BHoffman

Hi Jack - It's a stock sale to an individual. Not an asset sale. He started the company from scratch and did not buy it from anyone else. He did not contribute any fixed assets to the corporation. There are no loans between him and the corporation. Thanks for your response. I'm pretty sure this is as straightforward as it seems for this tiny and uncomplicated company. I will double check for outside items that will increase or decrease that $15,000 basis. He was talking about an installment agreement with the buyer (I know how to handle that), and I'll want to check Sec 1202 and do some other things. Just needed a small push in the right direction.

Is this just too easy? I have never actually presided over a 100% C Corp stock sale. The seller is my client. Tax returns and financial statements show: Common Stock: $10,000 Paid in Capital: $5,000 So, is his stock basis $15,000 and that's it? If the selling price is $100k then his LTCG will be (without considering 1244, installment agreement, etc) $85k? Thanks. I've just returned from an emergency trip back east due to a sudden death in the family that really rattled everyone. I'm home now.

Never heard of a registered CPA.

It's more fun to give a brilliant answer than to ask a dumb question. Hope nobody's keeping score Out of all the responses, Catherine's was the one I most identify with. The forum is my last resort. It isn't the garden variety stuff that trips me up, it's the weird or unfamiliar situations. Posting in the forum forces me to make sure the question is clear and easy for others to understand. Once in a while just getting that clarity with the question leads me to the answer.

https://www.icpas.org/docs/default-source/default-document-library/advocacy/government-relations/irs-letter-regarding-registered-cpas.pdf?sfvrsn=0 Wondering if that link will help you. A short glance seems to indicate that registered CPAs are treated differently by the IRS than licensed CPAs for the state of Illinois.

Hi Bill, one other thing....you might want to meet with the client and go over the nuts and bolts of your basis calculations. Maybe he has some additional information that will make a difference, or maybe he'll feel more confident that your basis calculation is correct. Depending on their level of interest and comprehension, I try to get input from the client in some of these weird situations, and especially if we aren't in agreement.

I view Bob Jennings webinars at taxspeaker.com. There are live seminars offered. He's a pretty informative and even entertaining speaker. Some of the included PDF reference books are better than others. His seminars/webinars are geared to small tax practioners.

I have been riding this guy since our first meeting over a year ago to get the real estate appraised and out of that trust. I have to leave town tomorrow for a few weeks and would like to come back to this when I get back. I'll be online, but won't have the trust doc. Thanks very much for giving me the benefit of your experience!

SaraEA,. thank you very much for your advice! I think the beneficiary primary residence was owned by the decedent, as the mortgage 1098 comes to the decedent while the property is titled to the Trust. I think I can report the interest in the Beneficiary Sch A. I have also seen people victimized by scam artists. In AZ, the attorney general is the one who investigates these things. If the scammer is an attorney, the State Bar Assn. might have some leverage. The decedent was surely taken advantage of by making this trust. He already had a will and his son was the sole heir. He had an IRA worth approx $20k, a res. rental with a FMV on date of death of around $200k with a mortgage, and a house he lived in with his son and son's family for around $260k with a mortgage, and other debt. The son is a new client, but seemed to believe that leaving the real estate in the trust would protect it from creditors. We had to have a talk about that

Yep. The beneficiary's primary residence and a residential rental house is also in that trust.

The beneficiary can NOT claim the withholding on his social security number. The Trust will file a return for a refund. SaraEA pointed out that only backup withholding (required withholding) can pass through, not regular withholding that was requested and not required. Thanks very much and I'm sure I will have more questions. Trusts seem like an entirely different realm of tax preparation. I have taken CPE Webinars, read the instructions, etc. For some reason, it just doesn't sink in and I feel pretty dumb.

Thank you, SaraEA! I have corrected this error. If the decedent did not make any nondeductible contributions to his IRA, will the IRA have any basis?

Well, I hope I did Your post indicates that the Trust will report the backup withholding. My understanding is that if the Trust distributes 100% of the IRA proceeds to the beneficiary in the same tax year it received the proceeds, then the backup withholding is passed through to the beneficiary on his K1 in box 13, code B. Right? The trust distributed 100% of the income it received - this IRA and $3k in rental income. So, does the trust have any income to report or any tax to pay? Please say no

I'll try to answer my own questions on a hot Sunday afternoon Nobody pays penalties. The Son pays the tax since the IRA distribution to the Trust and the Trust subsequent distribution to the Son happened in the same accounting year. The Son gets to report the withheld tax on his 1040 since he received the total distribution received by the Trust. OK? Thanks and Happy Sunday!

Wrapping this up. The Trust was the beneficiary of Dad's IRA in the amount of approx $25k. The Son is the only beneficiary of the Trust. Dad died at age 69. The Trust took a total distribution and passed it all to Son. Is this subject to any 10%penalty to either the Trust or the Son? I'm 99.99% sure the answer is no, but have never seen a trust named as a beneficiary to an IRA. Who pays the tax on the IRA distribution, the Trust or the Son? I'm hoping the Son. 10% was withheld for Fed tax on the 1099R. Since the total proceeds were distributed to the Son, is it correct that the withholding is reported on his K1 and passed to him? Thanks as always for any advice. I've looked and looked and am coming up dry. Much of the info I'm seeing assumes the beneficiary wants to keep the funds in the IRA, not take a total distribution.

Pubs are not regulations and have no authority at all. Pub 957 is just guidance for employers reporting back pay and other special compensation payments to the SSA. There is an exceptions paragraph. I would prepare the amended returns with no worries.

Then I vote:

Hi Jack - I say what you said:. They are residents of MO. They visited CO and were not residents when the unofficiated ceremony took place. Based on the description of events, I vote that they cannot legally file a joint tax return.

.....And, I'm not 100% positive but I'm 99% pretty sure UPE has no basis limitations.

Catherine, it sounds like your client has substantiation but as Lynn points out, that doesn't always mean an auditor will agree immediately to allow the loss. Was a balance sheet prepared? It sure is nice to have a written partnership agreement with the correct UPE verbiage and all the CPE classes address this, but I have not ever been able to find a statute or cite that requires one. Reg 1.761-1(c) does say that the agreement can be oral. From how you describe it, I think Dad might have had UPE if he paid partnership expenses directly from his personal account and not a capital contribution.

Thanks a bunch!

Abby Normal - have you ever had any problems with TBird email? So far, so good here and it's a whole lot easier than Outlook!

I installed TBird email on my new computer with Win 10, and I like it much better than Outlook! So, I bought Office Home and Student for $150, and then bought Office Home and Business just because it has Outlook for around $230. I could have just installed nice TBird, but nooooooo.......and my desktop scanner driver won't work with Win 10. And my HP printer/scanner/fax/copier is making very crappy copies only if I use the top feeder and I can't figure out why. It also either scans a very crappy PDF or a very huge PDF. Those are the choices. Bah!

I want to join the 21st century and be like the cool kids, so I aim to just get used to the new look and functions. I found "sticky notes" and loving those. They don't cheerfully flutter when the back door opens, but one can't have everything.

I was working with Vista, so this is a whole new experience. Frustration level only reached 10/10 a few times today.