation is a hobby activity.
Recall the advantages and disadvantages of the various business entity types.
Specify the tax issues pertaining to a partnership.
Identify the types of entities that could be classified as a personal services corporation.
Recall why the dividends received deduction is used.
Specify how an S corporation can lose its status.
Identify the tax issues related to a family-owned business.
Recall the tests to see if the home office deduction can be used.
Specify the methods used to determine the amount of the home office deduction.
Identify the characteristics of the various types of acquisitions.
Recall how appraisal rights are to be used in an acquisition.
Specify the outcome of an asset acquisition.
Identify the process for appealing an adverse examination report.
Recall the contents of the Taxpayer Bill of Rights.