Monday, May 12, 2014

FuxSnooze Strikes Again!

Many of you have no doubt seen the latest FuxSnooze generated "outrage" orbiting the interwebs (including the BAP Yahoo group), decrying that Mary Burke's Company hasn't paid state income tax in three decades. As it turns out, that's kinda like saying fish don't comb their hair.

Thanks to Steve Herr for clearing up the Fog of Fuxed Up Misinformation being passed along by the unwitting.

Steve Herr - "It only has to do with the form of taxation. Trek (like my own business) elected to go with what's called Subchapter S status.  What happens is the corporation computes it's income for the year, files an 1120S return at the federal level, (There's a similar form at the state level, the number escapes me at the moment) and then allocates that income to the shareholders based on each shareholder's percentage of ownership by filing K-1 forms, which report income to the IRS just like W-2 forms do for wages.

The shareholders then report the allocated K-1 income on their 1040 forms on Schedule E , line 28, and add it to the income they get taxed on.

This only applies to closely held corporations (there's a limit on the number of shareholders).  

So yes, Fox News is technically correct - Trek has not paid income tax.  BUT TREK IS NOT SUPPOSED TO UNDER SUB S, THE SHAREHOLDERS PAY IT!!!!

It's just a smear on Fox New's part, probably fed to them by Walker's campaign."

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