The intricacies of the “family” business

There are cases when one or both spouses are engaged in business activities, using property owned by one spouse. Of course, this is their own business.
However, a large number of judicial practice on family business gives the impression that the fact of any “business” relationship between husband and wife causes suspicion among tax authorities. Here’s what we will discuss in the article.
That “my” and “our” in family propertyAs a General rule, property acquired by spouses during marriage is their joint property (common property). To such property, in particular, include :

– the income of each spouse from the entrepreneurial activity;

– acquired at the expense of General revenues of movable and immovable things, securities, shares, deposits in banks, shares in the capital of organizations, etc.

It does not matter the name of the spouse who acquired the property or who of the spouses paid the money for it. The main thing – to purchase took place after the marriage. Another regime of property may be established by a marriage contract concluded between spouses . That is, in the absence of a Treaty, dividing family property with “my” and “your”, the couple’s property (excluding acquired before marriage or received during marriage as a gift or an inheritance ) recognizes the common. And so, making deals between themselves by transferring the common property to one another on lease or loan giving, spouses, figuratively speaking, simply shift money from one pocket to another . If the tax authorities when checking pay attention to it, to avoid negative tax consequences is not always possible. A lot of disagreements with the tax raises and the distribution of income upon the sale of common property of spouse-entrepreneur: the latter, as a rule, believes that we need to share not only money, but also the obligation to pay taxes.
Divide the total income from real estate

As is known, the SP income from the sale of assets used in entrepreneurial activity is entrepreneurial. That is, if a businessman applies, for example, simplified taxation, and includes income from the sale of property by UPDF base. But if he applies the General regime, shall present to the buyer the VAT and pay income received “entrepreneurial” income tax. How taxation affects the fact that the disputed property, in particular real estate, owned by businessman with his wife? Is it right to assume that taxes on income from the sale of the common property or lease is required to pay only one of the spouses?
Most often in judicial practice, disputes are considered in the following situation. Is engaged in entrepreneurial activity one of the spouses. And the spouse of the entrepreneur in the Declaration reflects only half of the income received from the sale of common property. And the second half of “transfers” to his wife. Because then, if the property was owned by the spouses of 3 years or more, spouse namedparameter may not pay personal income tax from “their” part of the income . Or, if the property was owned by the family less than 3 years, to claim a deduction in the amount of acquisition costs of property or in the amount of 1 million rubles, This may result in a significant reduction in the tax burden on family business, if for example the spouse of an entrepreneur can not account for the costs due to the fact that paying tax when UPDF with the object “income”.

However, the tax authorities believe that revenue should be accounted for in the spouse, who used the disputed property in their activities, for example, leased, and sold it. And declare half of the proceeds through a spouse cannot namedparameters. The courts have supported this view. According to the judges, the fact that the disputed property belonged to the businessman together with the second half, not affect the characterization of income for tax purposes. Revenues from the sale of the joint property or renting it out, the spouses can divide only after the spouse-the businessman will pay to the budget taxes on all income. Even if the spouse is not registered as a PI, reported for “his” half of the income and paid the income tax, he can always pass a revised Declaration.