Insights: Article

Tax Treatment of Different Business Activities

By Andrea Mouw

April 06, 2017

Entrepreneurs and businesses are constantly on the lookout for new business ventures and opportunities. Sometimes, these new ventures are viewed as extensions or additions to existing business activities, while other ventures are viewed as new businesses. Whether the activities are viewed as extensions of existing businesses or the establishment of new businesses is often based on economic, marketing, or other business considerations.

Very few businesses make this determination based on tax considerations, even though it can have significant tax implications. Many taxpayers are unaware that the tax law outlines specific requirements for treating businesses as separate and distinct, and this can have a significant impact on the tax treatment of their new and existing business activities, including the tax accounting methods of the businesses.

Andrea Mouw, head of Eide Bailly's National Tax Office Accounting Methods practice, co-authored "Why Do the Separate Trade or Business Rules Matter?" The article, published in Bloomberg BNA Tax Management Real Estate Journal, addresses:

  • The interaction of separate trade or business rules and the rules governing tax accounting methods
  • The criteria identified by the Internal Revenue Service and courts as relevant in determining whether the taxpayer's trades or businesses are separate and distinct
  • Several scenarios in which the separate trade or business issue can arise and the tax implications of the determination in each scenario 

If you operate in the real estate industry, this article has specific and important items of current interest. Click here to read the article.

Questions? Contact your Eide Bailly professional or Andrea Mouw.

Latest Insights

November 15, 2018
Article
Until recently, many businesses weren’t overly concerned about sales tax. They knew they needed to collect and remit in the state in which they resided, but beyond that, their compliance burden was limited.
November 12, 2018
Article
This insight explores what dealerships can expect from the proposed section 199A regulations under tax reform.
November 8, 2018
Article
Are you a business taxpayer with annual gross receipts of $25 Million or less? If so, you may be eligible to take advantage of new Small Taxpayer Safe Harbors that could generate significant tax savings and simplify your tax returns in future years!
November 8, 2018
Article
Considered the most significant tax code overhaul in over three decades, the Tax Cuts and Jobs Act passed in 2017 includes provisions affecting both individuals and businesses.
November 7, 2018
Recorded Webinar
State and local sales tax compliance is always evolving, making it important to stay up-to-date on changes affecting your tax liability and responsibilities. This session will cover what you need to know regarding the recently enacted state and…
November 7, 2018
Article
“Why is my portfolio underperforming the market?” This question may be on your mind.
November 5, 2018
Article
Identify your implementation methodology. There are four practical expedients available. We'll explore each option.
November 5, 2018
Article
Deeper dive into ASU 2016 liquidity.
November 5, 2018
Article
There are many forms individuals and businesses need to consider as they work to comply with the ACA. Receiving and completing the appropriate form at the right time is key.