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In the days before LLCs became the darling of corporate attorneys, many corporations, even small ones, were chartered in Delaware. Attorneys were saying there were liability advantages in Delaware for corporations. From what I could see, there were no obvious tax reasons to do so. I had a couple small corporations that I filed Delaware corporate returns. As chartered in Delaware, they could not be "foreign" corporations. But when I completed the schedule for state allocations, Delaware didn't even receive any taxes. Not even a minimum. Nowadays LLCs are so much in vogue that a new "traditional" corporation is rare. Beware, in Tennessee, an LLC is taxed as a corporation, whereas a simple proprietorship has no taxes. And the TN dept of revenue is notified from our Secretary of State whenever an LLC is created.

The bank or credit union has the option of doing so. If this had happened to me at my credit union, they would have automatically covered from savings. Ironically enough, "Bob" has the same credit union that I have. Go figure.

I find the request for "Income Verification" very strange. What's the point?

After income verification, they will want expense verification. Better have your client get everything ready. 4 or 5 letters and two years later it will be resolved.

Entered the amount rolled over in the rollover box on the 1099R screen.

Just need to know how to enter data so that the early withdrawal penalty doesn't get triggered.

I have used the upload toll before and it worked fine.

You already received the best answer is to have client use IRS' Direct Pay. About the above statement, don't ever assume that a bank or credit union offers overdraft protection or that the account is of the type that even has that set up.

@Pacun and everyone, I fixed the link so that it now goes to the official IRS page for direct pay.

You'll be lucky if it's just one. I usually get 2 or 3 of those notices before the IRS actually handles the problem. Sometimes it drags on so long that I forget what the issue was.

No Cash Receipts. Everything on a 1099NEC. Contracted with a local govt agency to provide after school care. Profits did not justify the effort, so they did not renew the contract and closed the business mid-year. I am not worried about the audit. What I thought was most interesting is the wording of the letter. "If we do not receive a response, we will not process your return." Since when does the IRS have the choice to "not process" a timely filed return? I understand they can audit, they can delay the payment of refund while under examination, etc. But to flat out say they will not process the return because they want more info blows my mind. BTW - we got the response to the client today and they are uploading to the new portal thingy the IRS rolled out a while ago. I am interested to see how this works out, if it actually gets what they want to who wants it via their upload tool. Tom Longview, TX

You'll get a response stating they need more time to respond.

https://www.irs.gov/payments/direct-pay-with-bank-account

I learned about the Wayfair case a couple of years ago and many states are going after businesses to see what they can collect.

Attorney should get 1099. IN GENERAL, the part for services provided to your client should be on NEC box 1. The settlement portion should be on the MISC, box 10. The amount to include will depend on how the check was made out. My basic understanding is that if the check was paid to only one attorney, then obviously that attorney gets the 1099 for full amount. If one check is paid to co-payees, I think they each get a 1099 for the full amount. If attorney gets money and part is for co-counsel, then attorney gets 1099 with full amount, and they issue a 1099 for amount they paid co-counsel, but again, that depends on who check is made payable to. There is also the issue on what type of settlement the payment is for. Example, as the article below explains, payments for personal injuries don't require 1099s to the injured party but will be issued to the attorney, depending on how the check is made out. I'd suggest start your reading with the article below from the ABA that is written in more layman's language and is informative before going to the 1099 instructions for preparation, and then the code . The 1099 instructions do reference the applicable code sections. Also, perhaps a separate post would be better for what portions of these payments are deductible by your client. Slippery Pencil is correct that attorneys are an exception to the corporate rule. They get 1099s regardless. Anyway, here is the ABA article to start with: https://www.americanbar.org/groups/business_law/resources/business-law-today/2020-february/irs-form-1099-rules-for-settlements-and-legal-fees/

Entity type doesn't matter for lawyer 1099s.

NY and CT have long battled over who gets to tax the mega incomes of big shots who live in one state and work in the other. For remote workers, NY has a "for the convenience of the employer" test, meaning if you work for a NY firm from your home in another state, you can only avoid NY tax if your employer requires that you work from home. After this passed, CT instituted the same rule for residents of NY (but no other state). I have a client who works for a NY firm from his CT home for her convenience, so she's taxed in NY except paid time off, which is taxed in CT. No kidding.

I wonder why they want to verify income? What kind of business is this? Do they have cash receipts?

You can always ask for more time to complete your response. IRS really does want to work with you, and I've never had them deny such a request. Of course that was when they still had employees....

Cattle prices are up right now. This may be less of an issue until the prices come down. But on the other hand, feed and fertilizer are up as well. Tom Longview, TX

Client got a letter from the IRS that needs to be responded to in 20 days. The letter is dated 4/7/2024. I got the letter today.... The letter asks for "Any Supporting Documents Verifying Income". The client has a Sch. C with 500K of gross income and a loss on the bottom line. At least I did not get it after it was too late to respond. I am blessed that my clients are so thoughtful. 20 days to respond, 20 weeks to get a response back. Anyone taking the under on getting a response before 20 weeks? Tom Longview, TX

If this was my client, I would be asking for an opinion letter from the law firm as to whether these expenses were a business expense or a personal expense?

Yes, that was the issue. I am not sure of all the details but there was another substantial amount that was sent as part of the settlement to pay for the other party's share of the business which was not included in the corporation's books. I am not sure whether any of it should have been, but I still think the fees paid to the attorney should be on a 1099. Unless Mass. lawyers tend to be incorporated.

Also, you need to whom it was rented, a related party or a friend?

Are you saying that the ownership of the corporate stock was at issue?