Moore Colson Newsletter

Moore Colson Newsletter - August 2005

Pay more than lip service

Documenting a loan is one thing. Actually adhering to its terms is another. To make sure the IRS doesn’t characterize a loan as a disguised gift, treat it as a legitimate transaction: Require regular payments and make a genuine effort to collect if the borrower defaults. Also, be sure to document receipt of payments and collection efforts.

Should you ever want to write off the loan as a bad debt, this evidence will help you demonstrate that the transaction was a bona fide loan gone bad and not a gift.

Should you deduct sales tax or income tax?

This section presents brief notes on deducting state and local sales taxes instead of state and local income taxes on federal returns and new requirements for signing bonuses.

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4 estate planning strategies

In addition to creating a will and ensuring assets are titled properly, looking for ways to trim your taxable estate is an important part of the estate planning process. This brief article discusses four strategies: making gifts to family and friends, giving to charity, forming family partnerships and creating trusts.

Generating interest with intrafamily loans

Lending money to family members may be personal, but it pays to treat loans like business. If you don’t, you could owe taxes on income you never received and gifts you never intended to make. Structured properly, however, an intrafamily loan can be a great way to help your kids or other family members buy a home, start a business or meet any number of financial needs. It can also be an effective estate planning tool for you. This article reviews the ins and outs of intrafamily loans, including documentation and interest rates.

Taking it to the next generation
Business succession planning

Business owners often have conflicting goals when it comes to passing the baton to the next generation. On the one hand, they want to have a comfortable income after retirement. And on the other hand, they want their business to continue under the successful leadership of their children or key employees. This article explains how to accomplish both goals of saving for retirement and developing strong management skills in future business leaders through a succession plan. It also discusses the delicate issues of distributing assets among heirs who are involved in the business along with those who are not.

Brake for car-related tax breaks
Don’t pass by your opportunity to save

The rules for car-related deductions can be very confusing. For example, the amount you can write off depends not only on operating costs, but also on how much you use your car and where you drive it. This article takes the mystery out of getting the most deductions from your business vehicle by discussing what’s deductible and what’s not, how much of the vehicle’s value can be depreciated and when, and the two IRS-approved methods for deducting car expenses — actual cost and mileage rate.

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