Tax Help & Solutions || TaxHelp Home || End || TaxHelp Index ||

Description
Due Date
Tax Tips
Tax Articles
Filing Exemptions
Filing Time
Related Forms
Required Records
Tax Rates
Tax Data
IRC Sections
IRS Publications
Tax Law 97

Description of Form

A corporation will have to file a corporate income tax return each year. If it expects to have any taxable income, it should make quarterly estimated tax payments.

There are two different types of corporations for tax purposes. One is the taxable corporations, which is also known as a "C" corporation because the tax rules for such corporations are set forth in sub-section C of the tax code. The second type of corporation is called an "S" corporation because the rules for this type of corporation are set forth in sub-section S of the tax code. An S corporation does not generally pay any taxes. With a few exceptions, it's income and losses are treated like partnership income and losses and are apportioned to the shareholders of the corporation, in proportion to their share of the stock. Like a partnership, the S corporation tax return also requires that a K-1 form be prepared for each shareholder.

Most public accountants are familiar with the rules for corporate tax returns and estimated tax payments, so it shouldn't be difficult to get help with this. Most corporations also have to pay an annual state franchise tax fee.

Any compensation you pay yourself from a corporation should be subject to payroll tax withholding the same as any other employee. Severe penalties can be imposed on the responsible officers or employees of a corporation who fail to make the required payroll tax payments.

For each tax form, the IRS is required to provide an estimate of the time that is required for the taxpayer to keep records, to read the instructions, to prepare the form and to prepare it for mailing to the IRS. It appears that the IRS bases their estimates on minimum amount of time required for each part of the process and that the taxpayer is a tax professional. Here are their estimates for the average filing time for each part of the process of preparing the estate tax return.These estimates are the sum of the separate estimates for each of the various schedules. Thus, these amounts presume that the return would involve every supporting schedule that could be required with the estate tax return.

Stages of the Process	Time Required
Recordkeeping	9 hours, 40 minutes
Reading the instructions	6 hours, 44 minutes
Preparing the form	11 hours, 14 minutes
Copying, collating and mailing	8 hours, 45 minutes
Total time	36 hours, 23 minutes

Does it seem a little ludicrous that the IRS estimates the time required to read the instructions is about 2/3 of the estimated recordkeeping time and about 1/2 of the time required to prepare the form? If an estate had assets that would require the preparation of every supporting schedule in the estate tax return, it would take a skilled professional with a good quality computer system a lot more than the estimate given by the IRS.

Tax Data

IRS Publications

For a copy of the following IRS publications, visit their web site at

http://www.irs.ustreas.gov/prod/forms_pubs/index.html

Link on the section for IRS publications and select

* Publication 334 - Tax Guide For Small Business
* Publication 553 - Self Employment Tax
* Publication 560 - Retirement Plans for The Self Employed
* Publication 583 - Starting a Business and Keeping Records
* Publication 542 - Corporation
* Publication 589 - Tax Information on S Corporations

The following sections of the Taxpayers' Relief Act of 1997 include provisions that affect corporations.

Section VI - Extension of Exiring Tax Provisions
Section VIII - Welfare To Work Tax Credit
Section IX-A - Miscellaneous Excise Taxes
Section IX-E - Other Provisions
Section XA - Revenue Increases - Financial Products
Section XB - Revenue Increases - Corporate Organizations & Reorganizations
Section XC - Revenue Increases - Other Corporate Provisions
Section XE - Revenue Increases - Excise Tax Provisions
Section XG - Revenue Increases - Foreign Provisions
Section X-I - Revenue Increases - Other Provisions
Section XII - B Simplification Provisions for Businesses
Section XIV - Excise Tax Simplification

About the author:

Vernon Jacobs is a CPA/CLU who works as a tax author and consultant. He writes Vern Jacob s' Tax Solutions, is the author of The Jacobs Report on Asset Protection Strategies, and serves as the Tax Editor for OFFSHORE, an eJournal. He has “big six” CPA experience and spent 12 years as a senior financial executive for an insurance company. He’s been the software columnist for Personal Financial Planning for five years. His email address is vkj@rpifs.com and his web site is http://www.rpifs.com/apvkj.htm He can be reached by phone or fax at (913) 362-9667.