bbrownatl

I’ve got a client who has four entities(A,B,C, and D) each with a different structure and ownership. A new entity (NewCorp) was formed in Nov. 2011 and concurrently the four existing entities transferred all assets and liabilities into the new entity. Combined, they have greater than 80% control of the new entity. My question is this. Entity B is an S-Corp with assets of $200K and liabilities of $280K. So, it is my thinking that to record this transaction requires the assets and liabilities being removed AND an $80K gain hitting the book and tax return. Correct? If so, how do you report it? On Form 4797, Sale of Business Property?

Here I am replying to my own question. Found the answer - just save and go out of the return. Come back in and there it is magically!!

I've prepared an 1120S and GA return. Had originally filed an extension. However, now done with prep of the return. When going to efile, it indicates the need to attach the Form 7004 as a PDF attachment. When I'm in the return and go to "E-file" on the top menu, I can select "Attach PDF" but it does not allow me to attach anything. It is sort of grayed out. I've got the 7004 save separately as a PDF. Any insight appreciated. Much thanks.

Any insight appreciated here. I have a client that had a limited partnership interest of 70% and from 2004-2006 incurred passive losses of ($91K). At the beginning of 2007, he bought out the other partner. For 2007, the business had income of $51K but ended up shutting down the business at the end of the year with still being on the hook personally for $84K in accounts payable. On his 2007 return, I took the full loss of $91K offset by the income of $51K for a net loss of $40K. In getting audited this year, the gov't contends that he can't take the $40K loss as he only basis of $51K. Before replying, I'd appreciate any insight here. I'm thinking that his basis would be increased by the $84K that he is on the hook for and thus would be able to take the $40K loss. Again, any insight appreciated here. Not sure if I'm missing the boat on this basis issue. Much thanks.

Ok, one more twist for you. This individual has another business from last year (single member LLC) that was on the 2009 Schedule C. Had a loss of $11K. For 2010, this entity was dormant. He insists that this entity is viable as he hopes to have revenue in 2011. It is a green energy construction company. Would you still show this one as one on a Schedule C and indicate the entity it ongoing? Otherwise, here you had an entity in 2009 with an $11K loss for which if you just not report anything for 2010 raises some flags in my mind. Alternatively, my thought is to explain out the nature of the entity. Maybe I'm way off base here. Any insight appreciated. Thanks again.

Much thanks. Great tax insight. I'll proceed forward!!

I’ve got a client where the husband did some 1099 work this year of approx. $13K. Subsequently, for their tax prep, he submitted his mileage and also a listing of tools and office equipment purchased ($3K). First the mileage, if I’m reading Rev. Rul. 99-7 correctly, he can only deduct the mileage between multiple work locations (i.e. the regular commute to and from home is not deductible, whereas the other trips during the day are deductible). Of course, the recordkeeping there is sketchy. Second, can those tools and equip be deducted via capitalizing and then depreciating? Normally, I’d say yes if this was an ongoing full fledged business. However, this was periodic 1099 work of which he may never use that equipment again. There is not separate entity, tax id, etc. This especially is my main question. So, I set up a Sch. C with the income, mileage deduction, and depreciation for this miscellaneous 1099 work which may (or may not) be an ongoing business of any sort. Any clarification much appreciated. Thanks, Brian __________________ The hardest thing in the world to understand is the income tax" - Albert Einstein