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Tax News Updates

irsSmall Businesses and Related-Party Transactions

October 1
Joseph A. Wiener, J.D., LL.M. for The Tax Advisor

A recent Tax Court case highlights pitfalls frequently encountered by small businesses that engage in related-party transactions without appropriate planning. Povolny Group, Inc., T.C. Memo. 2018-37, an engaging opinion by Judge Mark V. Holmes, provides a helpful case-study of the following four issues:

1. Whether an entity's repayment of the debt of its sister entity constitutes a fresh loan between the entities, or a contribution to the second entity's capital;

2. Whether a contribution of capital constitutes a constructive dividend to the common shareholder;


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You Can Still Deduct a Client's Meal, IRS Says

October 3
Laura Davison and Lynnley Browning for Bloomberg

The IRS is giving businesses a tax break they thought they had lost in the tax overhaul last year -- write-offs for wining and dining clients.

The agency said Wednesday companies can still deduct 50% of meals while entertaining clients and customers, clearing up confusion about whether tax law changes last year had completely eliminated that benefit.

The IRS is giving businesses a tax break they thought they had lost in the tax overhaul last year -- write-offs for wining and dining clients. The agency said Wednesday companies can still deduct 50% of meals while entertaining clients and customers, clearing up confusion about whether tax law changes last year had completely eliminated that benefit.


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