Max W

5 hours ago, Abby Normal said:

I would explore letting the old corporation die and forming a new one. Why incur all those penalties for an inactive corporation. This would mean a liquidation of the old corp, so the question becomes, what assets are in the corp?

Abby, that was the first thing I suggested to him, to just let it die and start fresh with a new corp name, but he insisted that it was for sentimental reasons as his father had started the business and he wanted to keep the name.  So, then we are back full circle to the initial question of the "ghost' assets.  To liquidate the corp, he would have to file all the back returns, pay the $800 yearly franchise fee to CA plus  P&I.  

I uploaded a 2848 and received a confirming letter in about a week and checked on line and it had been posted.

If you call PPL and fax it to them, always request that the 2848 be forwarded to the CAF Unit.  All they have to do is click a button.

19 hours ago, Lion EA said:

The state may've deactivated the corporation. You're going to need lots more information from that potential client &/or collect a very large deposit toward your hours.

It was suspended years ago.  The client wants to revive the Corp.  This means filig all the missing returns and paying fees and penalties. 

15 hours ago, BulldogTom said:

Ouch....This is one that could take up most of your summer and fall.     

Are you sure the corp was operating from 2012 until date of death?  If so, I think you have a bigger issue than the depreciation schedules.   Do you have income statements for all those years?  If not, the books need to be produced (can you get bank statements for the years in question?).

It may be that you can work out a deal with the IRS, but if it is a CA Corp, I don't think you are going to get out of all of the minimum corp franchise fees for all those years, and CA penalties.   If the corp was operating and did not file, there is a big mess to fix.  And the Corp has to be collapsed with the CA SOS to stop the fees from continuing to accumulate.

Good luck my friend.   I hope the kids have the resources to pay for the clean up of the mess their folks left them.

Tom
Longview, TX

Client knows he is  going to have to pay the $800 FTB fee for 9 years. the SOS. bi-yearly penalty of $250 plus P&I and file a Cert. of Revivor.  He's got all of his records from 2013 on and has supplied a P&L. 

On the federal side he shows losses for most years, Because he paid himself a salary, so very little penalty there.

My only concern is too clean up the one item on the balance sheet.   I guess I'll just leave it stand nless he an come up with a dep. stmt from before 2012.

On 6/10/2022 at 12:47 PM, Lion EA said:

The firm was founded in 2021? So, you're filing their first return on extension? Or, 2021 was filed by someone else and you need to...what?

Ooops! Mistake. Founded in 2001. Last return filed in 2012.

Thanks for all the suggestions, they have all been tried.  However, I have the client searching for additional returns and information, but so far nothing has come up.  The firm was founded in 2021 and the last return filed was for TY 2012.  

With no additonal info, what would be the best way to proceed?

C-corp client hasn't filed 1120 tax returns for several years.  The las filed return has a simple balance sheet with few entries.

However it shows an item(s) were being depreciated, but the depreciation stopped.  In other words, the OY and EOY numbers are the same.

Client inherited business from parent and has no idea what it could be.  The assets being depreciated had a start value of $75K and $50K acc. dep.

The only other asset is cash and the Liabilities are Add'l. piad in Cap $74K  and Retained earnings -$46K.

The question is what, if anything, should be done with this?

Only a 10% increase????  It should be more like 60%, or 90cts.

It looks like a rubber buoy converted to a punching ...  err, butting bag.

Client received $15K EiDL last year.

He spent $9K on expenses and still has $6K

What if anything is taxable; or is it a grant that has to be repaid and treated as a loan?

This should help.  It seems like there are just a few simple steps to take.

https://www.guideline.com/blog/what-you-need-to-know-about-calsavers-june-30-deadline/

7 hours ago, cbslee said:

According to TIGTA, the IRS has over 2 Million unprocessed Amended Tax Returns

Those must be the ones that have refunds. 

You can get a free demo and try running a few returns on it.  That will probably tell you if it is what you need.

3 hours ago, Abby Normal said:

Community property?! I'm tagging out, because I have zero community property experience (thankfully).

 

Lucky you.  It's a pain for MFS, but for stepped up basis it can be a real advantage, if it is recorded correctly.

3 hours ago, Abby Normal said:

You should probably just use the built in proration by dates of ownership for the deceased shareholder, but the question is, does his ownership pass to the estate or to the widow?

You could also allocate by running a P&L through the date of death and just put those amounts on the K1 for the deceased, but it might not be worth the effort.

I recently had some older clients request their K1s be titled as 'Tenants by the Entireties' with their spouses (MD law), so they get one K1 with both names on them. They had the same last name so I added "& Spouse Name" to the first name field and "TBE" after the last name.

To complicate it even more, this is in California, a comm. prop. state, where most things are supposed to be 50/50.

Then they were running two different business under the S-corp.  He was an Indian guru, astrologer an his master guru is in India and paid an enormous price for his consultations.    She started a cosmetology business last year and made about 1/4 of what he made in his half of the year.

Clinets were a married couple and he died in middle of last year.  How should ownership percentage be allocated?

A million thanks to you, Judy, for managing this site so well and giving so generously of your time and effort.  It certainly beats hands down any other tax discussion site on the web and it's all due to you.

I hope your husband has recovered well and that you get the rest and relaxation you so deserve.

On 3/28/2022 at 12:09 PM, Slippery Pencil said:

That won't tell what the irs has on file, it just confirms that a return was filed.  If the return isn't completed, it's idiotic to efile a fake or incomplete return just to see if one has already been filed. 

Who said anything about filing an incomplete return.  The asker had tried get a transcript, but if the request was by mail it is going to take a long time.  Right now, under the current IRS backlog and long on-hold phone times, filing a complete return will either go through as normal, or be rejected and then the appropriate action can be taken.  

The tax return has to be filed anyway and with client in the dark, taking action will demomstrate to the client that the preparer is doing something for them rather than sitting on their "idiotic butt."

4 hours ago, artp said:

 I am waiting for a reply to my request for a transcript to verify what the IRS has on file. The tax shown on the notice was calculated based on filing as single.

You may have a long wait.  The fastest way to find out is to file the return electronically.  If the spouses SSN has already been used on another return, the IRS will reject the return and it will have to be mailed in.   

Taxpayer had a home while married. Divorced and paid ex $200000 for the title and refi in her name. Now she sold ot it. Basis is the actual carryover cost of acquisition (not half)? Plus the cash paid to her ex?   Or is this a marital settlement with no change in basis?

1 hour ago, Catherine said:

Show higher income for a mortgage application?

I thought of that, but they had filed jointly for 30 years. She said 2021 was filed under her name.  Was it S or MFS?  And, ususally 2 years of tax returns are needed.  It's beginning to look like a scam.

Something doesn't smelll right here.  Why would someone file a fraudulent return showing a balance due?    I could understand it if it were for a large refund.

This is going to result in a CP2000 letter.  The current EIN will show up in the IRS transcripts and the wrong one that was used will not, so there won't be a match.

It should be easy to explain this to the IRS.  What might be more difficult is explaining it to the client.

Thank you DANRVAN

11 hours ago, DANRVAN said:

The solar panels qualify because they are property for which depreciation is allowable; provided they meet the rest of the criteria for qualified property per sec 48(a)(3).   

The reference to allowable depreciation distinguishes it from the residential energy credit under code sec. 25(D). 

So, if they get the credit then that is deducted from the depreciable basis?

Since rental's are income producing property, are they eligible for the solar energy credit under IRC section 48?