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Pratt and LeFevre Corporation |
| A monthly newsletter brought to you by your Pratt and LeFevre Corporation Team |
| VOL. 1, ISSUE 10 | October 2022 |
GETTING READY FOR YEAR END AND TAX STRATEGY? | ||
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Last month we talked about how essential it is to keep records of money spent and to understand how the cash flows from the Corporation to the LLC and then to you. Remember your Corporation is the publicly visible structure in the Pratt and LeFevre Corporation O.N.C.E. Strategy. Your LLC is private. To recap, the corporation is the publicly visible business entity, when your asset transfers were completed, one of the contracts that were created was the Marketing and Management Agreement (MMA) this contract is between the Corporation and the LLC or LLCs. The corporation has a fiscal tax year and the LLC uses a calendar tax year. Both of them calculate their tax on a cash basis and not on an accrual basis. During your tax strategy meeting with your Pratt and LeFevre CFO you will discuss when the corporation pays the LLC for services rendered, making it an expense to the corporation. Or, even the LLC can pay for services rendered by the corporation, also as an expense.Please keep in mind, your corporation is a complete entity in itself. Which means, if the corporation has a loss, it stays with the corporation it is not passed on to you. If the corporation has a profit, then the corporation is subject to IRS and State taxes. If you personally are paid by the corporation, you are subject to employee taxes, this is the reason the money passes to your LLC. The LLC is a pass-through entity, which means any loss or profits is passed to you personally. Therefore, you pay yourself by taking an owner’s draw without having to be an employee and subject to employment taxes. This can seem very confusing and complicated. This is why it is imperative that you stay in contact with your Account Executive, your CSA, and your CFO. Make it a point today to contact them and get your appointment set before the end of November. The team at Pratt and LeFevre Corporation are here to help you. Check out our newest team members on our website: https://prattandlefevre.com/our-specialists/. For more information, just drop us an email at info@prattandlefevre.com | ||
| Question and Answers |
A Quit Claim Deed does not transfer ownership. It is just a document recorded on the property which tells anyone who looks at it that the person issuing the QCD is QUITTING their interest in the property. A Warranty/Grant Deed is the only document which legally changes ownership. The IRS has on several occasions ruled that using a QCD does not show legally that the home was sold to the LLC. The sale needs to be documented as a true sale, using a settlement statement, such as title insurance companies use and the legal documents which actually transfer the ownership. The IRS is interested in documentation. There have been occasions where clients did not document the sale/transfer correctly and the IRS did not accept the QCD as a true sale, but ruled it as a way for the individual to avoid paying taxes. |
Have you been to our website lately? |
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We have added more team specialists. https://prattandlefevre.com/our-specialists/ Each of our specialists follow the O.N.C.E. (Own Nothing, Control Everything) Process in their own business. Our team has their own successful business and contracts with Pratt and LeFevre Corporation to work with clients, bringing their expertise in business, accounting, taxes, financing, marketing and more. Visit our website today to learn more about Pratt and LeFevre Corporation team of specialists ready to work with you. |
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| DISCLAIMER: Pratt and LeFevre Corporation has several attorneys on retainer. Any information contained herein should not be considered legal advice. The above is only an explanation of instructions given to Pratt and LeFevre Corporation by our attorneys which we have been given permission to explain from a lay-person’s point of view only. Any clarification or questions must be answered directly by an appropriate attorney. |
Pratt and LeFevre Corporation |
Memberships & Affiliations
NATIONAL SOCIETY OF ACCOUNTANTS
AMERICAN COLLEGE OF FORENSIC EXAMINERS, INTERNATIONAL
UNIVERSAL ACCOUNTING
