Restart salary after 10 years?

Here's another one I never saw coming.

Since I shut down my manufacturing company in 1993,
I have taken dividends (I am sole owner). The company
had a large NOL which sheltered its income and so it did
not need the deductions that paying me a salary
or fees would have provided. This kept the paperwork simple. At year end I issue a 1099/1096, report my income and that's it. My income is so low that I pay no fed. taxes, so not a problem, except the corp. has made a profit about every year since 1993 and now, the NOL is almost used up.
Once it disappears, the only solution I can see is to start
paying myself a salary (or fees) instead of dividends,
in order ot give the corp. more deductions. The corp.
and I should both remain tax free at that point (unless the corp. makes a lot of money) except for paying in FICA taxes again.

I really don't see any other way, My corp. is a personal
holding company and the taxes on PHCs are draconian. In fact,
I had a CPA tell me I should consider buying an operating company just to avoid being classed as a
PHC. Obviously I am not doing that.

Have I missed anything?

JG

[haha]

Quote:

I had a CPA tell me I should consider buying an operating company just to avoid being classed as a PHC. *Obviously I am not doing that. Have I missed anything?JG

How would we know? You describe your situation like some women give their ages.

You claim to have low net worth. Yet you have a corporation that mysteriously makes money. Rents? Interest? Dividends?

Presumably you drop this striptease when you talk to your accountant- why not just do what he suggests and get it over with?

M

He also says his taxes are "draconian" which means he's making tons of money. Unless most people are in the top 1% .... As the Neo-Con Pseudo-Capitalists are always reminding us, it's only the top 1% who pay 99% of taxes.

You guys are just confirming my instinctive feeling that I must be smarter than everyone else. I ask a basic question which I thought would at least be interesting and at best might help someone else and I get sarcasm. What is that?


JG

[Jarhead*]

Quote:

How would we know? You describe your situation like some women give their ages. You claim to have *low net worth. Yet you have a corporation that mysteriously makes money. Rents? Interest? Dividends? Presumably you drop this striptease when you talk to your accountant- why not just do what he suggests and get it over with? M

Mikey: Was surprised that you took the bait
However, your answer was handled with enough sense of humor, and commen sense, that no points will be deducted
Regards, Jarhead

[haha]

Quote:

Mikey: *Was surprised that you took the bait However, your answer was handled with enough sense of humor, and commen sense, that no points will be deducted Regards, Jarhead

Jarhead, hungover. Thanks for the slack.

mikey

"sense of humor and common sense" were absent.
Mikey would rather discuss pheromones (surprised
he can spell it) or salsa dancing. Anyway, it was real question from real life. Maybe too far out of the usual
SWR/SS stuff to post
here. I try to avoid salsa dancing and kayaks, but
perhaps those are of more general interest to the forum.
If so, I will apologize and move on.

JG

[unclemick]

Yep

PHC ins and outs are probably too specialized for this forum. Luck would have it - nobody came forth with any insight.

So you may be stuck with bouncing any ideas off your accountant.

Can't win them all.

I didn't find variable thread Robertson composite screws yet either - Phillips II variable thread - but not the square head. Oh well - don't plan to give up looking.

I just reread my "new topic". This is over the heads
and beyond the scope of most of the people on this forum. Not of general interest. I understand now why Mikey would rather discuss salsa dancing and pheromones. Feel free to ignore
my query and return to your "regularly scheduled program".

JG

Quote:

I just reread my "new topic". *This is over the heads and beyond the scope of most of the people on this forum. *Not of general interest. *I understand now why Mikey would rather discuss salsa dancing and pheromones. *Feel free to ignore my query and return to your "regularly scheduled program". JG

Your above comment puts you back on your "regularly scheduled program". :

True.

[brewer12345]

JG, PHC tax issues are beyond me, but I have to ask: Why not just dissolve the company and distribute the proceeds as a liquefying dividend/return of capital? Unless you would get clobbered with taxes, I can't see a real reason for maintaining the entity now that the NOL is gone.

John,

Could you start a tax-free plan on the corporate level? Say, a cafeteria plan, which avoids paying FICA? Or treat yourself as a 1099 employee and then, if you do make very little, you could slip under the $400 self-employment tax limit.

Thank you unclemick, brewer and eridanus1 for some
courteous comments. Sorry if I got a little testy.

I can't dissolve/liquidate. The NOL is not gone yet
and with luck it will outlive me. A very valuable commodity. Most of my income at present comes from the corp. in the form of dividends. When I started that
I never imagined that the NOL would be used up, but
we're down to about 10% of where I started out in 1993. As I said, the only problems I see with changing
to a salary or fee basis is more paper work and paying the
FICA. My sarcasm notwithstanding, perhaps PHC tax
issues really are too far off the usual fare.

Let's go back to what we do best. You all debate
LBYM, DJIA, DCA, SWR, SS, etc., and I will stick to
cynical observations and liberal baiting

JG