Lee B

Your post says no income, which I assume means they are not in business, therefore no tax returns need to be filed, no EIN. Husband, wife and all of the children could all be LLC members. Basically all of the tax related questions are moot.

Exactly, we still don't know what we are dealing with except we're gaining a lot of circular momentum

With the LLC as the owner entity, 10 % or 20 % interest can be gifted, sold or passed on to other family members which in the long term makes it easier to keep ownership in the family.

I have read other articles saying that forming a (nonbusiness) socalled Family LLC in situations like this is a good idea for multiple reasons. Involving a corporation, makes no sense to me.

https://files.hawaii.gov/tax/news/media/2021-01-08-income_tax_for_unemployment_ compensation-form_1099-G_distributions.pdf

Five minutes of online searching found multiple sources: "Tax on unemployment benefits: ARPA says that individuals can exclude up to $10,200 in employment benefits received in 2020. Hawaii is not going to copy the exclusion. It costs too much. If you received unemployment benefits in 2020, and you didn’t elect to have Hawaii tax withheld, you should look very seriously at paying estimated Hawaii tax." I suggest that you confirm this.

What if your distributions have zeroed out Retained Earning? Wouldn't distributions then reduce APIC or do you end in a partial liquidation?

In the last few years, I have finally realized my limitations and my areas of expertise. If these were my clients, I would tell them I am not able to do their returns any longer.

Lion is right, you need to get all of the information available with respect to the plan, before you even speculate as to what can be done.

I am not going to get into the messy details, but for years I did a 1065 return with no basis details. It was hard enough just to get the Income & Expenses! Finally earlier this year, I told them that I couldn't do their return any more.

Shouldn't need a workaround. There should be a supporting worksheet that allows the designation of uneven amounts. However standard operating agreements usually specify proportionate withdrawals.

Just combine or split the 1099 entrys in order to achieve the correct results. As long as the end result is correct it is highly unlikely that IRS will notice or respond, and even if they do you have the documentation to back up any required reply.

How is all the gain related to depreciation recapture? You don't have any basis allocated to land?

I would hope that nothing happens, but all you can do is wait to see if your client receives anything.

Good Point, In addition if it was sold at a loss, I don't believe Form 6252 applies since it would n't be an installment sale. NEI

This is a double negative so not sure what you mean? Follow the instructions and completely fill out Lines 1 thru Line 26 on Form 6252. If you do that, everything should flow to the proper places.

Find out the hours these lines are answered and have her call first thing in the day.

"The report, from the Treasury Inspector General for Tax Administration, also found that the processing delays caused by the closure of the IRS’s Tax Processing Centers in April 2020 led to the service assessing numerous incorrect failure-to-pay penalties (211) and incorrect estimated tax penalties (1,256). TIGTA also noted that systemic payment processing limitations also caused problems: IRS systems can only process payments received within the last 30 days, but when TPCs were reopened in June 2020, many payments already exceeded that limit, and the IRS did not revise that limit until October 2020 – because it did not realize that it could. ACCOUNTING TODAY "The backlog of returns, correspondence, and other types of work resulting from the pandemic has and will continue to have a significant impact on the associated business taxpayers," the report indicated. The report suggested that the backlog could have been reduced by have more payments redirected to IRS lockbox sites; most payments already do, but over 6.9 million payments worth more than $37.6 billion went through TPCs in 2020. TIGTA recommended that the commissioner of the IRS Wage and Investment Division correct the inappropriate penalties, and look into the possibility of sending more payments to lockbox sites. The IRS agreed with both recommendations, and said that it had begun making corrections to the incorrect penalties, and had updated its lockboxes to be able to process additional notices. It did note, however, that it would not be possible for payments received in field offices to be directed to lockbox site."

In addition there were also 281,000 unprocessed business tax returns according to the TIGTA Report

My understanding is that the exempt income should be included in the "current year net income" line. If it is not then it should be on the "Other Increase" line.

If I was preparing this return, the only place I would enter it is on Line 6 Schedule M-1.

During my 45 years as a professional accountant, I have been involved with several adversarial audits with aggressive auditors. However I don't ever remember being subject to scorn or feeling intimidated. In fact the two most aggressive audits I was ever involved with were not tax audits. The first was an Employment Tax Audit where the auditor was determined to prove than one or more of my client's 1099 subcontractors were in fact employees. This auditor didn't back off until his supervisor stepped in and told him to wrap up the audit and move on. The second was a Workers Compensation Audit where the auditor was determined to prove that several of my client's employees were performing work that should be classified in a higher cost class code. This auditor actually went to my client's facilities and followed the employees around to see what kind of work they actually were doing. This auditor ended up prevailing which cost my client an additional $ 6.000.00 in Workers Comp Fees.

Well said, Sara

Once the last 1065 is filed the PTS Entity ceases to exist. Since EINs are not transferable, the disregarded Enitity will need to obtain a new EIN. "The IRS cannot cancel your EIN. Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. The EIN will still belong to the business entity and can be used at a later date, should the need arise. If you receive an EIN but later determine you do not need the number (the new business never started up, for example), the IRS can close your business account. To close your business account, send us a letter that includes the complete legal name of the entity, the EIN, the business address and the reason you wish to close your account. If you have a copy of the EIN Assignment Notice that was issued when your EIN was assigned, include that when you write to us at: Internal Revenue Service Cincinnati, Ohio 4599"

Well Tom, that is the thing about opinions, everyone has one. However we seem to live in alternate realities.