If your identity has been compromised with the Internal Revenue…
For my nerds, today’s topic is Nwabasili Tax Court Memo 2016-220.
Do you have a business with someone and don’t file a partnership tax return? Perhaps you and your friend have a graphic business together, perhaps you bought a rental home together. Well, in the Nwabasili case, the taxpayer reported his part of his income and expenses on a Schedule C (tax form titled Profit or Loss from Business – for a sole proprietor). The Tax Court determined that the brothers intended for the business to be a partnership. It then disallowed the taxpayer’s write-offs for certain costs with the ventures stated that ‘they are partnership deductions that must be taken on Form 1065’.
Many of you know that I insist that all partnership agreements be in writing. I explain that a partnership is like a marriage without the love. It’s about the money. Put it in writing when you are in the ‘honeymoon’ state. File a LLC with the state (seek an attorney) and then file properly either as a partnership or S Corporation. Do not leave yourself open for an audit.
Remember, you don’t mess with the IRS.