Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
Your questions are numerous and I have already been kicked out once while compiling an answer.
Please bear with me while I address each individually.
1. You may not deduct the cost of premiums for life insurance where you, the business owner, are directly or indirectly the beneficiary. You may not deduct the cost of life insurance premiums paid on behalf of an employee or any person who has a financial interest in the business if the business is the beneficiary of the policy.This goes for all business structures.
2. Same really as 1 and 3 also. The premiums are not deductible for life insurance and if paid would be compensation.
4 LLC would be same but if LLC you are sole member so you would use Schedule C and life insurance is personal with no deduction under business or personal.
5. More of a legal question than tax so I suggest you speak with your attorney.
7. Yes. lease on vehicle can be ab expense under any business structure.
8. Yes leases can be transferred but you would need to seek the agreement of the leasing company.
I am sure you have some clarifying questions so please post them below.
Please keep in mind when I say they are not deductible (life premiums) I mean by themselves. If they are paid then they are cpmpensation and that is deductible but as wages and compensation paid.
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Do C-corps pay taxes on fringe benefits such as health ins premiums if the ins is for an officer / owner of corp?
They would pay their protion of the employment taxes, yes, for the life but the health insurance, these benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. The additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement, issued to the shareholder-employee, but would not be included in Boxes 3 and 5 of Form W-2.
The above is true for C and S corps.
the profit of a C-corp is taxed at corporate rates, but not subject to FICA/FUTA taxes? Is this true for an S-corp?
That is correct.
You have answered my questions for now, thank you.
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How would you characterize the main differences between S and C corps from a tax perspective?