We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

avatar"We first selected Gary Bode because of his familiarity with a creative financing scheme for our new small business.  During our time with Gary, his insights have helped us better structure our small businesses, save money, and learn to be better small business managers.  When it comes to small business accounting, a little hand-holding goes a long way."—Justin and Joelle LeBlanc

Ocracoke Coffee Co.
Ocracoke Coffee Co.

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Small Business Accountant Comments on Recent LLC Tax Court Cases

Wilmington NC CPA and small business tax accountant comments on recent LLC tax court cases

Gary Bode, CPA: if you'd like a free consultation with a small business accountant who keeps up with IRS trends, please consider calling us at (910) 399-2705.

IRS Regulations are constantly challenged.  Sometimes fortune favors the bold, if you stay current on tax issues.  Currently, LLC Members are considered to be “limited partners” with respect to passive activity losses in the IRS Regulations.  But five recent tax court cases ruled that LLC Members are “general partners” for these same purposes.  It pays to keep up with current events—even the tax ones!

“Despite the more restrictive IRS Regulations, recent tax court cases make it easier for LLC Members to write off passive activity losses.”
Gary Bode CPA, Small Business Accountant

How it Works

The IRS doesn’t make it easy to write off passive losses; trust me, as an experienced Wilmington NC CPA accounting firm, we know!  Generally, you have to materially participate in the underling business activities.  Limited partners can only use three of the seven material participation IRS tests (listed below), specifically the first, fifth, and sixth.  Making it unlikely they’ll qualify to deduct passive activity losses, unless they have passive gains to offset.  If you just follow the IRS regulations. 

We’re never anxious to tread into tax court.  Maybe other strategies exist, like obtaining a Private Letter Ruling.  But before passing up signifigant passive activity loss deductions, it pays to review the five recent tax court cases.  Would you qualify for the loss deduction if you can use all seven of the material participation tests?  If so, how much real cash is generated by the reduced tax liability?  Remember tax savings are (generally) the deduction times your marginal tax rate.   How would you react if a tax audit forced you into tax court?

What has your CPA done for you lately?  If you’d like a free initial consult with a Wilmington NC CPA Firm who stays current on tax trends, please consider calling us at (910) 399-2705.

Here are the seven IRS material participation tests:

1. More-Than-500-Hours Test

This test is passed if the taxpayer participates in the activity for more than 500 hours during the year.

2. Substantially All Test

This test is passed if the taxpayer’s participation in the activity during the year constitutes substantially all the participation by all individuals (including those who are not owners of interests in the activity) during that year.

3. More-Than-100-Hours Test

This test is passed if the taxpayer participates in the activity for more than 100 hours during the year, and no other individual participates more than the taxpayer during that year.

4. Significant Participation Activity (SPA) Test

This test is passed if the activity is a SPA (a weird term of art that is defined in Temp. Reg. 1.469-5T) in which the taxpayer participates for more than 100 hours during the year, and the taxpayer’s total participation in all SPAs during the year exceeds 500 hours.

5. Prior-Year Material Participation Test

This test is passed for the year if the taxpayer materially participated in the activity for any five of the ten immediately preceding years.

6. Personal Service Activity Test

This test is passed for the year if the activity is a personal service activity and if the taxpayer materially participated in the activity for any three preceding years.

7. Facts and Circumstances Test

This test is passed if consideration of relevant facts and circumstances dictate that the taxpayer materially participated in the activity on a regular, continuous, and substantial basis.

Small business accounting isn’t just about tax preparation.  As a small business CPA, I feel accurate tax preparation is only the first step.  Proactive tax positioning to reduce future tax liability is important, too.  Watching out for red flags helps prevent tax audits.  Tax refunds are great, but correct estimated tax payments keep you from over paying the IRS in the first place.  Guarding the “back door” of the business by keeping an eye on sensitive accounting functions, like payroll processing, helps deter embezzlement.  QuickBooks training assures accurate and timely bookkeeping.  Powerful managerial tools can be built from your small business accounting data, like the ones Fortune 500 companies use. 

We’re a Wilmington NC small business accounting firm.  If you’d like a free initial consultation with a CPA on any LLC issue, please consider calling us at (910) 399-2705.  We are a Wilmington NC CPA accounting firm serving the greating Wilmington NC area and surrounding NC counties: New Hanover, Brunswick, and Pender.

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