Understanding small taxpayer gross receipts rules

[...]gross receipts include interest, original issue discount, tax-exempt interest, dividends, rents, royalties, and annuities, regardless of whether those amounts are derived in the ordinary course of business. According to the interests shown in the table "LLC Members' Capital Interests,...

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Bibliographic Details
Published in:The Tax Adviser 2019-08, Vol.50 (8), p.568-571
Format: Article
Language:English
Subjects:
C corporations
Capital assets
Capital requirements
Cash basis accounting
Compliance
Inventory
Limited liability companies
Limited partnerships
Original issue discount
Personal service corporations
Small business
Tax shelters
Taxpayers
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Summary:[...]gross receipts include interest, original issue discount, tax-exempt interest, dividends, rents, royalties, and annuities, regardless of whether those amounts are derived in the ordinary course of business. According to the interests shown in the table "LLC Members' Capital Interests," the group of A, B, C, D, and E is considered to have a controlling interest in ABC and JKL only. The group of A, D, and E owns 70% of ABC, 85% of GHI, and 60% of JKL. Because only GHI is above 80%, there is a controlling interest in only one entity for the A, D, and E group, so the group cannot be in common control of two or more entities. A summary of the minimum common ownership of these two entities is shown in the table "Summary of Minimum Common Ownership." Because the combined minimum common ownership is at least 50% (70% in total among the five owners), this group is considered to have effective control of both ABC LLC and JKL LLC.
ISSN:0039-9957