DANRVAN

That is correct, I think of 1245 and 1250 as subsets of 1231 property. Sec 1231(b)(1) includes property "of a character which is subject to the allowance for depreciation provided in section 167, held for more than 1 year". Section 1250 applies since 1250(c) states "the term “section 1250 property” means any real property (other than section 1245 property, as defined in section 1245(a)(3)) which is or has been property of a character subject to the allowance for depreciation provided in section 167." Therefore, the undepreciated portion of the building and land are taxed as capital gains. Because of the above definitions, the rental does not need to rise to the level of a trade or business to be classified as either 1231 or 1250 property.

It is not a new form or concept, been around for as long as I can remember doing taxes; and referred to in multiple replies to the OP above.

You can e-file the previous two years when they start accepting business returns in the next week or two.

Use 2022 for periods beginning in 2022 and ending in 2023.

I think you are confused. That does not make any sense at all.

How did he find this out? I suppose he could file using those as his representations. Still lots of unanswered questions. How long has the business been closed. Was this a Sub S? Does he know if any returns were ever filed? Was he the sole shareholder? Did he take a wage? Has be been filing his personal returns? Did the Corp own any assets, and if so what happened to them? Most likely not. If he really wants to know if any any assessment have been made try calling the PPS hotline.

No, the gain from the first property is deferred to the sale of the second property. The total gain is the same, but there a possibility that the combined gain on the second sale could push the taxpayer into a higher tax bracket.

and Merry Christmas to you and all on this board!

Without knowing all the facts, I would probably let him know there it not enough information to file complete and accurate tax returns after all these years. I would be carefull how I phrase it, but after 10 years how likely is the IRS going to contact him now?

So to get this straight, you are trying to set up client accounts for the first time? Go to the home page but do not log in. You will see a tab to "enroll" https://www.eftps.gov/eftps/direct/EftpsHome.page I just did one few days ago.

That is correct. I am curious, are these 1120-S returns that you prepared?

You are making it way to complicated. You don't need to read past paragraph (a) titled "Deduction Allowed".

Wages are not reduced on form 941, just the employer's deposit liability by the credit. That is true to prevent a double benefit.

Incorrect. Suggest you review sect 172(a).

Maybe some confusion in how I am reading your statement; but I think you are referring to the year of loss and carryforward computation. In the year of deduction the limitation is taxable income (with 80% rule) without regards to section 199A.

We also have a lawyer on our finance committee that offers help with those types of issues.

Oh, that changes my answer. per: https://www.irs.gov/charities-non-profits/churches-integrated-auxiliaries-and-conventions-or-associations-of-churches "Churches (including integrated auxiliaries and conventions or associations of churches) that meet the requirements of section 501(c)(3) of the Internal Revenue Code are automatically considered tax exempt and are not required to apply for and obtain recognition of exempt status from the IRS." So now what is the next step? If this was my local parish, I would furnish the above information to the investment group. If that did not work, I would ask the CFO of our Diocese for help in resolving the matter.

Out of curiosity, auxiliary to what type of organization? It looks like they will need to apply for tax exemption.

Have you tried the IRS TEO search? https://apps.irs.gov/app/eos/

Now I am convinced it was made up as well, after I have beat it up trying to figure out how sec 6694 could apply!

In OP situation there is zero liability or understatement on the 1120-S; even though the preparer of the return is subject to 6694 per Rev Proc 2009-11, (which also includes form 1065). As I explained in a post above, in order for 6694 to apply in this case, it would come from an understatement of the shareholder's income tax liability. For example if a sole shareholder claimed a $50,000 tax free distribution instead of a wage, the understatement of liability would end up on his form 1040. If in fact that is the case, the 6694 penalty would be avoided by using a 1099-NEC (right or wrong) to avoid the 6694 penalty as I also mentioned.

Sound like the guy Terry mentioned in his OP specialized in those.

That is the key. If filed by Dec 15, the return will be two months late from the extended due date. If filed after Dec 15, three months. If e-filed after Jan 15 four months, so the late penalty increases from 10% to 20% between now and then. Even though there might not be any penalty because there is zero tax due, that could change if there was unreported income, or denied credits or deductions. The return is now eight months past the normal filing date. They can wait a little longer for a refund if that what it takes; I am not sitting on unfiled returns for 30+ days for a number of reasons.

That is true, but it is not going to result in a section 6694(b) penalty of $5,000.

Okay, here is a possibility. Accountant prepares 1120-S and K-1 showing distributions and zero wages while there was no doubt shareholders were providing substantial services to the corp. Then accountant prepares 1040 (or in this case 20 of them) based on the K-1 he prepared which shows zero wages. Now there is an understatement at the 1040 level and IRS as the burden of proof to show: a. There is an understatement of liability which is due to a willful attempt in any manner to understate the tax liability by the preparer, or b. The preparer has recklessly or intentionally disregarded rules or regulations. In this situation, there should not be a substantial understatement on the 1040 (and lets leave off the 199A deduction) for the year in question by reporting on Schedule C instead of W-2 wages. And since there is not a significant understatement, there is not a potential sec 6694 penalty. Although the 1099-NEC amount could be reclassified as wages, the bottom 1040 liability should not be significantly different. Not saying that is the proper way to handle it.