IllinoisTaxMan

Are you talking about reporting it on Sch E page 1 or Sch E page 2?

Thank you for your advice.

However, how do I report it on Sch E since the taxpayer can't receive K-1 any more from his dissolved company?

What happened to the assets that your client sold? Was he able to repossess any of them?

Maribeth

The client couldn't retrieve them. The buyer dissolved the business too. One of the buyers passed away. The other is broke after dissolved.

The client dissolved S-corp in 2008 after selling the business assets by installment method. The client didn't receive any payments from the buyer in both 2008 and 2009. The note issued by the buyer became worthless in 2009. I am concerned where the client can claim the business bad debt on his tax return (1040). Any experienced advice would greatly appreciated.

Well... a S-corp can certainly sell assets on the installment basis. However, assets sold that result in ordinary income gain must report the ordinary gain in the year of sale. Form 4797 page 2 determines such ordinary income gains. Any capital gain is reported as received.

As an example, a machine fully depreciated sold for less than original cost would have to recognize any gain in the year of sale (Form 4797) even tho the proceeds from the sale are received in future years. But a capital investment asset (Sch-D), not depreciable, would recognize gain in the year the proceeds are received.

Do you know any code secton on this? I couldn't find it out.

The Client, 100% shareholder of S Corp is considering the sale of business which includes equipments, furniture and inventory by installment sales and then dissolves itself. I wonder if it is possible to do it that way. I heard the S-corp can't sell its business by installment. Any input is appreciated.

Do you know if an Section 108 exception applies?

This is what I wonder about.

In case of residence, due to Section 1082, the discharged debt is not income to the taxpayer.

Does this real property apply to Section 108? The taxpayer has 1031 deferred gain. So, if the rule applies, it will save her lot of taxes.

1. There may not have been any debt forgiveness.

2. Has the client ask for the interest, fees, expenses, etc. from the receiver.?

I am asking the taxpayer to request P/L from the receiver.

I have one more question. How do I calculate the capital gain on this foreclosed property?

>>she had no right to use the money/lease/rent<<

She had every right to that money. That's why it was available for the court to use it for her own debts. It was all taxable income to her until title was transferred away from her, which apparently didn't happen until the sale. I wouldn't waste any time second-guessing the settlement statement. All in all, it sounds to me like she came through this foreclosure in remarkably good shape.

Ok, But, the problem is that the taxpayer didn't receive any information from the lender such as the date of the foreclosure, debt cancellation, the mortgage interest payment which occurred in 2007.

I wonder how I can prepare 2007 return on these matters.

What are the terms of the receivership?

Was the receiver to give credit to your client for rents collected, or only use the rents for the benefit of your client?

Were the rents applied to the loan on the property.

Your client may or may not have a gain or loss on the sale of the property which may or may not have a tax effect, depending upon your client's tax circumstances.

The lender sued the taxpayer for not payments of mortgages. The court ordered the receivership.

The receiver just received the management fee approved by the court.

The rents collected by the receiver was applied to interest, principles, property taxes and other operating expenses.

The client couldn't even touch any money since the court didn't allow her to do it.

Does anybody know when the stock of MCI became valueless?

The taxpayer wants to report it now.

If this was part of a bankruptcy. the income that went to the trustee is not the taxpayers income. You should amend the return. The trustee has the responsibility to do any reporting required of the trust funds.

It was not a part of bankruptcy. It was foreclosed but the lender didn't issue 1099-A or 1099C.

The taxpayer could receive the Settlement Statement. It showed that the property was sold on October 2007 and the seller was the lender.

Would you comment on my question again?

The client's rental property fell into the court ordered receivership in September 2006.

I would like to know who is responsible for 2006 tax return, the taxpayer or the receiver.

I reported the rental activity under the taxpayer return for a whole year after I colleced tax data from the receiver under my assumption that all the funds (trust) were treated as owned by the taxpayer.

Now, the taxpayer wants me to amend it since she had no right to use the money/lease/rent collected by the receiver.

I wonder if I have to amend it or not.

Any experienced advice is welcome.

There are ordering rules to how losses are utilized and dispositon of a passive activity does kick in all the previous passive losses. I'd guess that PALs have to be used first and that there is not an option to not take the PAL. It only makes sense that Capital loss carryforward would kick in after the PAL but I don't know enough to give you a cite or even if I'm 100% right. You might try a search in some of your reference materials for "loss ordering rules" as this is how I've heard this stated.

Julie

Thank you for your response. It gives me some info.

My question is if the taxpayer gives up the use of loss carryover this year, he loses the right to use it in the future years.

Does anybody have this experience?

Any comment is appreciated.

Hi,

I wonder if the taxpayer can choose not to use prior suspended passive activity loss?

The taxpayer sold one of the residential rental property resulting in the capital gain but bringing up the use of prior suspended loss from other property on Form 8582.

Since he had huge capital loss carryover to offset capital gain, the use of prior suspended loss is not beneficial to the taxpayer.

So, the taxpayer doesn't want to use up the suspended loss this year. Can he do that?

<_<

HI, everyone!

Do you have any problem in printing return in PDF format?

I had no problem but recently there is no content in pdf file.

I don't know what is going on this feature.

Any advice would be greatly appreciated.

The original post said:

>>But, the company insist that the classification be correct. He is a sales person. <<

There was nothing that said what the payments were for in the original post. Why should we assume that it is commissions when the company clearly has reviewed the 1099 and still says it is not box 7, non-employee compensation. If a Statutory Employee (W2 employee) is paid an expense allowance and does not account for the actual expenses I could understand a 1099, box 3, even though it should probably be added to the W2 instead of 1099. Why would we think we can just ignore box 3 treatment and subject it to SE tax without a clearer understanding of the payments?

There was no W-2. He didn't get reimbursed for his expenses such as travel, automobile and phones, etc. I wonder in what occasions the company inputs the amount on 1099 no. 3 other income.

The taxpayer brought 1099 Misc on which no 3 other income shows $89,781.00. How do I have to handle this case? He has business expenses unreimbursed. How do I claim expenses? As I know, the amount should have been shown on no. 7 nonemployee compensation. But, the company insist that the classificaton be correct. He is a sales person. I don't understand the this treatment from the company.

Anyone has any idea?

One (retailer) of our clients got audited by the state and as a result, she has to pay lots of money for underreported sales tax for last two years. The state collected all the invoices from suppliers and recalculated the estimated sales tax she should have paid to the state.

The question is "Should she file amended federal income tax return?" The tax effect on the federal level would be zero since underreported sales and underreported purchases are equal except for additional sales tax payment because of the audit.

What is the federal requirements in this case?

Any experienced advice would be greatly appreciated.

My client wants to know how to collect the sales tax on foods and liquors sold at the bankquet business.

Would anyone who has clients with bankquet business give me an advice on that?

Thanks in advance.

Hi, Atxers,

I have used Max programs for 7 years. I renewed Max again for 2007 tax returns but I couldn't get the installation code until now. I paid the price using two methods (Check $1,000, Card $137) and the MyAtx showed the invoice was paid on Dec 19, 2007. The representative told me I had to wait for the next morning until the computer generates the install code. However, for some reasons, I couldn't get it until now.

Are there any ones who are having this problem? I don't understand why the service from this new company disappoints me.

Would you share any similar experience like this with me?

Thanks.