When you are faced with business tax planning issues, working closely with an attorney who will explain clearly all options and consequences can help to ensure that you make decisions that are in your business' best interests. Contact our firm today to schedule a consultation with an experienced tax attorney.
Tax Planning and Estate Planning Lawyers: Michigan and Nationwide
Attorney Jeffrey S. Freeman has practiced tax law since 1994. Today he leads a team of accomplished lawyers and a professional staff prepared to help you resolve current tax problems, guide you through innovative tax planning for your new or existing business, or help you develop a legally sound, comprehensive estate plan designed to provide maximum protection of your assets.
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Whether you are starting a business or organizing your personal affairs with an eye to tax consequences and other financial priorities, you can contact the Law Offices of Jeffrey S. Freeman for guidance based on extensive knowledge and experience. Based in Birmingham, Michigan, we frequently assist clients statewide, including the Detroit metro and throughout Wayne County, Oakland County, Macomb County and Washtenaw County.
At the Law Offices of Jeffrey S. Freeman, you will find lawyers with an in-depth understanding of finance and tax matters. We will prioritize your needs and protection of your interests as we deliver complete tax planning solutions for your family, new business or ongoing enterprise.
Federal Income Tax
Federal income tax is the largest contributor of revenue to the federal budget. Income tax law is complex, especially when applied to businesses. It is critical for businesses to have an understanding of these laws and how they will affect the business' tax liability and bottom line. A tax attorney at Law Offices of Jeffrey S. Freeman in Birmingham, MI, can assist your business with understanding and complying with the federal income tax laws.
Sources of Tax Law
The Sixteenth Amendment to the U.S. Constitution gave Congress the power to tax income from "whatever source derived." All residents and businesses are subject to the federal income tax. The Internal Revenue Code (IRC) is the main source of federal tax law. It is found in Title 26 of the U.S. Code and is administered by the Internal Revenue Service (IRS). Title 26 of the Code of Federal Regulations provides guidance and explanations on IRC provisions. IRS regulations, rulings and policy statements and federal tax court decisions also shape federal income tax law.
What is Income?
In general, all "income" is subject to federal tax. However, the IRC does not specifically define "income" and it may have differing meanings. Gross income is generally defined as all income from whatever source derived, including:
- Pay for services such as wages, fees and commissions
- Interest earned
- Business income
- Royalties
- Rent payments
- Alimony
- Income from life insurance
- Endowment
- Pensions
- Income from a decedent
- Discharge of debt
- Income from an estate or trust
- Income from illegal activities
26 U.S.C. §61. The IRC also includes several exceptions to gross income, including the following:
- Any contribution to the capital of the corporation (26 U.S.C. §118(a))
- Employer-provided coverage under an accident or health plan (26 U.S.C. §106(a))
- The value of any meals or lodging given to an employee by an employer for the convenience of the employer (26 U.S.C. §119(a))
- Fringe benefits given to an employee if the fringe benefit qualifies as a: no-additional-cost service, qualified employee discount, working condition fringe, de minimis fringe, qualified transportation fringe, qualified moving expense reimbursement, qualified retirement planning services or qualified military base realignment and closure fringe (26 U.S.C. §132)
Adjusted gross income is gross income less certain allowable deductions, but before standard or itemized deductions and personal exemptions. 26 U.S.C. §62. Taxable income is defined in 26 U.S.C. §63 as gross income minus the deductions allowed by that chapter of the IRC. Essentially, it is the income on which the taxpayer will be taxed.
Talk to a Tax Lawyer
Determining a business' taxable income can be a complex task. IRC provisions and IRS regulations are generally not easy to understand and apply. A tax attorney at Law Offices of Jeffrey S. Freeman in Birmingham, MI can advise your business on federal income tax issues.
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