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Once determined, the guaranty fee may However, the court considered the
be paid in the form of a separate fee, a totality of the facts, with no specific The average in May
higher salary, or a cash bonus. It could weight given to any particular fact. If
also be paid in the form of equity in the tests for deductibility are not met, 2022 was $4.545 per
the company (see Davis, T.C. Memo. any fee paid separately may receive gallon according to
2011-286, aff’d, No. 12-10916 (11th dividend treatment.
Cir. 5/16/13)). If equity is used as the the EIA, an increase
form of payment, the guarantor may Final thoughts of $1.145 from $3.40
need to find a source of cash to pay Even though a guarantor may never in December, or an
income taxes. Alternatively, it may be have to make a personal payment
possible to structure the guaranty as a toward the company’s debt, the increase of 33.7%.
tax-free contribution of property to the guaranty may cause issues for the
company under Sec. 351 rather than guarantor. For example, that contingent
as a service. The distinction between liability could hurt the guarantor’s between Jan. 1, 2022, and June 30, 2022
property and service may be swayed credit rating. Yet, for the owners of (Announcement 2022-13). While the
by whether the guaranty is provided private companies, providing personal IRS usually sets the optional standard
because the shareholder is protecting guaranties may be a necessary part of mileage rates for computing deductible
his or her investment or because the process. costs of operating an automobile only at
an officer is protecting his or her From Stephen D. Kirkland, the beginning of each calendar year, the
future compensation. CPA/CFF, Columbia, S.C. July increase represented the third time
since 2008 it has done so at midyear.
Dividends Standard mileage rate The rate for purposes of a deduction
The fourth and fifth factors listed in increased July 1 of the cost of transportation primarily
Clary Hood are intended to weed out Effective for miles traveled on or after for, and essential to, medical care under
fees that are in fact disguised dividends July 1, 2022, the standard mileage rate Sec. 213 also goes up by 4 cents, to 22
to the shareholders, which would for purposes of deductible business cents per mile from 18 cents in the first
not be deductible. In Clary Hood, the expenses is 62.5 cents per mile, an half of the year. The 18- or 22-cent
court noted that the business did have increase of 4 cents from the 58.5 rate also applies to moving expenses
profits but had not paid dividends. cents per mile applicable to travel (restricted in 2018–2025 to members

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