Tax Newsletter

• Keeping Accurate Records Of Charitable Contributions
  A tax deductible item may be subtracted from a taxpayer’s income, thereby reducing taxable income before calculating the amount of tax owed. The resulting tax savings vary, depending on the taxpayer’s income tax bracket. A... Read more.
• Business on Cruise Ships and Ocean Liners
  It is common to conduct business on luxury travel vessels such as ocean liners and cruise ships. However, only in certain situations are some or all business expenses related to this type of travel deductible. Luxury... Read more.
• Estate Taxes and Valuation of Estate Property
  Assets owned by a person at the time of their death, whether real or personal property, is commonly referred to as the decedent’s “estate.” After the person dies, the property or proceeds from the sale of such property... Read more.
• Valuing Stock That is Not Publicly Traded for Estate Tax Purposes
  In 2001, Congress passed legislation incrementally increasing the amount exempt from federal estate taxes and completely eliminating estate taxes in the year 2010. However, the legislation contains a “sunset” provision... Read more.

• Elizabeth Warren, Bernie Sanders propose 3% wealth tax on billionaires
• What Trump tax returns may reveal following Supreme Court ruling
• This tax pitfall could affect millions due to Covid. Here’s what you need to know
• A dispute over a federal tax break for businesses could cost Virginia $101 million
• Global Tech Tax Is Expected to Arrive This Summer

Partners and Self-Employment Tax

The Internal Revenue Service generally requires self-employed individuals to pay self-employment taxes. How does this self-employment tax requirement apply to partnerships?

Generally, if you are a partner, your proportionate share of a partnership’s income or loss must be considered to determine your self-employment income. Guaranteed payments from the partnership are included.

Limited Partners

Because limited partners generally do not participate in the decision-making process of the partnership, only guaranteed payments from the partnership are included in the calculation of self-employment income.

Retired Partners

Sometimes retired partners still receive income from the partnership. The IRS does not consider this income to be subject to self-employment tax, as long as the partner receives lifetime periodic payments and does not provide any services to the partnership.

Husband & Wife Partners

If a husband and wife operate a business as a partnership, formally or informally, special forms are required by the IRS for reporting income and losses. However, just because a husband and wife are both in the same business does not necessarily mean that they are partners. One may be working for the other as an employee. In that case, the typical Social Security/Medicare taxes must be paid by the employer/spouse on behalf of the employee/spouse.

Investment Club Partnerships

A common partnership entity is an investment club partnership. This type of partnership has a number of individuals who collectively invest for profit. However, income will not be considered as self-employment income if the investment is limited to:

• Investing in savings certificates, stock, or securities
• Collecting interest or dividends for its members’ accounts

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