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About BHoffman

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    ATXaholics Anonymous

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  1. Setting Tax Appointments - Best Practices

    I try to avoid appointments and prefer either scanned or mailed docs. Sitting there listening to all the non tax stuff while they cough and wheeze with the flu, using my bathroom and leaving a mess, bringing the kids who climb my curtains and interrupt every 5 seconds....it’s a gross waste of time. And I have to change out of my comfy jammies and wear shoes. :*
  2. 1099 / W-2 program

    Quickbooks for most W2s and Drake CWU for 1099s and W2s not on QB. I prepare about 100 W2 forms and around 30 1099s.
  3. Prepared by someone else (prior year)

    FDNY - If you and the client have already determined his reasonable salary at a hefty $260k per year, and his hours haven't changed, then why would he need to increase his salary just because his investment in his company is doing well? Unless he is the only one providing goods/services for sale to his customers I'd say that no one is going question his salary. He's already paid taxes on the cash used for his distributions. The whole premise of the S Corp is to pay FICA only on income that is earned, and avoid the double taxation on dividends. I think we get tangled up with the reasonable salary for S Corp shareholders because there is no set calculation. The tax court cases were all about heinously low salaries and huge distributions. The court recharacterized that portion of the distributions to closely meet the SS wage limit in every case. I think it's a relatively safe bet that the SS wage limit would, in most cases, satisfy the reasonable salary requirement.
  4. Prepared by someone else (prior year)

    Tax court cases involving reasonable salary for S Corp officers generally settle on the max Social Security wage cut off. See the above Forbes article for the specific cases.
  5. Prepared by someone else (prior year)

    Here is the IRS fact sheet FS 2008 25 cited in the article: See "What's reasonable compensation?" I am curious about this https://www.irs.gov/pub/irs-news/fs-08-25.pdf
  6. Prepared by someone else (prior year)

    Cbslee, I wholeheartedly agree that the client should take adequate payroll. Sorry to have veered off topic by bringing up the question of whether SCorp salary can be an issue if the shareholder takes no salary, and also takes no distributions.
  7. Prepared by someone else (prior year)

    https://www.forbes.com/sites/anthonynitti/2014/02/04/tax-geek-tuesday-reasonable-compensation-in-the-s-corporation-arena/6/#5cf75f1641a2. See the last paragraph of the article. This is a contentious issue, but if the shareholder received no distributions then perhaps there is nothing to re characterize.
  8. Prepared by someone else (prior year)

    Did the SCorp shareholder take any distributions? A discussion during a CPE class seemed to imply that no distributions means there is nothing for IRS to reclassify as missed reasonable salary.
  9. W-2 Verification Code Expands

    https://www.irs.gov/individuals/w-2-verification-code More info in the above link. I'm hoping if/when it becomes mandatory, payroll software like QB will be able to include the code.
  10. Multi entity confusion

    Update: I got the ownership info for this new client from the AZ Corp Commission website. NOW they are telling me that they intend to change the AZ LLC to a multi member, so it will a 1065 after all. I'm so glad I gave them a high estimate of fees with a retainer up front.
  11. Multi entity confusion

    I have an AZ LLC with its single member being a DE LLC. The single member of the DE LLC is a DE Corporation. The AZ LLC is a construction contractor. The DE LLC does nothing except hold the interest in the AZ LLC. The DE Corp does nothing except hold the interest in the DE LLC. Since the AZ LLC is a single member disregarded entity, what form is used? I'm thinking the operations are reported on the DE Corp 1120 and there are no tax returns filed at all for the LLCs but that seems strange....any advice?
  12. S corp stock sale - do new owners file new 2553

    Sue and Sally will show zero ending ownership percentages on their K1s. IRS does not match K1 forms like they do 1099s. I think there is a statement that shows ownership changes.
  13. S Election Revocation

    See if this helps. http://smallbusiness.chron.com/terminate-s-corp-election-revert-llc-23511.html
  14. Unreimbursed Partner Expenses

    The UPE is deducted on his Schedule E page 2 on his form 1040 and appears nowhere on the partnership tax return or his K1 from the partnership. The UPE must be shown as a separate line item on the Schedule E page 2. I'm not sure what limits the amount of UPE other than perhaps the usual issues: partner's basis, amount at risk, etc. in the event that the whole transaction (K1 income - UPE expenses) results in a loss.
  15. Sec 751 accounts receivable

    The sale is supposed to take place this year 2017, but I don't think that's going to happen. The company provides medical care and exclusively bills Medicare. The correct estimate of collectible AR is hard to determine, and they still have open AR from a year ago. I can give an educated guess that around 20% of open AR will not be collectible. I think that is going to equate to around $600k in bad debt. A material amount either way Should the company start booking an allowance for bad debt? The broker isn't going to like that. I'm going to press on the client how important it is to have the collectible amount on the books, and not just what has been billed. Judy, I did read that article and it is printed and kept in a special folder that I will refer to for this transaction.