miatax

Hi: I have a client who has an LLC created in 2006. It has not had any activity and has not filed any tax returns. The LLC has 2 managing members: 1 is a U.S. resident and the other is a foreign Italian company. The LLC plans to purchase rental real estate this year. The funds will be provided by the Italian company. When the purchase takes place and when the LLC starts producing income, what are the reporting AND tax requirements the LLC needs to meet regarding the foreign company? Is there anything in particular I need to be aware of when filing the first (2009) tax return? I have never done any tax returns with foreign members / partners. Please let me know if there are any other questions I should ask my client. Thank you.

Client (92 years old) wants to change banks. He got into a fight with the former bank and does not want to speak with anyone there. He wants to move his IRA to a new bank. He was already automatically set up for RMD, but I want to be sure he doesn't get taxed when taking the money out to rollover to the new bank. Does the form requesting specific tax free 'rollover' have to come from the old bank or can it all be done through the new bank? Client showed me application from new bank but does not mention anything about the 'source' of the funds.

Another recommendation: Set a little bit of time aside each day - 15 or 30 minutes - and start recycling many of those magazines you know you won't read again. I only keep the magazines with articles I find very interesting and that are applicable to my work. Best of luck.

Jainen: The reason I called was for a notice that was specifically in reference to 2007 which I clearly specified to the representative. I do understand that communication has 2 ends. I see how this can be confusing to some, but it surprised me that an IRS rep (from the phone number on the notice) wouldn't understand and then proceed to hang up on me. That's all.

I did get his ID # and I explained what happened to the next agent that helped me out. She was nice and ended up helping me out. She couldn't believe he hung up on me.

I called IRS to get an explanation for a 2007 - 1120 notice. I was on the phone for 15 minutes. Finally I get an IRS agent and he is asking me questions about the business. He is asking if I have in front of me the 2008 return. I told him I have the 2007 because we are on a different fiscal year. He asked me what month we close in and I responded November. He went on to explain why I should have the 2008 return in front of me since it should be from December 2007 - November 2008. When I explained to him what a fiscal year was and how I had the correct year in front of me, he hung up! This was a first.. Thought I might share that with all of you... haha... Now I am on the phone with another rep that knows what a correct fiscal year end is.

So based on the above information, which I received all the backup from the client, what is the taxable SS portion and the total taxable income? I will plug it into ATX this evening when I leave my regular job, but I want to understand what is taxable.

Thanks. I am getting the POA signed today and I'll call IRS later this afternoon. So, considering this is all their income for 2007 as stated, what would be the correct taxable income?

I have a client MFJ (both in their 90s) that state they did not file a 2007 1040 but notice states otherwise. Now they are receiving an IRS notice claiming the following: 1099 INT - $15,554 1099 SSA - $21,594 (IRS is proposing $18,355 Taxable SS) 1099-R - $1,435 Client claims that they have always been under a $32,000 SS exemption amount so they weren't under the impression they had to file. Can someone please explain this better to me. IRS SS Benefits state the following on the notice: "Our notice includes SS or Railroad Retirement Benefits. These benefits are partially taxable if your modified AGI PLUS 50% of the gross benefits, exceeds the following: *$32,000 if MFJ." So, Total Change to Taxable Income = $35,344 Shown on Return = $<9,800> As corrected by IRS = $25,544 Tax = $3,438 Failure to File = $688 Interest = $310 Total amount owed = $4,436 SS benefits is not my forte. I am not clear on this issue. Please let me know if I should prep the 2007 1040 based on above and if what IRS is proposing is correct. Thank you.

I never did one of these. 1120 (C Corp) has NOL in 2008. 2007 was profitable. Can I carry it back and if so do I fill in form 1139? If return wasn't filed by extension due date (9/15/09) can it be disallowed? Help. Thanks...

Accrual Basis Taxpayer wants to close company for 2008. Bank accounts were closed, however he did have a $400 business loss (licenses / professional fees) on his K-1. Only item on the 1120S at the end of 2008 is this liability & expense which he paid personally in 2009. Can I still file his 1120s as final for 2008 just for that or does he need to file a 2009 1120s since that is when he paid the liability for the company?

I have another client who has a huge NOL carryover that is to expire in 2007. That return has been on extension but it lapsed. Now that I am helping him gather all the information to file 2007 and 2008 (which also had an extension) could IRS disallow NOL for exceeding the extension? I haven't found any information on that, but I wanted some feedback so I can tell my client what he may expect. Penalties and Int? but if he had income in 2007 and is carrying forward a loss, then what?

Thank you!! Now I realized there was a check off box to 'allow distributions to go in excess of AAA'. Now it works.

I have an 1120s on extension that I need to finish and I am stuck with the AAA. The beginning balance is Negative (32,272) Ordinary Income is 36,494 Other reductions is 550 The client took out 11,210 in distributions but ATX is zeroing out the ending AAA by forcing the distributions (line 7) to be $3,672 and forcing my retained earnings on the balance sheet to be zero. Should I force R/E to be (7,537) and force the AAA to be (7,537) Another local accountant advised me that it was ok to have negative AAA but I am still not sure about this. **Add'l info APIC is $19,564. In worse case scenario, if I leave AAA in zero, could difference in distribution be return of capital??? Help please... Thanks.

I have a client who was 18 at the end of 2006. He did not file a 1040 but his father did and claimed expemtion / dependent as he fulfilled all criteria for being dependent. Now in 2009, my client (the 18 year old at the time) gets a notice from IRS claiming they are missing a 1040 from him from 1099 income. Turns out the 18 year old did have unearned income from an investment firm. Question: Does the 18 year old file a 1040 and / or would the father have to amend his 1040?

So based on the above information, is it correct for the AAA Ending balance to be zero? Theoretically thinking... if the client made enough profit this year to get out of a carrying-over hole, then AAA would be positive, but if she took out withdrawals in excess of any positive AAA left, then this would zero out the AAA and the excess would have to come out of APIC. Is this correct? The other issue, is that ATX automatically calculates the R/E and it happens to be exactly as the amount on Column C of the M-2 - undistributed taxed s/h income which is ($2,574). This doesnt' make sense to me though.. This is a carryover from prior years, but I don't understand how this can be negative...

2008 AAA Beginning Balance = ($29,698) s/h undistr taxable income = ($2,574) 2008 Net Income = $36,000 (This amount already takes into account any salaries paid to herself). 2008 Distributions / Advances to Personal Account = $11,000 So what would my 2008 AAA Ending Balance look like? ATX calculations zero AAA at end so I reduced my paid in capital by the excess. Is this ok? Also, is the negative s/h undist taxable income ($2,574) to carryover as it has rolled over from prior years? My r/e shows this amount on the balance sheet as well. Let me know. Thank you!

Please correct me if I am wrong. The 1120S is on extension and my problem is figuring out her AAA correctly. Her K-1 - line 16 will not affect the 1040, correct? It's a very simple S Corp which just shows ordinary business income on line 1 of the K-1 which will flow into her 1040. I would like to get her 1040 out today if possible and later deal with my ordeal with the AAA and the balance sheet on the 1120s. Thank you...

Then how do I interpret prior year's M-2 by prior accountant? AAA ............... S/H undistributed 1) Balance at beginning of year ($24,612) ($2,574) 2) Ordinary income 30,810 3) Other Additions 4) Loss from page 1 5) Other reductions (STMT 7) (5,400) 6) Combine Lines 1 - 5 798 7) Distributions other than div 21,783 8) Balance at end of tax year ($20,985) ($2,574)

Client had net income in her 100% owned S Corp for 2008. She takes salary but she also took out money from her 100% owned S Corp AND she repaid herself back a loan SHE gave to the company in 2007. I want to be sure I am posting the following items in the right place: The distribution is reflected on page 4 of the 1120S - line 7 - column A of the AAA account as well as Schedule K - line 16, correct? Most importantly, for 2008, ATX is not letting me have a negative balance at the end of the year for AAA ending balance when it's been done in prior years. Also, my balance sheet is off by that difference that AAA would be negative. What do I do? Regarding the loan repayment BACK to her, does this affect basis and where is this reported?

My two cents.. File the extension.

Yes. It's on accrual. This would be the case if I left the Due from Shareholders alive, but does this make sense? There is no balance in the bank account and the money all went back to him. That is why the only activity really left at the end of the 2008 year is a liability of $400. I want to reflect this information correctly. Let me know your opinion. Thank you for the help.

My mistake... I didn't even notice... R/E is $2,000... Due from S/H = $2,500 Assets = $2,500 A/P = $500 R/E = $2,500 L+OE = $2,500

I'm sorry I may be asking such a dumb thing... I only do 2 of these returns per year and these are almost favors for close friends that have become clients. I don't do this year round as I'm in the private sector... help...

I have a client who has an S Corp that is on extension. Only activity in 2008 were accounting fees - $350 and annual filing fee - $50 ( A/P of $350 and Due to S/H $50). Since he closed bank account in 2007, I should have done this entry then but I didn't. I have at the end of 2007 a Due from Shareholders of$2,500, A/P of $500 and R/E of $1,500. How is my R/E affected and how should the M-2 look? Where do I show the distribution of the funds from the prior year and what is my AAA balance at the end? This is so easy and I just don't know what I am missing. Please help so I can finish his 1040. I think his K-1 will still just show a loss of $400. Please correct me if I am wrong. Thanks.