Terry D EA

If the payroll taxes were deposited and the 941 filed under the sole proprietor's name and TIN, the IRS will have record of those deposits under the sole proprietor and not the corp. You could show the corp not issuing any payroll until the fourth quarter, claim the PR taxes paid for the 3rd qtr on the Sch C and all should be fine. The sales taxes have nothing to do with the PR taxes. I have had my clients screw up their payroll deposits and you can't imagine the trouble and time it takes to get the IRS to make the proper corrections ( 3 years on the last one I took care of). So, I wouldn't do anything that would add confusion on the end of the IRS. Just another note, HRB filed PR taxes for a real estate agent client of mine who fell under the same scenario as yours using the wrong EIN. They also filed the 1099's using the wrong EIN. After corrections, things are still in a mess. Unless someone else has a better way to handle this, follow my first suggestion Terry D.

MAS did acknowlege this was a liability for the sister-inlaw. You need to send this one to HRB Terry D,

As I looked into this further, my client owned the property that the business rented from him and the depreciation was taken on his individual income tax return from Sch E. So, this makes this a schedule D transaction all the way correct? If I am right, then the 1245 depreciation recapture doesn't apply. I am tired and am having a difficult time trying to keep this straight. I am closing the office and heading home for some sleep. Maybe tomorrow it'll click. Thanks, Terry D.

Okay KC you got my attention. I really didn't think the loan repayment was part of the expense of the sale but thought I would get others opinionl. Now, if the cap gains tax rate is zero, why does the program still show a fair amount of tax due. This should be reported on form 4797 1245 property long term with depreciation recapture correct? When I look at the cap gains worksheet the amount is being taxed at 15%. Am I doing something wrong? Here are the figures: sales price 67090.00 basis 12,500, land value at the time of purchase was 1045 and there was 469.72 that are an expense of the sale. Full depreciation had been taken. I show 54,049 cap gain on line 13 and 11,455 depreciation recapture from form 4794 on line 14 of the 1040. Because of this and a 1099-C that is taxable, the client owes 6323. Thanks for taking a look at this. Terry D.

I think it would depend on when they changed entities. You may only have to do a short year 1120S and the remainder of the year on Sch C. I don't think it is proper to file the entire year as an S-corp unless it was an S-Corp for then entrie year. Terry D.

LOL, I think Joelgilb is right. Terry D.

I am too tired to look this up. A client sold a commercial building where he owned and operated a business that closed two years ago. A personal friend loaned the business some money (10K) to keep the business running. He only repaid a small portion and then the business closed. He did repay the balance of the loan from the proceeds from the sale of the building. Would the amount of the loan balance paid be part of the expense of the sale? Thanks to all in advance Terry D.

i got in this one late but just had a client today that owed 7800 to the Feds and close to 2k to the state. I do exactly as some of the others. I peruse the return for anything additional and offer the client suggestions on additional possible deductions. Then I tell them it is what it is. I genuinely feel bad for some that did some planning and didn't expect such a large hit. But, this guy is a personal friend and I told him last year to see me on June 30 or each quarter to re-evaluate the estimate. You got it, didn't bother to do so which doesn't make me feel so bad after all. Others that are not personal friends, and do not plan or even ask, then I don't feel bad at all. Terry D.

I am curious to see what others will say here. But, if it were me, I would enter each transaction separately if there was only twenty or just a little more. A few years back, the IRS stirred up a big stink when they were requiring that each transaction to be entered and then offered up the form to put on additional transactions. I don't have that many clients with large amounts of transactions so I am not real clear on the requirement. Terry D.

One of my clients decided back in 2006 to complete their own tax return. In doing so, they left off one of their 1099-R forms. Naturally, the IRS found this and began to send the notices. My client did respond to the notice and agreed with all of their proposed changes without considering any possible withholds on the missing 1099-R. Now the client wants me to handle this. My question is, once the client responded with an agreement of the proposed changes, can I now change that response or is it etched in stone. I haven't had this happen before and would like some opinions. Terry D.

In order for a private company, (S-Corp), to maintain its corporate status, must the company issue stock certificates? This company is not publicy traded and I am not aware of any law in NC that states that stock must be issued. However, another CPA firm has stated this is so. Can anyone shed some light on this for me. Terry D.

I had one of these dropped on my desk last friday. Apparently, my client overlooked the 23K retirement income he took from a 401K plan and forgot about or lost the 1099C from Dell Computers. The W-2 forms that I have stapled to last years return match the figures on the tax form but not what the IRS has. Now they call me and can't believe the owe 8K plus interest and penalties and that someone has had to make a mistake. Well guess what, someone did. I haven't told them yet that they will owe the state as well. How in the world do you overlook these type items? The last time this happened, the client blamed me for forgetting to input the information they didn't provide. I guess they didn't like it when I told them the light in my crystal ball had burned out and I couldn't find a replacement lamp and the ball had brokern when it fell into the trash can. I have not seen them since which is probably a good thing. As for this one, I said oh well, another one bites the dust. Terry D.

>>>The old accountant said that is the way the old owners did it and continued the process<<< This statement in and of itself bothers me. Do owners get the right to tell the accountant how to keep the books? I understand your apprehension and would proceed very cautiously. Can you look on the Michigan Secretary of State website to see if the LLC exists? In NC the LLC would be required to file an annual report which would be public information in NC. Does Michigan have the same requirement? I can't answer your question about the EIN either as I have never come across this type of situation. Be careful with this one. Terry D.

I might add one thing to Tom's post. The penalties and interst should be picked up by the employer for failing to properly withold the required employment taxes. Don't forget, the employer owes his portion of the FICA as well. Make sure you cross all of your T's and dot all of the I's when making the corrections. The IRS can screw this up and cause you more headaches (Just settled one for 1st qtr 06). Be sure to get your fee (substantial) for all of the corrections. Terry D.

Fortunately, and I should probably keep my mouth shut, I haven't had either of these problems yet. I certainly hope there is a fix coming that will ensure there won't be any future problems. I do wonder what operating system you are running. I am running XP-Pro SP2 and have not updated to SP3 because of some conflicts with ATX that were posted back in December regarding the blue screen of death after installing ATX. It will be interesting to see how this comes out. Terry D.

I'll try your suggestions. Thanks, Terry D.

Thanks for the help. I'll bet that is exactly what I have done. I didn't change anything but I do remember re-opening the return to answer some questions for this guy's broker. Terry D.

This was kinda scary and I don't know if I did something wrong. I had an e-file that was created and I selected it to be held. The client called to inform me there was additional information coming which is why I held the file. While transmitting other returns, the return I had held got transmitted and fortunately rejected. Why did this happen? Is this a poor feature or am I using it incorrectly? I have used ATX for 10 years now and have never used this feature until now. Help please. Terry D. :scratch_head:

Onthe W-2 input screen you have to select the locality of the state that local taxes were withheld. I have a client who lived as a part year resident in PA. The state of PA is selected, the local tax entered, but the locality which is Philadelphia, doesn't exist in the drop down menu. I think this has been asked before so please accept my apologies if I am being redudant here. How do I get the locality to show up. If I enter blank, then it is red flagged when the e-file is created. Thanks, Terry D.

Gotta love em :spaz:

My take on this is it is a taxable sale. When they were given the property before the parents died, their cost basis was their parents cost basis divided by the number of children. If the farm was indeed sold to them for $1.00 then that is their basis and by your post there is taxable gains. What would be helpful is if you could obtain the documents from the time the parents gave or sold the children the property. Did the LLC own the property or the parents? >>>>NOW the K-1 for the sale of the farm showes a capital gain of $95000. This was basicaly inheritance.<<<<< This is not an inheritance and is a sale of business property Provide some more information if you can. Terry D.

The final K-1 should be input on the k-1 worksheet within the partnership return. I don't believe there is an input on the 1040 K-1 worksheet if that is what you are referring to. Terry D.

I got it figured out. Just as I thought, the IRS has made the error. I can't even tell where they got their figure from. Atleast I know the program is calculating the EIC correctly from the tables. Thanks Terry D.

Has anyone else experienced this problem? I did my son's return and he received a notice from the IRS the EIC was calculated incorrectly. All of the figures the IRS proposed matched mine except for the EIC. I will be calcualting this manually to see if the program is calculating correctly or the IRS has made a mistake. The difference is 169.00 which is an odd figure. Any suggestions? Terry D.

RoyDaleOne thanks for the cliff's notes as it really helped. OldJack, as usual, you are very helpful and thanks for reminding me about reducing the retained earnings account to make a stock purchase. The solution to the problem is as follows: Treasury Stock (5,000 x $10.00 Par) 50,000 Paid-In Capital Excess Par Common (5,000 x (14.00 - 10.00) 20,000 Cash (5,000 x $11.00) 55,000 Paid-In Capital Treasury Stock (Plug to balance) 15,000 Again, thanks for all of the wonderful help with this. If I would have just remembered that if you credit a paid-in capital account, you must debit the account when you sell or purchase the stock. In this case, the number of shares reacquired had to be removed from the PIC par common for the difference between the purchase price and the FMV. To make the columns balance, the Paid-In Capital Treaury Stock account is credited and the figure is plugged in. Thanks again Terry D.