Tax Tips

TAX TIPS

Our Tax Tips are intended to give general tax information. Tax laws, rulings, and procedures can often be complex with different interpretations depending upon the facts of each individual circumstance. You are cautioned that our Tax Tips are not to be taken as tax advice for your particular situation. You are urged to seek competent tax advice for your particular situation. Please call one of the telephone numbers at the top of this page if you are currently in need of a tax accountant and would like to schedule a tax consultation with Carl Bosch. Click on the following links for information on selected topics.

To create an "S" corporation a valid corporation must be formed according to the procedures prescribed in a particular state. Once the corporation has been formed an I.R.S. Form 2553 must be completed and filed in a timely manner. All shareholders must sign the form giving their consent for the corporation to be treated as an "S" corporation for federal income tax purposes.

Shareholders of corporations that live in one of the nine community property states (Arizona is a community property state) must also have their spouse's consent as evidenced by the spouse's signature on Form 2553. Failure to get both spouses signatures on the Form 2553 will result in an invalid election. Unfortunately, many corporations have not found out that their election to be treated as an "S" corporation is invalid until after many years have passed. This situation can cause serious tax problems for the corporation and its shareholders.

I.R.S. Revenue Procedure 2004-35 will grant automatic relief to husbands and wives in community property states who filed improper "S" corporation elections. Certain conditions must be met for this automatic relief to be granted by the I.R.S.

We urge you to call for a personal appointment with Carl Bosch using one of the telephone numbers at the top of this page or email us by clicking here. Remember, all business owners are offered a FREE initial consultation.

Instead of deducting actual vehicle operating costs a taxpayer may choose to use the I.R.S. approved standard mileage rates. Rates are expressed in cents per mile. Rates for the current and several past years are shown below:

	2007	2006	2005 Sep-Dec	2005 Jan-Aug	2004	2003	2002
Business	48.5	44.5	48.5	40.5	37.5	36.0	36.5
Charitable	14.0	14.0	14.0	14.0	14.0	14.0	14.0
Medical & Moving	20.0	18.0	22.0	15.0	14.0	12.0	13.0

Like many tax issues this one also has different applications depending upon your circumstances. The best way to determine if you can use the standard mileage rates and if that is your best choice is to schedule a consultation with Carl Bosch.

TAX TIPS

I.R.S. RELIEF FOR INVALID "S" CORPORATION ELECTION

I.R.S. APPROVED STANDARD MILEAGE RATES