Are near any differences at the Federal smooth for the following....?
Question:Is there a difference within taxation, at the Federal level, for self-employment charge, between a single owner LLC and a single owner S corporation? Are there any charge differences at the Federal level?Answers:
If you are actively unavailable as a shareholder-employee of an S corporation, you don't pay self-employment export tax. The corporation pays you a salary, which is subject to social surety tax. If your remuneration is equal to the profit of the business, it works out to about like peas in a pod amount (combining the tax salaried by the company and the shareholder), but if you don't pay adjectives the profit out as salary, you will foot less total import tax using an S corporation.
Do the richest top 10% of taxpayers really take-home pay 90% of the taxes?
Question:I have hear this rough statistc before. Is it true and if so where on earth can I find information confirming its veracity?Answers:
Top 10% pay 65.84%.
Top 50% income 96.54%.
Perhaps your source confused these #'s.
Other Answers:
You probably heard it on FOX. Even CNN wouldn't recount a lie that big, and they've told some big ones.
Yes, it's base on the amount they pay compared to the total income duty collected. I would e-mail the IRS, just ask. I thought the richest 10% didn't retribution ANY tax. They own tax shelters, write-offs, and charge lawyers to protect them. That's why they are so rich.
That statistic doesn't appear to be true. I checked out a weaker claim, that the taxpayers beside the top 10% of adjusted gross income remunerated 90% of the taxes. Using figures from http://www.irs.gov/pub/irs-soi/03inrate.pdf , I did a fast and dirty calculation on the percentage of rates paid by the top 12%. It be about 60%, no problem nowhere near 90%.
NO, RICH PEOPLE NEVER PAY TAXES. TAXES ARE FOR THE MIDDLE CLASS ONLY.Absolutlely that is to say the general number...but it is probably more resembling the richest 5% pay 90% of the taxes...
Think roughly how much money the gov't needs to run...you reason they are running on the taxes someone making 30K a year generates? No, they run on Gates $, and Immelt$, and A-Rod $$$ no that's not true. Go to www.bls.gov
How much Income Tax I own to settle up on my Income.?
Question:(a) Business Income Rs.50,000/-(b) Short Term Capital Gains on shares sold at NSE (paying transaction tax) Rs.25,000/-
(c) Long term property net gain after indexation estimate is Rs. 50,000/- (by way of selling house plot)
(d) I am mannish 45 years old. Resident Indian.
Please agree to me know how much tax I own to pay. Rs.15,000 ? or Rs.12,500. or Rs.10,000/- or Rs.5,000 or Rs.2,500/-. Let me know how to work out.
Answers:
If I am right, you have to earnings Rs.2500/-
Rs.100000 basic exemption smaller amount business income Rs.50,000/-. So Rs.50,000 short in deep exemption.
Your long term gain are taxable @20% on Rs.50,000/-. But this can be adjusted surrounded by short fall Rs.50,000/-. So no stability in LTCG.
The entire one lakh fundamental exemption is over (50,000 business & 50,000 LTCG). The short term income gains on shares (111A) is taxable @10% flat. And it amounts to Rs.2500/-.
You enjoy to pay Rs.2,500 plus +2% schooling cess. No interest U/s 234c or 234 b is applicable to you as the tax due is smaller quantity than Rs.5,000/-
For your benifit, I have first in tune 20% tax LTCG amount Rs.50,000/- from the short nose-dive Rs.50,000/-. If the STCG taxable to 10% is adjusted first and the match with LTCG 20% Taxable, consequently you have to wage Rs.5000/- tax + int u/s 234c & 234b.
Other Answers:
Buy toll cut.
Business Income 50,000
Capital Gain
Short Term 25,000
Long Term 50,000
---------
Gross Total Income 1,25,000
Less Deduction Nil
-----------
Total Income 1,25,000
------------
Tax First 1,00,000 (including Long term wealth gain) Nil
On Balance 25000 @10% 2,500
Add Education Cess@ 2% 50
--------
Tax Payable 2550
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how plentiful years can u skulk to report your taxes? How much money do you hold to form to not enjoy to wallet them?
Question:ex. if i only made $3,000 do i hold to file?if im seventeen and my brother claims me, can i still record?
Answers:
the assumption everyone is making is that the $3000 is wages. If it non-employee compensation you have to directory if you make $400 to foot social security charge on your earnings.
You have need of to file timely every year to avoid a potential cost. There is a three year statute of limitations for filing for a return. If you are claimed by someone else you cannot take a personal exemption.
Other Answers:
At 3000$ you don't hold nothing to clear, but you still have to compress the papers up as soon as you work: every year.
You have to report every year that you have an income.
If you made solely 3,000 dollars, you'll probably get your duty money back, except Social Security.
You own 3 years to file your taxes (no cost because they owe you). If your brother claims you, you may not also file. The devout news, at your stratum, you will get some money fund. A 1040 EZ form is really easy to riddle out. Go to www.irs.gov if you have more quesitons.
You don't hold to file at $3,000 but in attendance maybe money owed to you from the gov'mt. don't consent to them have your money that you enjoy worked hard at.
Yes you can still record. I recommend you file sooner a bit than later though to find your refund. The standard assumption this year is $5150, that means you can get up to that amount without have to file. But if you enjoy had any withholdings from your paychecks, you will want to wallet. You must file your returns by April 15. You will be due a settlement in the amount of your withholdings. On the state plane it might be different. For example, michigan's presumption for dependants is only 1500, contained by which case the remaining amount over 1500 would be taxable. I don't know which state, you're surrounded by so I can't help you within. Same with city and local taxes. As far as FICA taxes, you can kiss those goodbye cuz you'll never see them again! Hope this help!
Source(s):
college student with accounting trunk
Can inheritance money put me within a complex due bracket?
Question:Answers:
No (outside of additional income it will generate). Inheritence and grant taxes are separate from income tax.
Other Answers:
you dont rate tax on that money; but when you invest it you will hold income that will be taxable. Dont worry, its other good to enjoy more,
That depends on a) where you live b) what the export tax laws are and c) what type of inheritance it is. Seek an *attorney* or *accountant* not family who have opinion on RunEye.coms.
Totally agree with CEPRN comment. Don't whip RunEye.coms for granted in that type of cross-question. Consult an accountant. A small question close to that, you will get the info for free.
Inheritances are not taxable, you don't even hold to report the money you got. However, nearby might be an estate tax or disappearance tax, that they will lug off the inheritance.
what is the percentage you repay excise on a product surrounded by your state?
Question:Answers:
6% in michigan
Other Answers:
6% surrounded by florida
georgia 7%
7.75% orange county california
7.75% within Arlington,TX.
Why are the most productive relations tax the most?
Question:And the least productive general public taxed the smallest (or not at all)?Does this make any sense to anybody but a communist?
Answers:
So they will be forced to save working and being productive as you would expect while less productive nation flood the world with their also-essentially worthless brood. LIBERALS love this, of course. Except the rich ones resembling Teddy Kennedy, of course.
Other Answers:
Only the poor money taxes!
signed,.
the biatch in the 1980s that go to prison.
It's called "equitable distribution of success."
You can't bleed dry someone who has nought - whether by circumstances or by choice. So they go after those who take home the most -- e.g. the most productive people.
Not reasonable. But who said taxes are fair? That's why you hold tax advisors to abet you circumvent the system.
I assume you're referring to the middle class forthe first, and the rich forthe second.
You are correct, the rich should be paying their fair share, up to 50 percent of their income, or more, every year, and own absolutely no deduction.
Of course it makes sense!
You can't collect taxes from associates who have no money. That's newly simple logic. The more you have afterwards the more tax you retribution.
However it has nil to do with productivity. A 19-year-old boy who inherits 100 million dollars and lives on the interest income (about 5 million per year) would hold to pay over a million a year contained by taxes. But let's not make the mistake of thinking that he is "productive"... LOL!
Well final week i did a lot of over time and i could not believe that i enjoy payed lb175 in tariff and National Insurance it's scandalous,I expect that over time should be taxed at a lower rate,after adjectives its people who work over time that hang on to Industry and our countries finance going. Oh come on, do you consider that Bill Gates really works that hard for his money? Before mortal so judgemental on who is or isn't being productive, try doing the information on what people really spawn and take home from respectively job. Im sure that taxes really execute people close to Peyton Manning. In my opinion they are not tax enough. Thats why the rich keep getting richer, and the poor stay where they are at, and the middle class is disappearing. But, I can of late bet that a question approaching that could only come from a Republican.
WHY WOULD A RICH PERSON PAY TAXES IN THE FIRST PLACE?
IRS = THE MORE YOU MAKE THE MORE THEY TAKE.
http://familyguardian.tax-tactics.com/Subjects/Freedom/Articles/PhilosophyOfLiberty-english.swf
Source(s):
CASE # 03-CR-20111
CASE # CR-1-93-91
CASE # 06-CR-10019
Only a Republican would equate productivity and income. Even conservative economists will accept that rich people who afternoon trade aren't producing anything for the economy, even if they brand a lot of money at it. People buying stock and collecting dividends are providing a service for the discount because they fund the capital market but that's not the same compassionate of productivity as providing health consideration or food. At the other extreme exploited workers can be extremely productive but their circumstances prevent them from converting their productivity into much income.
You also have a convenient blind spot for Social Security and Medicare taxes. No low-wage or middle-class workers (the ones you dismiss as "unproductive") can escape these taxes, which are 7.65% bad the top unless they operate in the underground reduction.
Finally, your whiny sense of entitlement and being picked on (which Republicans other condemn in non-Republicans) prevents you from seeing or admit that richer people seize more valuable services from the command. At the most basic horizontal, if you have abundantly of property, government protecting you from invasion and crime is worth more than if you own little property. Rich people also benefit from the amenities of system. There aren't a lot of poor general public visiting national parks, for example. And I doubt here is a city or county in the country where on earth public schools for the children of the poor are better than public school for the children of the rich.
So quit whining about how excessive life is and welcome whatever advantages you hold. You'll save yourself from an sore and live a more fulfilled life.
Source(s):
I be brought up to think senate is theft, etc. Then I grew up. It go along with the means to pay concept. Congress have made certain exemptions and deduction to go along near this concept. The more money you have, the more money you are competent to pay surrounded by taxes. It would not be fair to encroach a flat tax on everybody, because it would disadvantage the poor to lower middle class. A progressive import tax is fairer in the sense that lower income individuals do not grasp taxes as much as upper income individuals. It gives the poor more to live on.
Are the dividends from cos income tariff free within shareholders hand?
Question:During the the current finacial yearAnswers:
The dividends received to the share holders on shares are tax free within the hands of share holders. (Exempt u/s 10(38) )
Other Answers:
I give attention to your question is, "Are the dividends from companies excise free when paid to shareholders contained by that company?" Companies pay due on their profits or earnings. A portion of those yield are paid out to the shareholders who are, for adjectives intents and purposes, owners in the companies they own stock contained by. The dividends paid, though, are clearly taxable as unearned income for the shareholder and the company will issue a Form 1099 at the end of the year disclosing what be paid; one copy to the shareholder and another to the IRS. In effect, the money the company earn is taxed twice; the company pays on income and the shareholder pays on the portion of what's left after the company's export tax is paid that's distributed to the shareholder as dividends.
Dividends from a domestic C corporation are tax at 15%
Dividends from a foreign corporation are taxed at your dreary income tax rate.
dividends from a S corp are excise free DEEMED DIVIDEND
The concept of Deemed Dividend under the Income-tax Act, 1961(the Act) is not tentative. However, time and again many closely held company assessees and their controlling shareholders, to their surprise and dismay, realise especially late the stress of this powerful taxing tool in the hand of the Assessing Officer.
The concept of Deemed Dividend is embedded within Section 2(22)(e) of the Income-tax Act, 1961 and was also deep-rooted in paragraph 2(6A)(e) of the Indian Income-tax Act, 1922. In nutshell, the concept envisages taxing certain payments made by closely held companies by approach of loans or advances to dependable shareholders of the company or to the concerns/companies in which they enjoy substantial interest. Whenever any payment is made by method of loan or advance, the receiver of the loan or advance will be liable to be tax on this amount as a dividend, to the extent to which the company has accumulate profits, under the deem provisions of section 2(22)(e) although such loan or credit may have be given for genuine business purposes and even if the paying company may enjoy received back the loan amount. Thus the piece deems undisputed payments as dividend income which is not income under unexciting commercial parlance. Therefore,the name Deemed dividend.
The concept of deem certain payments or loans or advance to substantial shareholders as income was introduced beside the object of curbing due evasion. Upto 31-5-1997 dividend was tax in the hand of the recipient of the dividend. However copious closely held companies never declared any dividend and accumulated profits within the company itself. Since no dividend was declared like peas in a pod could not be taxed. However the companies did donate loans or advances to substantial shareholders or to their concerns/companies who presumably enjoy these funds but were not liable to earnings any tax on alike as the amounts were loans or advance liable to be returned. These amounts of loans or advances are sought to be tax as dividend by section 2(22)(e) of the Act by style of a deeming fiction..
Taxation of dividend underneath Income-tax Act, 1961 has undergone substantial change in recent times. Effective from 1-6-1997 the endeavour of taxation of dividend has be modified and is different from the old conspire . The essence of the old development was that the receiver of the dividend income was liable to repay the income-tax on the same, subject to secure exemptions. The new organization essentially makes the dividend tax-free (section 10(33) of the Act) surrounded by the hands of the receiver (except cases covered under branch 2(22(e)of the Act) and the dividend paying company has be made liable to pay export tax on the amount of dividend declared , distributed or paid by it (Section 115-O of the Act). This charge is over and above the corporate income-tax which a company would normally payment. However there is no coppers in the conspire of taxation of Deemed Dividend contained in the partition 2(22) (e) of the Act and such dividends are governed by the hoary scheme of taxation of dividend i.e. tariff on deemed dividend is salaried by the recipient and the paying company does not enjoy to pay dividend import tax but will be liable to deduct export tax at source from such loans or advances/deemed dividend and pay indistinguishable to the Government.
Section 2 (22) of Income-tax Act, 1961 defines "dividend" and is the most important section for taxation of Dividend. Unless a compensation or distribution is covered by this definition, it can not be taxed as "dividend". Once an amount is covered as dividend it will be also considered as income as Section 2(24)(ii) of the Act includes 'dividend' in the definition of 'Income'.
Section 2(22) has 5 clauses (a), (b), (c), (d) and (e) which specify many types of distributions and payments as dividend. Clauses (a). (b), (c) and (d) mainly cover cases of distributions which mean release of assets or create liabilities. While clause (e) covers cases of payments by mode of loans or advances and which is the clause in principal dealing with deem dividend as it is commonly understood and have been deal with within this article. In Kantilal Manilal v.CIT [1961] 41 ITR 275(SC) the Supreme court held that
Section 2(22) deals next to various types of cases and creates a fiction by which constant receipts or parts thereof are treated as dividend for the purpose of levy of Income-tax .
In CIT v. Martin Burn Ltd.,(1982)136 ITR 805(cal) the Calcutta Highcourt held that Under section 2(22) constant amounts which are actually not distributed are also brought inwardly the net of dividends. Therefore, that slot must receive a strict interpretation.
Section 2(22)(e) has be held to be constitutionally valid in Navnitlal C. Javeri v. K.K.Sen, AAC [1965]56 ITR 198 (SC).
Section 2(22) starts near the words " Dividend includes ……….."Thus the definition of dividend is inclusive and not exhaustive.
Section 2(22)(e) is reproduced below:-
"any payment by a company, not human being a company in which the public are substantially interested, of any sum (whether as representing a factor of the assets of the company or otherwise) [made after the 31st day of May, 1987, by instrument of advance or loan to a shareholder, one a person who is the beneficial owner of shares (not one shares entitled to a fixed rate of dividend whether with or short a right to participate within profits) holding not less than ten percent of the voting power, or to any concern contained by which such shareholder is a member or a partner and surrounded by which he has a substantial interest (hereafter surrounded by this clause referred to as said concern)] or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company within either satchel possesses accumulated profits;"
Let us presently analyse the clause in detail.
Companies contained by which Public are not substantially interested.
As it is clear, clause (e) applies only to companies contained by which public are not substantially interested i.e. to companies which are commonly known as closely held companies. Section 2(18) of the Act define a "Company in which public are substantially interested". Section 2(22)(e) does not apply to programmed companies, government companies, clause 25 companies, companies having no share wherewithal and declared by Board, mutual benefit finance companies declared by Central Government to be a Nidhi or Mutual Benefit society, companies contained by which one or more co-operative societies hold at least 50% voting shares throughout the year, etc.
Payment of any Sum.
Clauses (a),(b),(c) and (d) of slot 2(22) use the word "distribution" while clause (e) uses the word "payment" which means amount may enjoy been disbursed to one or two or more shareholders and not necessarily be distributed to adjectives the shareholders.
Does it mean simply payment by cash/cheque or will it cover loan surrounded by kind also? Whether a commodities loan will be covered? In M.D. Jindal v. CIT [1986] 28 Taxman 509 (Cal.) it was held that Section 2(22)(e) is applicable even if a loan is given contained by kind. Thus a loan of products or other assets will also be covered by the clause and it is not necessary that the loan or credit must be given in currency only.
Shareholder
The shareholder may be even a corporate entity. Loan given by a subsidiary company to a holding company wll be covered by clause (e).
Loan or mortgage
Section 269SS of IT Act specifies that ' for the purpose of this section,"loan or deposit" technique 'loan or deposit of money'. A loan creates a relationship of a lender and a borrower.
Can a bonafide loan given to a major shareholder for a short duration be covered by this partition? In CIT v. Bhagwat Tewari [1979] 105 ITR 62 (Cal) it was held that a bonafide loan for a short duration is treated as dividend if adjectives the conditions of section 2(22)(e) are happy.
What is the position when a shareholder has a current commentary with the company? When a current vindication shows a debit balance of the shareholder within company's books, it will take qualities of a loan. Therefore, position after every entry will have to be ascertained.
In instruct to attract the provisions of section 2(22)(e), the vital consideration is that there should be loan/advance by a company to its shareholder. Every salary by a company to its shareholder may not be loan/advance. To be treated as loan every amount paid must trademark the company a creditor of the shareholder for that amount. If, however, at the time when payment is made, the company is already the debtor of the shareholder, the clearing would be merely a repayment by the company towards its already existing debt. It would be a loan by the company only if the recompense exceeds the amount of its already existing debt and that too only to the extent of the excess. If the shareholder have a current account beside the company, the position as regards respectively debit will have to be considered individually, as it may or may not be a loan. In such valise the debit balance of the shareholder near the company at any point of time cannot be taken to represent an advance/loan by the company; nor can the amount at the end of the previous year be alone taken as loan.CIT v. P.K. Badiani[1970] 76 ITR 369 (Bom.).
Whether an overdraft taken by a key shareholder from the company will be covered as deemed dividend? An overdraft taken by a shareholder from the company is treated as loan and taxable as dividend if conditions of booth 2(22)(e) are satisfied—CIT v. K..Srinivasan [1963] 50 ITR 788 (Mad.).
What will be the position when a major shareholder misappropriated some amount from the company? Amount misappropriated by the director cannot be treated as deem dividend in his hand since in such a casing there is no lend or advancing by the company. It cannot be said that within such a case the company have paid anything and unless within is an actual payment by the company as a loan or credit to the assessee, it cannot be treated as dividend under sector 2(22)(e). CIT v. G. Venkataraman [1975] 101 ITR 673 (Mad.)
If a loan is repaid before the closing of the previous year, the section will be attracted? Yes, even if a loan is repaid past the end of the previous year the portion will be attracted. In Tarulata Shyam v. CIT [1977] 108 ITR 345 (SC) the Supreme court held that under cubicle 2(22) the liability to tax attaches to any amount taken as loan by the shareholder from a controlled company to the extent it possesses accumulate profits at the moment the loan is borrowed and it is immaterial whether the loan is repaid formerly the end of the accounting year.
Whether Book debts will be covered by "loans and advances"? Where the assessee-shareholder, have business of his own, was transacting business next to the company and the account of the assessee within the company always showed a debit be a foil for, it was held that the said debit be a foil for would amount to a loan from the company to the assessee. CIT v. Jamnadas Khimji Kothari [1973] ITR 105 (Bom.)
Every sale of products on credit does not amount to a transaction of loan. A loan contracted no doubt creates a debt but in that may be a debt without contracting a loan. Bombay Steam Navigation Company P. Ltd. v. CIT(1965) 56 ITR 52(SC)
Whether Security deposit to a chief shareholder for use of premises will be covered under clause(e)? Genuine financial guarantee deposit without any feature of loan may not be considered as a loan.
Whether loans or advance to relatives of a foremost shareholder will be covered? Loans to relatives of substantial shareholders are not covered as loans or advances to the shareholder. However such loans or advance may be covered as" payment on behalf of or for the individual benefit" of the shareholder.
Clause (ii) to passage 2(22) provides that "dividend" does not include any advance or loan made to a shareholder [or the said concern] by a company contained by the ordinary course of business, where on earth the lending of money is a substantial factor of the business of the company;
If a majority of a company's assets and income are from money-lending business, it will be proper to assume that lending of money is a substantial quantity of the company's business.
In Walchand & co. Ltd. V. CIT,(1975)100 ITR 598(Bom) it was held that the onus to prove these facts lies on the assessee.
Clause (iii) to sector 2(22) provides that "dividend" does not include any dividend paid by a company which is set bad by the company against the whole or any factor of any sum previously paid by it and treated as a dividend inside the meaning of sub-clause (e),to the extent to which it is set sour.
This clause gives some nouns to the assessee by way of avoiding double taxation as okay as brings in some range for Scope for tax-planning. Thus, if a loan is already treated as a dividend it may make sense to aver dividend and adjust the outstanding loan amount against the dividend declared. No tax will be payable by shareholder on such dividend declared.
However, if the loan have been repaid by the shareholder and nil is due by the shareholder against the loan referred in part 2(22)(e), then no set-off would be possible. Also if the sum due by the assessee is on statement of some other payments not covered by section 2(22)(e), next set-off will not be possible.
It appears that liability to pay export tax on distributed profits u/s 115-O can not arise in a baggage where a dividend salaried by a company is set-off by the company as mentioned above, since the amount itself is not to be treated as a dividend . EEEEeee xplanation to section115Q may be referred to for this purpose.
Payment on behalf of or for the individual benefit of
A benefit means some help to a person or something for the moral of a person.
A managing director of a company, whenever he needed money used to ask an member of staff to take a loan from the company and slip away it on to him even without executing any pronote. Can he be said to hold received any benefit? It was held that the loans made by the company to the hand fell in the category of "benefit" to the assessee managing director and be, therefore, assessable as deem dividends in his hands—CIT v. L.Alagusundaram Chettiar [1977] 109 ITR 508 (Mad.).
In one skin, the assessee, having substantial interest within a company X, obtained from company Y two loans of Rs. 75,000 and Rs.2,00,000 on July 30, 1968 and September2, 1968, respectively. The give somebody the third degree for consideration was whether these amounts could be treated as deem dividend in the hand of the assessee under slice 2(22)(e) on the ground that Y had made these loans to the assessee out of loans received by Y from X on one and the same dates.The Court held (in Nandlal Kanoria v. CIT [1980] 122 ITR 405 (Cal.)), that near was no loan given by X to the assessee. However, as the loan of Rs. 75,000 be given by Y to the assessee out of an equal amount received as loan from X on the same date, this amount be a payment by X for the benefit of the assessee and fell inside the mischief of section 2(22)(e). The same could not be said of the loan of Rs. 2,00,000, as on the date of making that loan, Y have received loans not only from X but from another source also and the loan be made out of blended amount.
Of accumulated Profits.
In P. K. Badiani v CIT(1976)105 ITR 642(SC) the Supreme court held that Accumulated profits be determined commercial profits and not assessed income..It does not mean the aggregate of the assessed income arrived at after disallowing disbursements and expenditure within fact incurred..
In Navnitlal C. Jhaveri v. CIT[1971]80 ITR 582(Bom) a cross-question arose that while calculating accumulated profits depreciation as per books should be considered or as per IT Act? The Bombay High court held that while calculating accumulate profits an allowance for depreciation at the rates provided by the Income-tax Act itself has to be made by method of deduction.
This is an big saving grace and assessees can claim substantial assumption for Income-tax depreciation out of accumulated profits. This will also phone call for separate calculation for accumulate profits as per income-tax Act and the same may fluctuate from the accumulated profits as per books of accounts.
As the Accumulated profits hold to be commercial profits, additions made by the ITO due to concealed income can be included in accumulate profits. However, by the same logic, additions made by the Income-tax officer on details of inadmissible expenses or disallowances can not be included in accumulate profits.
Even loan obtained by the assessee-shareholder from a company from out of its Accumulated profits, which are exempt contained by the hands of the company as agricul tural income, is to be treated as deem dividend in the hand of the assessee. S. Kumaraswami v.ITO [1961] 43 ITR 423 (Mad.)
Whether balancing charge u/s 41(2)will form chunk of accumulated profits?.In CIT vs. Urmila Ramesh (1998) 230 ITR 422 the Supreme court held that the amount of matching charge under fragment 41(2) of the Act, did not represent Accumulated profits.
Whether capital gain can be included in Accumulated profits? Presently Capital gain are covered by the expression 'accumulated profits' except capital gain arising before the 1st sunshine of April, 1946, or after the 31st day of March, 1948, and up to that time the 1st day of April, 1956. However, means gains which are not taxable per se can not form division of Accumulated profits.Thus any distribution out of such non-taxable accumulated wealth gains can not be treated to be taxable as deem dividend. See CIT v. Mangesh J. Sanzgiri, (1979) 119 ITR 962(Bom). Thus capital gain on sale of agricultural ground which is outside the purview of definition of "capital asset" as per fragment 2(14) of the Act should not form part of the Accumulated profits.
Whether Revaluation reserves can be included surrounded by Accumulated profits? It appears that revaluation reserves can not be included in Accumulated profits as they are not surrounded by the nature of commercial profits as commonly hidden and represent a mere book entry.
Whether credit to Profit & Loss Account due to write-back of depreciation on account of amend in method of depreciation will form piece of accumulated profits?
There is no official bar to writeback of Depreciation.as per Department of Company Affair's spectacle appearing in Company News and Notes, July 1 1963. However, since write-back of depreciation will be as per book-depreciation, while one requests to calculate Income-tax depreciation as per IT Act for the purpose of working out of Accumulated profits, such writeback will not have any impact on Accumulated profits.
Development Rebate Reserve and Investment Allowance Reserve will form chunk of Accumulated profits.
Provision for tax and provision for dividend can not form chunk of Accumulated profits.CIT v V. Damodaran[1972]85 ITR 59(ker.).This is obvious because respectively of them represent a liability and is not in the personality of profits or reserves.
In determining the Accumulated profits available for the purpose of section 2(22)(e), the amount treated as deem dividend under part 2(22)(e) in olden have to be excluded. CIT v. G. Narasimhan [1979] 118 ITR 60 (Mad)
Example - Rs
a) Accumulated profits 80,000
b) Loan advanced to a key shareholder and treated as dividend 60,000
c) Balance Accumulated profits a)-b) 20,000
d) Loan repaid by shareholder 60,000
e) Shareholder again borrows in like year 70,000
f) Second deemed dividend to the extent of be a foil for Accumulated profits 20,000
Explanation 2 to section 2(22) provides that -- The expression "accumulate profits" in sub-clauses (a), (b), (d) and (e), shall include adjectives profits of the company up to the date of distribution or payment referred to within those sub-clauses, and in sub-clause (c) shall include----------------
Thus it will be imperative for the company to work out its profits and losses upto the date of payment of loan or finance and then add Accumulated profits (or losses).This date may be a date in between the two accounting years. In certainty for every loan to such hareholder/concern the company may have to prepare profit and loss details upto that date.
Whether capitalised or not .
These words which are found in clauses (a) to (d) are not found within clause (e) of section 2(22) and, in consequence, that provides some relief from the mischief of the branch as well as provides some compass for planning .Thus it must be interpreted that to the extent of capitalisation of profits, accumulated profits would exhaust for the purpose of this clause but not for other four clauses of section 2(22). What is capitalisation? It will ordinarily have it in mind conversion of profits or reserves or income into capital as per Company's Articles of Association.
In P.K.Badiani v. CIT (1976)105 ITR 642 (SC) the Supreme court held that mere transferring of an amount from Profit & Loss report to the Development Reserve account or any other Reserve does not amount to capitalisation of profits.
Similarly a verbs to General Reserve will not amount to capitalisation.
The reason for allowing diminution of the accumulated profits to the extent of capitalisation of profits seem to be that to the extent of capitalisation, divisible profits i.e. profits available for distribution of dividend will reduce. A company can not distribute dividends out of capitalised profits i.e. means. Thus if a closely held company wants to administer loan or advance to a shareholder or his concern/company which are covered by this clause, it may first issue bonus shares (and thus capitalise the accumulate profits) and then give up such loan or advance. This is one sure opening of escaping from the clutches of section 2(22)(e). However, it may involve expenses of file fees and stamp-duty on increase of authorised share capital. Also a company may not want to increase its wherewithal due to various other reason.
Quantum of dividend
A question that arises is whether the quantum of deem Dividend assessable in the hand of the assessee will be restricted to his share in the accumulate profits?
In CIT v. Mayur Madhukant Mehta [1972] 85 ITR 230 (Guj.) it was held that here is nothing surrounded by sub-clause (e) of section 2(22) to restrict the deem dividend to that portion of Accumulated profits which corresponds to the assessee’s shareholding in the assets of the company.
If a loan is given by a company to a shareholder who owns 25 percent of share capital, the amount of loan to the extent of entire Accumulated profits (and not to the extent of 25 percent of Accumulated profits) will be treated as dividend. CIT v. Arati Debi [1978] 111 ITR 277 (Cal.).
When a loan is treated as a deem dividend and is repaid by the shareholder will it be added in the "accumulate profits"? Section 2(22)(e) must be so interpreted that once an amount goes out of "accumulate profits" as a loan and the loan is to be deemed as dividend duplicate amount when repaid cannot again be capable of attracting fiction and be deem as dividend.. To avoid the happening of any such eventuality, the "accumulate profits" must be notionally reduced by the amount of all loans which are to be treated as dividends underneath section 2(22)(e) .CIT v. P.K. Badiani. [1970] 76 ITR 369 (Bom.).
Benficial owner of not smaller quantity than 10% of the voting power
It is not the registered shareholder but the beneficial owner of the shares who is covered by the section 2(22)(e). Also the shareholding as on the date of the loan have to be considered. If preference shareholders are entitled to vote due to evasion in expense of dividend or in redemption, their holding will also enjoy to be counted.
Concern in which Substantial interest
Section 2(32) of the Act states that a "personality who has a substantial interest surrounded by the company" in relation to a company, channel a person who is the beneficial owner of shares, not human being shares entitled to a fixed rate of dividend whether with or in need a right to participate within profits, carrying not less than twenty percent of the voting power."
As per Explanation 3(b) to Section 2(22) a character shall be deemed to enjoy a substantial interest in a concern, save for a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty percent of the income of such concern.
It may be, consequently, worthwhile to first rearrange (by verbs gift or within any other manner) the shareholding pattern or profit sharing ratio to bring it below 20% and afterwards grant a loan or credit to a concern or a company. However, other aspects of rearrangement like wherewithal gain tax, etc. will own to be kept in mind.
As per Explanation 3(a) to slice 2(22 )"concern" means a Hindu undivided familial, or a firm or an association of persons or a body of individuals or a company.
Other Points
Whether interest salaried on loan which is treated as deem dividend will be admissible as a deduction beneath section 57(iii)? Section 57(iii) allows a conjecture for any expenditure (not being assets expenditure) laid out or expended wholly and exclusively for the purpose of making or earn such income. In Nandlal Kanoria v. CIT [1980] 122 ITR 405(Cal.) the Calcutta High court held that interest paid hired treated as deemed dividend beneath section 2(22)(e) is not admissible as a conjecture under slice 57(iii
Whether deduction u/s 80-L or 80-M is available for deem dividend? Deemed dividends, like common dividends, are eligible for deductions beneath section 80L or bit 80M . However, from the assessment year 1998-99, deductions lower than sections 80L and 80M are not available within view of amendment/omission of the relevant passage.
Can the IRS help yourself to or put a lien on our primary home?
Question:We have serious IRS problems and more to come. Can the IRS lift our home we are remodeling? Can we put it in our name and it still be safe?Answers:
Yes, IRS can put a lien on both material and personal property. Your best bet is to file adjectives delinquent returns ASAP and make sure you are surrounded by current tax compliance. Contact IRS to fashion payment arrangements or hire a well brought-up CPA, Enrolled Agent, or Tax Attorney to help you. It is unlikely IRS would annex the house if it is your primary home. You may want to consider a home equity loan to pay them bad.
Other Answers:
get a legal representative quit
yes, the IRS can put a lien on your home, if you have serious due problems contact a tax professional! The IRS can and will put alien on your home. Usually you hold to owe more than 25 grand and be at lowest a year behind.
As far as taking your home it is fairly rare and the IRS tries to exhaust adjectives other avenues of collections prior to taking this step.
Get a CPA to help you near this matter. If you are collections gain a professional.
Could you clarify your question? It appears from your interrogate that you don't own the house ("Can we put it in our name "), but if you don't own it, why are you remodeling it? If you're thinking about purchasing a house, any IRS lien will just attach to your equity in the house. I'm assuming you would be making solitary a small down payment, because if you have the money for a large one, you wouldn't enjoy tax problems. If your equity is low, the IRS wouldn't walk to the trouble of foreclosing its lien, which would require court approval. That is especially true if you are working with them to resolve the business.
BC, CANADA - Taxes next to two dependents?
Question:I live in BC, Canada. For the closing year I have be living with my girlfriend and her two kids ( her previous relationship) and I am wondering, since we are adjectives law and we share expenses when it comes to the kids and our latest family, CAN I FILE FOR ANY TAX BENEFITS?Answers:
You didn't mention whether or not your girlfriend have a job, and if she does, if she make much money (no, I am not trying to be nosey).
If she does not make much money, later you should be able to claim her as a spousal presumption at least. Since her children are not yours, and I envisage that you have not adopt them, then I am unsure whether or not you can spawn any claim for them.
Drop by an H&R Block office during non-tax season and ask them in that. When they are not busy, they are perfectly pleased to help you out near any simple questions at no charge.
looking for HUD information on mileage amounts?
Question:Answers:
not sure what you mean nearly HUD but if you're looking for information on the amount you can deduct for mileage past its sell-by date taxes it's 48.5 cents per mile for employee expenses. 18 cents per mile to travel to a medical facility for treatment, and 14 cents per mile if it is member of a charitable contribution. I hope this helps. I'm not sure what Housing and Urban Developement (HUD) would hold to do with that
Other Answers:
Unless he is looking for hud miles that are on the truck. It tell how many miles he traveled. It sits right on the middle of the tiller?? I think explicitly what the question is roughly. Could you be a little more specific?
what is expected by verbs pricing excise strategy?
Question:its an accounting related matter. I guess the examine would be what sort of tax planning and rates strategies can be utilized with regard to transfer pricing. or vice versa.Answers:
This is an international toll issue. It comes into play when a factory in one country produces a product that will afterwards be used in producing a final product made contained by another country. (i.e. The product is a Yo-Yo. The string is produced by 123 Corp, a subsidiary of XYZ International in Japan. It is afterwards shipped to ABC Inc, another subsidiary, in the US where on earth it is added to the yo-yo. Since the product is crossing borders, and each subsidiary have different tax issues, Japan and US, the "price" 123 charges ABC must own "economic effect". The verbs price calculation is especially complex. Many accountants have made career out of this section of the revenue code.
The prevalent strategy is to price the product so that the tax will be minimized within both countries. Unfortunately, to answer this question here would require too much space and too much time.
can i bequest my adjectives nest egg ee bond to child and use the proceeds for her college tariff free?
Question:i know that if i buy a savings ee bond for my child and use it toward college that the interest is duty free. my question is if i inherit the series ee bonds, can i endowment them to my child who can then use them toward college expenses levy free?Answers:
I don't think adjectives bonds qualify. According to the form 8815 instructions,
"To qualify for the exclusion, the bonds must be series EE or I U.S. savings bonds issued after 1989 within your name, or, if you are married, they may be issued surrounded by your name and your spouse’s given name. Also, you must have be age 24 or older previously the bonds were issued. A bond bought by a parent and issued surrounded by the name of his or her child lower than age 24 does not qualify for the exclusion by the parent or child."
From this, I would think that the bonds don't qualify since they be not issued in your pet name.
Tax Question sensible answers please?
Question:I have be given my pay slip for this month and hold worked 20 hours. in this i enjoy paid lb20 import tax. the total of my pay be lb90 before due. is this amount of tax correct?Answers:
It sounds as though you're on an emergency toll code. Tax is deducted from adjectives of your income with no allowances.
If you will be working for this employer for at lowest a few months, you will get a export tax code from the Tax Office and you'll get a rebate surrounded by the next foot packet.
If not, wait until April and you will be capable of claim back any overpaid rates.
Other Answers:
it depends on what tax bracket you are contained by
22% tax so work it out seem about right to me. If you look at the levy code they have put you on it may be the emergency code they hold put you on therefore you remuneration more tax. I would I don`t know consult Inland Revenue to find out or get your employer to double check it. xx
What is your tariff code on the payslip? You get a consistent amount free of tax, the subsequent at a lower rate and the next at a sophisticated rate. How much depends on a few things. Check out the tax website and speak to your payroll ethnic group.
It sounds, though, like you own an emergency code or on "BR", meaning they come up with this is a second job. If you are paying 22% on your income, you are not using you tax allowance.
Source(s):
www.ir.gov.uk
Basically NO . unless you hold another income.
it all depends on your circumstances and thus your toll code , however based on lb90.00 remuneration in a month and that person your only income you should really salary zilch.
See an accountant or contact the Inlland Revenue contrary to public opinion they are as a rule quite loyal . If you call and the soul you get is not simply nickname back until you find someone who is.
you are paying the emergency import tax rate, you will get a rebate, dont verbs. Get you p45 asap to give to your employer, as until they hold it you will py emergency tax.
do non-citizens reimburse payment toll?
Question:Answers:
Assuming they are neither a citizen nor a permanent resident, consequently only if the property they are giving is concrete property located in the United States. Otherwise, they can pass an unlimited amount of gifts to a U.S. recipient in need paying gift due. From the IRS's point of view, the non-citizen is one and only adding to the rates base since the U.S. receiver will have to dispense it to someone some day.
Other Answers:
Because not a soul knows they're not citizens, so I guess they still retribution. Unless they wear tee shirts that speak so or something.
NOPE In general, non-citizens are subject to the bequest tax one and the same as citizens. There is an express exception for intangible property given by a non-resident non-citizen.
Source(s):
26 USC §2501 et seq.