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- HOME, INC.
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- However you make a living...or whatever you do as
- a sideline hobby...make a business of it. Say you're a
- computer technician. You work for a company that
- maintains computers. It sends you out on calls. You
- get a salary. You drive a company car.
- Go to your employer and arrange to get off the
- payroll. Instead, you set up a company, Computer
- Maintenance, Inc. You become a subcontractor to your
- former employer. The former employer figures out how
- much it actually cost to employ you...health insurance,
- holidays, car, etc....and pays you the total. You now
- deduct the business car, the phone, the office in the
- home. What's more, you hire your family to help.
- Everyone goes on the payroll. Your teenaged daughter
- becomes the receptionist. Your son becomes accounts
- payable clerk, and so forth. Everyone gets a
- salary...all deductible.
- The kids get paid little...but enough to pay for
- their own clothes and build up enough money to pay
- their own college expenses. They are in very low or
- negligible tax brackets...so the money is all but tax-
- free. Everything gets deducted.
- Don't take any more vacations... instead, find a
- place where the company could learn something...like
- Hawaii. Go and take the rest of the employees with
- you...they could probably learn to do a better job,
- improve productivity, and bring more to the bottom
- line.
- Don't buy any more food for the family. Instead,
- set up a cafeteria near the office...say in the
- kitchen. This would be for the employer's convenience,
- of course. This might not only make meals deductible
- expenses...but it might also make the kitchen a
- deductible portion of your house, including the
- refrigerator, stove, etc.
- Even the bathroom. The employees need a place to
- go to the bathroom while at work, don't they?
- And probably some could stand to upgrade their
- skills. The company might have to fork over some money
- in tuition.
- What about day care? Your company is responsive
- to employees' needs. So if your employees have small
- children, the company could set up an on-site day care
- center as an employee benefit. Hire a care-provider,
- deduct the expense, and deduct another room in the
- house -- along with day care supplies, diapers, and so
- forth.
- Our tax advisor is getting nervous. But you get
- the idea. The family corporation is a gold mine, if
- you can make it work for you. Some of the ideas we
- present in this example, as far as we know, have never
- been tested in the courts. They are logical extensions
- of the principles of U.S. taxation as we understand
- them.
- But that doesn't mean they will work for you.
- These cases tend to depend on the individual
- circumstances. If you are operating an ambulance
- service out of your home, for example...and your son
- drives the ambulance and your daughter takes the
- calls...and your wife does the books...the
- possibilities are enormous. If you try to employ your
- three-year-old as a business consultant, however, the
- courts might find that so imprudent as to give rise to
- a suspicion of tax evasion. Be sure to seek competent
- advice, geared to your own individual situation.
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