Leaderboard

To Gail. I remember a professor tell us that when you start this job you are given a bag of marbles. When are are gone then its time to quit. I am getting close.

I don't think that in this business being crazy is a reason to quit - I thought it was a requirement?

That would be a corporate liquidation where the shareholder exchanges his stock for remaining assets. So your client would have a capital gain equal to $20,000 less basis in stock per section 331(a). Technically, form 966 should be filed and 1099-div showing the $20,000 liquidating cash distribution in the specific box. Final paper work also needs to be filed with the state.

My niece and I were meeting after church on Sunday. As I started writing the notes that I wanted to touch on with her, I thought it would be funny to put it into a 10 commandments format. She got it, cracked up about it. Not sure I would send this out to a client either (unless they were members of my church). If God does not have a sense of humor, I am gonna fry for this.... Tom Sparks NV

My niece is starting a business. I am going to try to get her started on the right foot, so I started writing a document to go over the things I think are most important. Having just come back from church, I thought I would put it in the form of the 10 commandments. Let me know what you think: 1. Commandment #1 - I am your business and Tax Advisor. You shall listen to no hairdressers, contractors or co-workers regarding tax and business matters. You shall not believe everything you read on the internet, hear on the radio, or see in a TV commercial without checking with me. You shall not call an 800 number for advice on borrowing, lending or tax issues. You shall keep me informed of all major decisions related to the business, its ownership, its structure, and its profitability. 2. Commandment #2 – Thou Shalt Keep your business and personal money separate a. Business checking account b. Anything you take from business for personal is recorded in both accounts c. Reconcile your bank accounts monthly d. Get a separate credit card for the business (only charge business expenses on business credit card) 3. Commandment #3 – Thou Shalt Record all your business transactions a. Every single one, every single time, every single day, no exceptions, no whining about it b. You will keep a mileage log of all the trips you make in your vehicle for business. It will not be created at my desk during your tax appointment, but will be kept on a daily basis. You may use any fancy dancy millennial app that you can put on your phone to keep the log, but at the end of the year you will produce a mileage log that I can print out on old fashioned paper and put in my files that tells me where you went, why you went there, what the date was, and how many miles were driven to get there and back. c. You have to do this to follow Commandment #4… 4. Commandment #4 – Thou Shalt Know your costs of doing business a. How much do materials cost b. How much is your office and other overhead costs (electric, business licenses, taxes, etc) 5. Commandment #5 – Thou Shalt Price your products and services correctly a. At a minimum, you need to mark up your material costs by 40% b. You need to have a billing rate for your time i. 40% more than you want to get “paid” from your business ii. If you want to earn $20 per hour for your time, your billing rate is $28 per hour c. You need to add at least 10% to the above numbers for overhead d. You need to add at least 25% to your billing rate and overhead rate to cover taxes 6. Commandment #6 – Thou Shalt Put into savings a minimum of 25% + any sales tax collected from every payment you receive to cover your tax bill a. Sales tax collected is not yours – don’t treat it like it is. Put it in savings until it needs to be paid. b. Federal SE tax rate is 15.3%. This is your SS and Medicare contributions c. Lowest Federal Tax Rate is 10% d. State Taxes – Find out what your tax rate is and add that to the 25% above 7. Commandment #7 – Thou Shalt NOT hire any employees until you do all of the following a. Get an EIN from the IRS i. You don’t want to give your SS# out to every business customer who asks for it ii. You must have one if you ever hire employees b. Get a State EIN - to get a state EIN you need a Federal EIN c. Get General Liability Insurance d. Get Workers Comp Insurance e. Know the Minimum Wage requirements for your State/City f. Know the Benefits Rules for your State/City i. Paid Time Off? ii. Sick Time iii. Health Insurance iv. Anything else any Government Entity requires you to provide to your employee g. Have the ability to process payroll yourself or hire out the process h. Pay your Payroll Taxes on time every time (The IRS takes a dim view of employers who withhold from their employees and does not remit to them – They call it THEFT) 8. Commandment #8 – Thou shalt have the proper local business licenses and follow your local business laws a. States, Counties and Cities can be more brutal than the IRS b. If you have an office in the home, make sure it is allowed by the local government c. If you are a professional, you must have the required licenses to perform the services offered by your business. 9. Commandment #9 – Thou shalt keep your appointments with me a. My goal is to help you succeed in business. You will be busy running the operations, trying to sell and trying to develop new products and services. I know your time is important and limited, you need to recognize that my time is as well. I will do all I can to accommodate your schedule. However, government entities impose deadlines that cannot be missed. Don’t ignore me all year and then show up on April 14th with a shoebox and a flimsy apology and expect me to get your documents ready on time. There is no 10th commandment, since I am not God, but on earth I am your Tax Daddy! Tom Sparks, NV

Of course He does! Have you ever looked at a platypus?

Your scenario implies your client is a cash basis C Corp, in which case the numbers don't don't make sense to me.

Could be a windows bug. The only thing I would try, before calling in IT, would be to turn off bitlocker on the secondary drive, reboot, then turn bitlocker back on. Good luck!

The penalty is indeed based on the number of partners, not the tax liability (partnerships usually pay no federal income tax). It can be waived using the first-time penalty abatement. Be sure it's a first timer. I had a partner once who was chronically late, got hit with a penalty, and to appease him I wrote a letter asking for the first-time abatement. I knew he wouldn't get it, and he didn't. After that year he got his docs to me well before Oct 16 (now that would have to be Sept 15)! Be aware that no penalty if they file an extension, but if they miss the Sept 15 deadline the penalty is assessed back to March.

It's now $210 per partner per month for a max of 12 months.

Is it still $195 per partner per month for as many as 12 months? For small partnerships (10 or fewer partners) use Rev. Proc. 84-35 if it applies to your situation.