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FIFO for the Inventory. Take the last Invoice price and End inventory from POS system. I have quite a few Gas station clients here in NJ and PA. PM me if you have any questions.

He wasn't...

How is the LLC treated for tax purposes? If Schedule C, and the client does not want to change, then a loan is the only option. If he takes on a "shareholder" then he becomes by default a partnership and all the rules for partnerships apply. If he is treated as an S-corp and he takes on a "shareholder", then all the rules of S-Corps apply. Not a question with a simple answer, for certain.

I also have a gas station client and agree with what Rich and DevM said above. I use FIFO for the inventory and the POS system and client's summary of gallonage. He knows how many gallons he has in those tanks at the end of each day. It's not that hard to determine ending inventory and see if the cost of sales makes sense. My bigger challenge is that the supplier nets the electronic debits charged against client's checking account for the gasoline purchases against the credit card sales owed back to the client. There's no logical pattern for how they combine or net the activity. Believe me, inventory and COS is a snap compared to reconciling cash, deposits in transit, and ending payables because of the netting.

I'm thinking the only option is a loan and properly charged and reported interest paid and received. (1099, etc) Have seen this done many times.

For it to remain a single member LLC, the family member could make a loan to the LLC which could pay the family member interest.

The first sentence answers your question unless, of course, he does rent it out.

So far, so good on my four year non-filer. Have finished 2010 and no liability. We are skipping 2011 temporarily so client can do more research. Fine with IRS agent. Makes it more difficult for me to move on to 2012, though. Client is retired with SE income as a Sales Rep., so of course a 1099. No withholding anywhere. No problem with getting the retainer. Just wonder what this guy was thinking!!!

I am still dealing with one of these. Filed 11 years of tax returns for the client. IRS did not garnish while we were working on getting the returns prepared. Owed over 100K when it was all said and done. We did the offer, and wouldn't you know, the IRS said no. Not suprising. So we just sent in an installment agreement. Waiting for the IRS answer on that. IRS has not garrnished yet. We have been able to hold them off for two years. The clients are making very small payments right now. The first thing you need to do, if you accept this client, is to get the open year returns filed. If he is really not making anything right now, he may have refunds to put in the pot. Then start working your way back to the years that they are looking at. Get them all done, and keep in contact with the IRS. As stated before, no offer until all years are filed. Usually, if the IRS is not after them, they want 7 years. That is how far the software looks back unless they have a collection issue open in a year older than 7 years. If they have an open collection issue, they want back to that year. Get your money. If this goes sideways, they will blame you for not getting them "off the hook". Tom Hollister, CA

Taxmann: This line: "It's like watching a train wreck. Horrible situation, but fascinating to watch." Actually, you can be the dispatcher and stop the train wreck from happening... $170K sounds like a lot of money, but if you made $75k each year on 1099's for three years and you were SFR'ed, you could get there pretty quick with penalties and interest. The main issue is dollars to pay you. If you do the work, you should get paid. That is where you are the conductor. First you would get the transcripts for the years in question, then you would prepare amended or original returns for filing with the best info you could get from the guy, then move on to the later years with new transcripts and new returns for the other years. Then you do the OIC when all the years are filed and the IRS Agent is talking to you. Nothing that difficult about this case. Lack of dollars make it easy to make the OIC deal. Finding a way to get paid is important, but a monthly retainer would be a good place to start. The OIC and all the processing time can have you collecting $100-200 a month for several years... There is LOTS of business like this if you are interested. If not, find someone local who is interested in these cases and do the referral. Bankruptcy would not save him. The SOL has not started to run yet because he hasn't filed so nothing is dischargeable. If he had filed in the past, it could show some cause the IRS that things are bad for him... Be the dispatcher and direct this guy away from the train wreck. HE might not listen. That would not be my problem. I would do what *I* would feel is the right thing and let go of the outcome. Rich

I'm sure that there are SFR's since he has not filed since 2003. I don't feel sorry for him. I am just wondering if filing 10 years of taxes and trying an OIC is the only way to go in this situation, or if there might be some administrative remedy that he could seek. I'm just weighing the options, and I don't work for free!

H-m-m. The family member sent the letter back? He didn't call Joe up and say "Here's something pretty urgent from IRS you may want to see". He didn't even know an address to send it on to his relative. He didn't have any concern at all, just thought "Not my problem, sending it back" Alarm bells are going off left & right. This client is looking more and more like somebody that even his kin don't want to get involved with. Maybe you should follow their lead.