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About jklcpa

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  1. jklcpa

    Phishing email

    Because your client has not yet had a confirmed case of theft, he or she will only be eligible if a resident of one of the designated areas listed on this IRS page: https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin If eligible, I'd encourage him or her to apply since he/she did fall for the phishing scam and gave out the SSN.
  2. Dept of Defense and military personnel have the deferral.
  3. Yes, I agree with Dan that if the client still has the same route with a reduction of several customers, then I'd say company bought back those several customers for the $30K. My answer would be different if this was not substantially the same route though. I'd prorate the cost, amortization, and remaining basis saying that what was bought back was 30/130 or ~23.08% of the route and report that against the $30K proceeds so that the client would report ~ $21, 460 of gain (30K - 8540 of basis). What I wouldn't do is frontload an entire $30K of basis against this sale and report -0- gain.
  4. I can't answer that because I moved to Drake starting with the 2012 tax year.
  5. Both the Sch C individual as transferor and the S Corp as transferee will each attach statements. https://www.law.cornell.edu/cfr/text/26/1.351-3 Shareholder receiving stock must file statement with return for the year of the transfer under Treas. Reg. §1.351-3(a) Corporation must file a statement with its return for the year of the transfer under Treas. Reg. § 1.351-3(b) Both must maintain permanent records to determine subsequent gain or loss
  6. I'll take a shot, but am not entirely sure, but I think this could happen under the ordering rules with redemption distributions. If you look at the ordering rules in 1.1368-2(5), the "ordinary" distributions can't take the AAA below zero, but I think a redemption can. The M-2 section for AAA distributions doesn't have separate lines to differentiate between the two types of distributions, so I'm guessing that this may be possibly why ATX has this option. Maybe someone else that's had this situation will chime in.
  7. jklcpa

    No BS

    Dan, I was thinking the same thing. File the returns to make the election. I'd also put a statement on the return that indicates the partnership had no activity that actually required a return be filed so that the IRS doesn't try to assess late filing penalties. ILLMAS, if you, or anyone else, would like a more complete reading of this under sec 266, this article from The Tax Advisor is a pretty good one. It also reminds us that with more people claiming the higher standard deduction, this election should be considered because the taxpayer can still benefit by adding real estate taxes and interest to basis that would otherwise be lost.
  8. Can't help you with Texas. With the facts as presented, this partnership would NOT be required to file a Delaware Form 300 partnership tax return. It would need to file an annual report for its franchise tax with the DE Secretary of State each year though, and that must be filed via the internet.
  9. I agree with this too ^^. Quoted Lion EA b/c a merge of two duplicate topics didn't work properly. Creating a new topic with all three posts was the only way I could find to fix. Grrr!
  10. jklcpa

    Sale of S-Corp

    Max, to be simpler and more clear about the warehouse sale: the form 4797 should show only the $211,971 in part one and Drake will use the label "from K-1". That is the entire net gain and is all that should be on that form. just that one figure. From there, that net gain figure will flow onto the Schedule D on line 11. The unrecaptured 1250 gain of $16,821 is the portion of that gain that has the potential to be carved out and taxed at 25% because of the depreciation method used for the warehouse, and it will show on line 19 of Sch D, the "Wks CG" worksheet, and the "Wks 1250" worksheet. That is all that should happen related to the warehouse. As I said in my post immediately above, you still also will have to report the liquidation of this client's shares of stock in the S corp too, and that will go directly on Schedule D. Hope that helps you.
  11. jklcpa

    Sale of S-Corp

    No, that's not right. There are 2 separate things that happened. First, there is the sale of the warehouse by the S corp, AND second, there is the liquidation of this client's shares of stock in the S corp. FIRST, regarding the sale of the warehouse: The building was sold by the S corp and reported on the corp return. Your client's share of the NET gain flows onto his K-1. There are 2 items on the K-1 that are related to this sale and those 2 figures are what you need to enter into the software related to this gain. You don't enter proceeds or the building's basis because the S corp already did that. Just enter the 2 figures from the K-1 of $16,821 for the unrecaptured 1250 gain and the $211,971 for the 1231 gain. Don't enter the escrow figure either or worry about reconciling that; it is only informational. SECOND, you also have the liquidation of the shares of ownership in the S corp that should be a loss, and that is a capital loss that will be reported directly on Schedule D.
  12. I've been very busy with some personal issues on the homefront lately and have read only what's been posted here about this and have to say that this will create a gigantic mess. Has anyone in D.C. with these stupid ideas thought about what will happen if an employee works for a company that defers in the fall and then that employee changes jobs next year to one that didn't defer? All I can say is thank goodness this isn't going to be a reconciling item on the 2020 1040s!
  13. jklcpa

    Sale of S-Corp

    I'm wondering if the client also received other funds as a liquidating distribution, or if the liquidating distribution was included in the amount on line 16D of the K-1 instead of on 1099-DIV, or if client also received 1099-DIV for that part of this puzzle. Max W, do you have a 1099-DIV with amounts in either box 9 or 10? Or, did the client receive more in distributions than was reported on line 16D of the K-1?
  14. The Bipartisan Budget Act made changes to the way partnerships are audited and allows the IRS to assess and collect tax at the entity level. Prior to its passage, any assessments were collected from partners. Here's a pretty good summary that explains it: https://www.thetaxadviser.com/issues/2018/jul/irs-final-regs-electing-out-centralized-partnership-audit-regime.html#:~:text=The BBA brought in a,generally effective for most partnerships.
  15. jklcpa

    Sale of S-Corp

    I did not suggest that there would be. The S corp shareholder's basis in his shares starts with his or her initial investment, and each year it will change for the items on the K-1. It increases because of the income that flows to the shareholder, and it decreases for things like nondeductible expenses and distributions. There is a specific order that is followed for each year's increases and decreases. Below is a pdf worksheet for calculating a shareholder's S corp basis. It is somewhat general, so please keep in mind that the gains reported on the K-1 will go on this worksheet on one of the blank lines for other income. There is also a line for the distributions lower down in the bottom section. Most tax programs will automatically create this basis worksheet for us if we ask it to. It's too bad that the preparer of the S corp return didn't provide this to your client. In your case, the first year would start with -0- basis from the previous year and then add the $94K contributed, then the items from each line of the K-1. You will need to complete a basis worksheet for each year the shareholder was in the S corp, starting with the first year, and the ending basis of each year carries over to become the starting point for each subsequent year's calculation. Also below is an article from the Journal of Accountancy that discusses the basics of calculating basis in an S corp. It's from 2012 but the concepts remain the same. S_Corporation_Shareholders_Adjusted_Basis_Worksheet.pdf https://www.journalofaccountancy.com/issues/2012/jan/20114319.html
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