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We prepare most type of tax returns:

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S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

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When my business partner and I found ourselves in a land investment that was abandoned by the developers, we had no reasonable economic choice but to walk away from our mortgage loan.  While we understood that there would likely be tax consequences, the magnitude of our exposure was not fully anticipated.  Thankfully, Mr. Bode was able to work with us to strategize a defensible tax position and mitigate the tax implications of our investment loan abandonment.  I would recommend that anyone facing an investment loss that has tax implications due to debt forgiveness give Gary a call.  It is always best to fully understand the circumstances and the tax rules and related options before paying a hefty bill.  Thanks Gary!

Brian D. - CPA

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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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S Corporation CPA discusses 2013 Medicare Tax Avoidance | Form 1120-S

S Corporation CPA Wilmington NC 1120-S

Gary Bode, CPA: an S Corporation can avoid the 2013 additional Medicare Tax. For a free phone consult, call (910) 399-2705.

Any S Corporation CPA will tell you distributions circumvent employment taxes all together. S Corporation distributions are the profit taken after paying the shareholders “reasonable compensation” (formal wages subject to employee and employer payroll taxes), as calculated on the annual 1120-S. I’ve been watching Congress try to close this loophole for decades. But at the moment it’s still there. Why? Surprise, many Congressional folks run their own businesses as S Corporations. Newt Gingrich and John Edwards, for example. So, S Corporations distributions aren’t covered under the “earnings” part of the new Medicare tax described below.

A 0.9% additional Medicare tax looms on the 2013 horizon. Currently Medicare tax is 2.9% on all wages, half from your employer, and half from your paycheck. In 2013, couples earning more than $250,000 per year ($200,000 for an individual) will pay an additional 0.9% on the amount of wages over $250K/$200K. For example a single person making $250K would incur an additional $450 {250,000-200,000) x .0.9%} tax that year.

“Remember your LLC can elect to be taxed as an S-Corporation.” 
– Gary Bode, S Corporation CPA

So, let’s say a husband and wife S Corporation pay themselves $150,000 and distribute $150,000 to themselves in a tax year. All the $150,000 of distributions escapes the Social Security and Medicare tax. An S Corporation CPA would try to structure one spouse’s salary above the annual Social Security threshold to save the (expected) 12.4% of Social Security Tax on that payroll component.

I’m an S Corporation CPA with a virtual/remote office to serve folks beyond my Wilmington NC site. I operate my CPA firm as an S Corporation, so you know I keep up with current developments. There are dozens of S Corporation postings on this website, including the “reasonable compensation” issue mentioned above. Just click “S Corporations” from the drop down category list in the right side bar or 1120-S from the Forms drop down box. For a free phone consult, call (910) 399-2705.

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