The research notebook.
Short explanations with explicit assumptions, worked illustrations, and a trail back to the underlying authorities.
Three ledgers, three different questions
Outside basis, inside basis and book capital are related, but each follows a different ledger.
PartnershipsOutside basis is a moving balance
An annual basis schedule explains why the cash received and income reported can be different.
PartnershipsBefore calling a distribution tax-free
Identify cash, deemed cash, outside basis and the special rules before reaching a conclusion.
PartnershipsA guaranteed payment is not simply an owner draw
The payment formula and the partner’s role matter more than the label on the bank transfer.
Research methodFollow the rule back to its authority
A useful explanation is a starting point; the controlling text and applicable dates complete the research.
Business & entitiesAn LLC has a legal form and a tax classification
State-law organization and federal tax treatment are two separate layers.
Federal taxChoose the tax year before choosing the numbers
The year of the income and the year a return is filed are not interchangeable.
Tax procedureRead an IRS notice as a document with a deadline
Identify what the IRS is asserting before deciding how to respond.