imjulier

I agree, it sounds like you are in over your head.

Obviously a negative ending inventory is wrong. However, if it is the final year, there may be an adjustment to COGS (reduce COGS) to clear up all the previous years of inventory issues. This will result in increased income but the increased income has never been reported in previous years so it would be reported now. This is the adjustment that will take ending inventory to zero. Hope this helps. Julie

I think the sick time has no value....gets paid anyway, right?

So I followed the other string on this but in my case there is a deferred loss on the 1031 exhange. The adj basis in the car traded in was 12,800. New car cost (after 5K trade in for old vehicle) was 28,000. New basis 40,800. The deferred loss on this is $7800 which is included in the new basis. (Dealer later sold the car for $6,000). Owner drives A LOT. About 40K miles/year and when traded in, the vehicles have a lot of remaining basis but little value. Will this loss ever be released if we just keep doing trade-ins? His next vehicle in 6 years will probably give him a basis of $50K plus even though the car is only worth $30K. This seems odd. Am I missing something? Thanks, Julie

Sorry- Forgot to include the distributions. $104K which is the 90K in income plus most of the $15K he left in the bank last year. No equipment. He is a consultant with lots of travel expenses, mileage, M&E, phone, etc... Also, he has pushed the low side of wages for a few years but not this bad. As an example, 2011 was $40K of wages with a remaining $61K in profit after expenses, wages, etc. And in 2011 he left something in the business. Future plans are unclear as he now has a W-2 job and a baby on the way. But he wants to keep his consulting business on the side and earn $150K gross and $100K net which is his prediction for 2013. Thanks for the thoughts. Interesting thought on the equipment KC. Julie

Hi- Just looking for ideas. I have an S-corp SH who claimed wages of $48,000 in 2012 but profit in company is $90K after taking the wages, travel, other allowable expenses, etc. I was thinking about recommending issuing him a 1099 so that employment taxes would be paid with Schedule C in personal retrun. I know he is not paying himself the "fair wage" and he did not indicate to me throughout the year that he was making a ton of money and we should consider changing his payroll. Is the 1099-Misc a good idea, bad idea, other ideas? What do you do with taxpayers who do this? Thanks, Julie

Hmmm, I just figured out how to attach letters....all mine have been rolling over with the letters already in them. Not intuitive, thats for sure.

I can't seem to find it this year, not in the ES form and not in the client letter. Anyone know where this is? Thanks, Julie

What I have seen is a 1099R from the plan administrator...like fidelity showing the distribution of the excess contributions. No change to W-2 as the 1099 is taxable. 1099R won't be issued until after 2012. This is just what I have seen.

I'm with Terry O....basic math.

Terry- I know in Colorado that Scorp owners being able to claim unemployment at all is a loophole. Some of the s-corp owners I have work and pay themselves and then as soon as they don't have work, they don't pay themselves and collect unemployment....while the s-corp still has cash and they can take distributions. Even discussion with the unemployment office did not deter these s-corp owners from believing they were eligible and unemployment personnel had no idea and could not answer their questions. Rubs me the wrong way as the SH work for 6 months and pay themselves $100K and then collect unemplyoment while the company still exists and they look for their next contract. Probably not helpful but it sounds to me that there could still be income being generated by the S-corp owner. Julie

Finally getting some snow in metro denver....first sizeable snow since a year ago which is not typical. Hopefully, we'll have good snows in march as well since we didn't get any last year and that led to all the summer wildfires. Anyway, stuck inside on a Sunday so here's my question. Are all qualified Roth distributions non-taxable? Including the earnings part? This is what I have picked up from other strings on this board and from reading the 8606 instructions. I know the distribution is qualified but includes about 2K in earnings and I don't know if this gets reported. My understanding has always been that the earnings portion would be taxable but I obviously haven't had any clients old enough to cash out a Roth. I feel like I should have understood this correctly a long time ago but I may not have. If that is the case, I wish I was 30 again and could convert my 401K. Thanks, I'm sure this is an easy question and I feel like a ???? for not getting it. Julie

Never can you deduct the loss on a personal residence that I am aware of.

I got my own direct deposit within a week so no probelms here.

Old Jack- I agree 100%. They do not want personal use added to their W-2 so I have them sign a statemenmt every year which says that all use is business use. Maybe this covers me, maybe it doesn't. It may be time for me to drop this client....but I'll have to think about it. I appreciate your input and thoughts. Julie

No worries. And thanks to both of you for your comments. I totally appreciate OldJack's suggestion of... "maybe the shareholder bought the vehicle at FMV and gave the S-corp a promissory note bearing interest to pay for the vehicle. That would solve most of the problem, except the corp would still pass taxable gain to all shareholders on a k1 for tax." This would solve the problem but the SH has no intention of paying anything to the S-corp. I believe I'll have the SH quit claim the new vehicle to the business which is how the last vehicle ended up in the business. Does anyone want to shoot holes in this as I am sure there are some? I hate trying to fix what the shareholders actually did after the fact. Thanks again for your input. Julie

As you all know, taxpayers that we work for never listen to us. I have an s-corp owner who took and traded in a car that was in the S-corp for a vehicle that he put in his own name. The business is an s-corp with 2 SH ownership split 50%/50%. What to do with the vehicle taken out of the business? Converted to personal use with no G/L is what I am thinking. New vehicle by the way will be leased back to the business for the cost of having the business pay his gas, insurance, maintenance and reapirs, etc. Any ideas? Thanks, Julie

My own tax retrun was e-filed last Friday (the 8th) and I received the refund today....7 days...not bad.

Rich- I would have never guessed it could be so easy. I just never would have thought about adding a 1065 to an individual return, its just not in my logical mind to do that. I haven't actually tried it but I will later today. I hope its as easy as it sounds. And this is acceptable per the IRS? I was thinking more along the lines of a section 351 election like for corporate assets. Thanks for the info. Julie

So jainen enlghtened me in an earlier string that H&W RE LLCs should be reported on a 1065. Last year, one rental property was not yet in an LLC so I reported it on Sch E. Another property was in an LLC but I treated it as a QJV on Sch E. This year, both properties are in LLCs. I'd like to put them both on 1065. How do you do this? I don't need the nuts and bolts of accounting but more need to know how to transfer the assets. Can you simply remove them from their Sch E and put them on the 1065 with the same information for depreciation already claimed, etc? The instructions for QJV act as if you might do this based on qualifying for that treatment but that seems odd. Any insight? Thanks, Julie

Services provide the same drain on infrastructure as traffic created by brick and mortar retail. Just sayin'.

Joan- I'm not in front of my program or I would open it up for a better look but the transactions you are describing are balance sheet transactions for both book and tax purposes. If the asset is entered in ATX with a 2013 date no amortization for 2012 and no expenses. The balance sheet would show the asset (start up costs) which is not yet placed in service and a loan from the shareholder. Maybe cash if the SH opened a bank account. Not sure what I am missing here but I would be filing zero expenses. I hope this helps. It will be interesting to see what others reply or to see what I am missing. Julie

Hilarious! I see divorce in the future!

I had not seen that before. Thanks for the information Jainen! Julie

Ah, found it in instructions to Sch E....no change in passive loss limitation rules. Let me know if you would interpet this differently. Julie