First "HELP" post here!
I 'inherited' a client this year. They're brothers - partners in a partnership that took the S-election for 2016. Don't know how to phrase the question yet, so I might ramble a bit...
In 2015, they were filing as a partnership with a 60/40 split. The business had around 360k in gross receipts. There's no Schedule L on the 2015 return (and no Schedule L on 2014 and 2013 either. Business consistently grosses over 250k). Their previous accountant only ever asked for income and expenses, and they always gave it to him in an Excel spreadsheet.
In 2016, they filed as an S-corp. Over 500k in gross receipts. No Schedule L. One K-1 issued to Mr. 40. None for Mr. 60. Apparently, Mr. 40 bought out Mr. 60, but I do not find a record of this on the 2016 individual return. I find 12K in proceeds on Mr. 60's 2017 Sch D (he already filed his 2017 return btw). Shouldn't that have been reported on Mr. 60's 2016 Sch D? He should still have received a K-1 in 2016 if the buy-out was in 2017, right?
I have the 2017 worksheet and have managed to get a P&L from them, but they've been dragging their feet on the balance sheet - not because they don't want to give it to me, but more because they have no idea what it is or how to get it or why I'm even asking for it. Gross receipts for this year according to the P&L are again over 500k, however, their spreadsheet shows a little over 400k.
So the steps I'm taking would be, assuming that the buy-out happened in 2017:
1.I would need to amend the 2016 S-corp return so Mr. 60 can get his K1 for that year
2. Which would mean amending the brothers' individual returns
If buy out happened in 2016:
1. I would only need to amend Mr. 60s 2017 return.
Still waiting on client's answer as to when it happened. I do see some notes with question marks in their files. My interpretation is Mr. 40 would pay out Mr. 60 in installments of 1k a month for 5 years for a total buyout of 60k. How would that be reported on Mr. 60s individual return if that's the case?
Will deal with how to fix the balance sheet after I figure this whole buyout thing. I don't even know where to start.