ILLMAS

A used to operate a business and a acquired a loan from a family member, A closed down the business and let B (daughter) open up her own business and pretty much continued operations. The family member still wanted to get repaid and they started paying from business B, the loan was never accounted for in business B, how Would you account for it?

I mailed out my extension on the 15th of July and they didn’t cash the check until the 28th. Usually within a week they cashed it.

I once missed the darn form too, however the IRS was holding off on releasing the refund until we filed out the form and submitted it, no problem since the income they said they were going to make when they applied matched. Now another TP didn't take into account side jobs and the spouses' part-time job that turned into full-time when they applied, that was a bummer. Now to your case, when you combine their income is that going to affect it?

Seems the state of CA is cracking down on companies: https://www.chicagotribune.com/business/ct-biz-uber-lyft-driver-employees-20200811-kgqv2yiirvdbdh7tk3qqrmeoey-story.html

Just a random thought, but what happens to the profit for the months PPP covered the whole payroll and will not have to be repaid back? Let’s say a business had zero interruptions from the pandemic and chugged along as before and used up the PPP loan appropriately and the profit per month is as follows: Average sales $100,000, payroll cost $50,000, operating expenses $25,000 (per month) Jan $25,00 Feb $25,000 Mar $25,000 + $50,000 (PPP loan forgiven) Apr same as March May same as March The rest of the months, the profit is $25,000, so if the PPP loan is not forgiven it would be a liability, but how are business going to account for the freebie? Are business not subject to income tax if the PPP covered 100% of the payroll cost? This is a topic I have heard no one discussed and just want to see it’s really beneficial to a business.

Seem like it’s a big about but it actually about .001% of the gross income and the auto expense exceeds $100K

Thank you

IRS disallowed $15,000 (1/2 of meals) in meals on the tax return, do I make an adjustment for the $15K or the $30K, to remove the whole amount from tax return and books to match the retained earnings calculated by the IRS?

M-2 is not required in this example, Sch B question 4 is marked yes FYI

Hopefully someone can shed some light and see If we have a problem here: Balance sheet Capital Account 2017 was -500,000 Partner A ending was -200,000 40% Partner B ending was -100,000 20% Partner C ending was -50,000 10% D and E was -150,000 15% and 15% Totaling -500,000 which matches to balance capital account Partner D and E walked away in 2017 and they were issued a final K-1 (no sale) In 2018 the partnership had a loss of 200,000 so the capital account increased to -700,000 Partner C sold their interest to A & B so 10% was split between A & B and ownership % was adjusted. Capital Account 2018 was -700,000 Partner A ending was -350,000 75% Partner B ending was -150,000 25% Partner C ending was -50,000 0% final k-1 Total ending capital of -$550,000, so I have a difference capital account-ending partners capital = -150,000 (D & E ending capital) My question is, does the partners ending capital account has to match the balance capital account? In 2019 the difference is now the sum of partners C, D & E = -200,000, it seems the tax program does not transfer the amounts after a K-1 is marked final and that ending capital is lost. I only have one 1065 client with positive capital account, so this is a new one for me, I was given a copies of prior years so I was able to trace things back. If it doesn’t matter if they don’t have to match, them I am okay. Thank you MAS

Trying to figure out if it will require an amendment to the k-1 in 2018, 2019 has not been prepared yet. If the case the operating agreement states "(partners non-recourse debt) shall be allocated to members who bears the economic risk of loss for such debt in accordance with Treasury Regulations section 1.704" If understand this correctly, it really makes no difference if the partner capital account is negative because the IRS would respect the operating agreement, I am interpreting this correctly?

Has anybody had to amend a 1065/K-1 for choosing the wrong capital tax basis (tax basis, Gaap, etc...) and not including the reporting it on line 20 using code AH? I've been going back and forth with reference material and seems the capital reporting requirements will be in effect until 2020. Source https://www.journalofaccountancy.com/news/2019/dec/irs-postpones-partnership-reporting-requirements-201922618.html https://www.irs.gov/pub/irs-drop/n-19-66.pdf Can someone chime in to see it would okay to leave as is for 2018 and 2019 and make the election in 2020 and to include line 20 code AH? Thanks MAS

Sounds similar to this: A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.

Let's say Joe & Larry are partners (1065) for the last couple of years they have been developing a product and have incurred expenses but no income what's so ever, their capital is negative and they have been loaning money to the partnership to cover expenses. Yes this has produced loses over the years to each partner, what options do these partner have to come up to zero?

How are people getting caught, this is like the 3rd story I have read about business owners misusing PPE funds from a false application. Are they randomly selected for an audit or by the fact of them submitting a copy of a luxury yatch invoice they purchase is what causes the investigation? Fraud is fraud and to know they are going after people. https://www.nytimes.com/2020/07/27/us/lamborghini-ppp-covid-19.html?smid=fb-nytimes&smtyp=cur

What’s is the longest time it has taken you to prepare a return for a client that has multiple business intermingled with one another?

Thank you

A little late responding, John glad to hear you and your wife are okay, unfortunately I personally know of the 15+ individuals that had it and some think they had it since early January 2020.

How do you respond to this: Very close to filing deadline ”Here is my information and I would to file before the deadline to avoid having to pay fines and penalties” You: you have tax returns you received in May still in queue to be prepare.

Did the $300,000 in Dividends reduce Retained Earning down to zero ? Yes The access amount was tacked on to the owner as capital gains, I understand the capital gain portion has nothing to do with the C-corp, however I am trying to figure out the adjustment to equity, I believe the accounting software will not allow to create a JE to affect retained earnings. If I were to create a JE to reclassify the loans 100% to dividends paid, that solves the issue, but in reality only $300,000 is dividends paid, and I am having a hard time find a name for the $200,000 portion on the C-corp side. Thanks

C-corp

Let's say a corporation owner had their "Due from" loans reclassified in an audit in the following way: Total due from owner $500,000 Adjusted to $300,000 to Dividends $200,000 to Capital Gains So the due from owner went down to zero, how should it appear on the corporations BS? Under equity, -$300,000 Dividends paid and -$200,000 capital gains Thanks MAS

A “Karen” moment

This sounds in par with people not wanting to come back to work because they fear getting sick, but at least they notified you when you called in. I would be upset if I was told last minute, glad everything worked out at the end.

Like Naperville IL?