Income Tax

Financial Consultant Fails To Avoid Self-Employment Tax With S Corp Structure

Late December’s Fleischer v Commissionerinvolves facts that are common among many small business service-providing taxpayers wishing to minimize self-employment liability by setting up S Corporations and funneling service income to those corporations. Unfortunately for Fleischer, the Tax Court found that he faced a sizable self-employment tax liability as it reallocated income that was reported on the S Corporation’s 1120-S to his Form 1040.

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