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Sixth Circuit Highlights S Corporation Perils In Broz Decision

Business owners and their advisers often fail to recognize how perilous S corporations can be.  The Sixth Circuit decision in the case of Robert and Kimberly Broz upholding an $18 million deficiency for the years 1996 to 2001 provides some useful lessons.

Journal Entries Are Not All They Are Cracked Up To Be

The lesson for business owners is that it is a very bad idea to use multiple entities without respecting the implications of each entity.  Don’t rely on your accountant to straighten every thing out with journal entries.  I spent much of the early part of my career making journal entries to move tax effects around among multiple related entities.  For the last decade or so, I have at least looked at every federal tax decision and have reached a painful conclusion.  The only people who think accountant’s journal entries mean anything are other accountants.  Listen to the Sixth Circuit:

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Heritage Income Tax offers a full range of tax preparation services. Located in Portsmouth, Virginia, we serve the entire Hampton Roads area including the cities of Chesapeake, Virginia Beach, Norfolk, Suffolk, Newport News and Hampton.