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Rich, it was a 2-person partnership according to the title of the post. I believe the article recommends depositing the proceeds of the life insurance into the partnership and handling the payout to the estate or successor from there. Just some ramblings, but I was thinking that if this were a partnership of more than 2 persons, it would consider making a sec 754 adjustment that basically has the effect of adjusting inside basis of remaining partners to their outside basis, but in this case the partnership is liquidating the deceased partner's interest, and so it has a technical termination. Does this mean that the remaining person has additional basis because of the buyout? And is that in the form of additional basis in all the assets he now owes as a SMLLC or is it still goodwill? Sorry if that's not helpful, and I may be creating more questions than answers....

I'm following also and don't have a clear answer either, and that is why I didn't respond sooner. I did find this article from The Tax Advisor that might provide useful though and get the discussion moving. https://www.thetaxadviser.com/issues/2015/aug/accounting-for-death-of-partner.html Also, this link to the Code that may be useful. After reading this, depending on how the buy-sell agreement is worded for the payout, it sounds like that $70K may well be goodwill. I'm not sure though and hoping others with more experience will weigh in. https://www.law.cornell.edu/cfr/text/26/1.736-1

Oops, the original post was old enough that I forgot that the original post referenced federal estimated tax. Sorry, I read the post too fast in responding. I have never seen federal tax withheld either.

I had one like this years ago with a sale of a SC vacation property by a DE resident. The client called me for the basis and estimates of the gain and taxes, and he had to pay the tax owed on the sale to the state at settlement. This rule by South Carolina is specific to nonresidents.

Thank you!

@cbslee , if this NY Times article is available online, would you mind posting a link here or sending it to me in a PM. Thanks.

Error check won't catch this because it is possible to not match the K-1 percentage of direct ownership because of the rules of indirect attribution.

Heck no! The older I get, the more I look up. There are areas I have absolutely no experience in and learn new things here all the time by reading how others approach issues.

Well, I didn't answer for a couple of reasons, the lease of which is so not to derail the topic into hypotheticals, and also because the calculations can be rather complicated with alocations depending on what else is in the mix for BHoffman's client, so I didn't want to post a misleading answer to you that may not accurate for the actual case. That being said, in a general sense, yes, the partnership would report the receivables as ordinary income. It is NOT capital gain income. Sec 751 specifically defines hot assets, and that code section specifically functions to make sure that the partnership or partners do NOT convert the income from what would be ordinary income property into capital gain property. Therefore, the inventory or collection of a/r will generate ordinary income. It really is very complicated, but if you'd like to read about this more and the mechanics of calculations, here's the text of a CPE course that I found that might give you an idea of the complexity. Look at section 3 and some of the examples. http://media.straffordpub.com/products/irc-751-hot-assets-calculating-and-reporting-ordinary-income-in-disposition-of-partnership-or-llc-interests-2015-07-09/reference-materials.pdf

Unreimb'd expenses paid by an S corp shareholder/employee would be reported on Sch A as employee business expenses. If this is the case, it is better to suggest that the S corp set up an accountable plan to reimburse for those out-of-pocket expenses, and those expenses need to meet the "ordinary and necessary" criteria.

In one of the Equifax's latest missteps, on Monday night the company sent out a tweet with what was supposed to be a link to their page where people could sign up for the free year of credit monitoring. Instead of sending out the correct page, it tweeted a link to a phishing site.

I had a chihuahua pup that entertained herself while we were out one afternoon by grabbing the end hanging down and ran with it out through the house. She even turned some corners with it and it held together. Fun times!

It does, and sometimes a new client's prior returns don't include those calculations so it's necessary to calculate outside of the program to arrive at the starting basis for the year we take over. Same idea with that debt basis, you might have to deal with it for a new client.

Cats prefer it coming over the top . . .

Under sec 751 the A/R is an unrealized receivable (hot asset) and will be taxed as ordinary income. This is one return that is a good candidate for an extension. Based on historical data, is it likely that the a/r will mostly all be collected within that "extended" time frame? Don't know if you looked at older articles, but this one touches on the a/r as part of sec 751. https://www.thetaxadviser.com/issues/2010/aug/clinic-story-08.html

Hopefully Taxman's client doesn't have debt basis in this S corp that has been used to allow losses at the personal level. I won't get into that discussion here, but if this is the case, Taxman please let us know and I'll post more information on those calculations.

If the time for editing has lapsed, members still have the ability to entirely hide their posts and post a new one with different information. The admin team will still be able to see the hidden post but not the general membership.

I moved this to Gen'l Chat so it might get more attention. Sorry I don't have answers. Was this an ATX rejection by the system or did the return make it to IRS and rejected there? I think ATX may have to do something in their system to allow the 2nd return, but I'm not sure. I think you will either have to paper-file the return or will have to rely on the reject (if an IRS reject) being dated today that gives you a few days to fix the reason for the rejection.

Well, here are some things about Susan Maudlin that were scrubbed from her LinkedIn profile that she or the company tried to scrub from the record. Yay(!) for screenshots. Youtube videos were also taken down, but the Zero Hedge blog page linked below has a link to the transcript of one interview that is worth reading for her thoughts on security and the use of the cloud. Then there are her comments that are quoted of her thoughts on recruiting security personnel. http://www.zerohedge.com/news/2017-09-15/another-equifax-coverup-did-company-scrub-its-chief-security-officer-was-music-major

Sara touched on the computer-based security questions in her post above, and today a friend ran into this situation when trying to place a freeze and get her free credit report. These tasks are going to be especially hard for some women who have changed their name recently. Below is my friend's real-life example that happened this morning. Her background: Divorced and changed her name back to maiden name a year or two ago, bought a new house this year and moved in so her address has changed. She can't get passed the security question of "which person do you know that lives, or lived, at [insert address she lived at ~ 15 years ago]. She picked "none of the above" and thinks possibly that there is a person somewhere with the same last name that she doesn't know and that the computer is matching with that really old address. Now she is being instructed to send in her SS card, DL, and a utility bill by U.S. mail. How much more insecure and a PITA can they make this? I also agree with Sara that IRS should be issuing IP PINs to everyone as an added form of i.d. in order to file returns, or some other form of i.d. that must match up before processing the returns. This is going to be a nightmare for a looooooooooooooong time.

This was covered in the other linked topic too. Below is how to handle the assets, and please DON"T added the old and new basis together and start over. You have to allow the program to calculation the depreciation through the DOD and then take it out of service. Then divide the cost and accumulated depreciation in half to arrive at the husband's original share of cost and a/d to be reentered because that will continue on at half value of the original cost and half the a/d already taken. THEN, also enter one-half of the "stepped" FMV that was inherited from the spouse as the basis without any accum depreciation to start, use the DOD as the starting date because depreciation starts over on the portion that husband inheritied. In other words, for this year the depreciation schedule will have the original depreciable assets through DOD AND 2 components for the time after DOD on the depreciation schedule for each asset that was owned. As an example, let's assume a house with a cost of $160, a/d at BOY of $55, current deprec of $1 calc'd through DOD, a/d at DOD of $56, and a FMV of $350. Your depreciation schedule will show these lines: House, cost $160, a/d BOY $55, current deprec $1 (allow system to calc the partial year deprec), a/d at DOD $56 - out of service at DOD (or disposed with no gain, however ATX handles that) House (for H's orig. share), USE ORIG DATE IN SERVICE, cost $80, a/d (at DOD) $28, current depreciation calculated for portion of year after DOD and you will have to override this to report the proper partial year amount House (for stepped up inherited portion), use DOD as date in service, basis $175, a/d -0-, allow system to calc depreciation for current year that will be from DOD through year-end IF he happens to sell the house within one year, you will have to override that gain to tell the system that the gain on the stepped up portion is also long-term because inherited assets get long-term treatment, but after one year, that won't be an issue any more.

TaxBook has one in the Small Business section on page 24-5.

Same client? So to not have to retype all again, this discussion from late last year should help -

It was a software upgrade to the forum about 2 weeks ago. From user's perspective, there's a change to the looks and some new "like" choices is all. Other functions didn't change. Here's the original discussion:

Rita, what's your preferred brand for the task at hand? Case, Caterpillar, something else?