Q: My wife and I run a business together, how must we file our taxes?
A: If only one spouse owns the business and the other works as an employee, then you may file as a sole proprietorship under Schedule C on your Form 1040. If the both of you materially participate in the company and you divide income according to ownership status, then a Form 1065, Partnership Return would be appropriate.
Q: How do you determine whether a worker is an employee or independent contractor?
A: Primarily, you look to the control that you have over the employee. If you generally control the worker and methods the worker uses to perform their task, they tend to be classified as an employee. If the worker has a fair degree of autonomy on the job, autonomy with finances, and less relationship with the principal, generally these workers can be classified as general contractors.
Q: Recently, because of the recession and real estate market, I decided to sell a rental property at a loss. What form must I file to show a loss on the sale of a rental property?
A: The loss on the sale of a rental property is reported on Form 4797.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors