Terry D EA

Okay I would agree with both of you and I am genuinely concerned about the related party rules here. When the business was profitable the rent was deducted from the S-corp expenses and claimed as income to the LLC which as we know, both of the entities are pass thru. After the trouble began for the S-Corp, the rent payable was not deducted from the S-corp simply because it was not paid which created the rent payable account on the S-Corp side. The LLC has never shown a rent due. This I have controlled simply because of the related parties rules. Yes, one of the things here is to reduce some gain on the sale of the building if possible and the other thing is to remove the rent payable legitimately from the S-Corp books which the bookkeeper entered the payable when I told her not to. If our only course of action is to delete the payable then so be it. They are using QB and I am concered about the audit trail that can show every entry and am trying to avoid any potential problems if audited. I have not been comfortable with the forgiven debt idea from the start.

I use QB for my accounting clients and gave up the payroll a few years back. If I were to process payroll for a single client, I would use Medlin as I too like the software. I have used ATX in the past to prepare taxes and for about 9 years prior to CCH garbling them up. I have used taxworks (RedGear from TRX) for four years and after the blowout there last year switched to TaxSlayer Pro. I do like TaxSlayer Pro but they still are not offering the forms I need to complete CRUT returns. So, I had to switch again this year. Now I am using OneDesk and I have to tell everyone it appears to be really good software. Yes, I am going thru a learing curve with inputting but have not had installation problems or update problems at all. As far as fixed asset, FAM through QB was good but I found out that the client could really screw this up on their end so I have reverted back to spreadsheets especially for my rental clients. I know this is alot of extra work but it works for me at this time. I don't want to trust a new software with depreciation until I really test drive it. BTW- I just learned of some really neat features that OneDesk has with inserting notes in the tax return. You can set a note with a reminder that will pop up at you when you select the return completion. That is a plus for me. Also, the ability to scan documents and keep them with the return is another plus. Keeps the paper file smaller.

I need to see if anyone can lead me to some indepth information regarding related party transactions. I have an S-corp single shareholder that is also the single mananging member of an LLC that is taxed as a disregarded entity. Here is the skinny on this. The building the S-corp has been operating from is owned by the LLC. Thus same shareholder and managing member. The S-Corp has rent payable due to the LLC in excess of the S-Corp assets which would leave the S-corp insolvent. Can the LLC forgive the debt, issue a 1099-C to the S-Corp? Also, I understand the S-corp would have to include the forgiven amount in income but that amount doesn't pass thru to the shareholder. Next question, can the LLC deduct the loss due to the charge off? Obviously this would benefit the the single managing member and offset some gain on the sale of the building that took place this year. My concern again is the related party issue. In the grand scheme of things, and at the very least, this looks a little fuzzy to me. Others opinions please or lead me to some research information.

I worked in two locations for a while as well. The best for me was the laptop and docking station. Worked perfect. Also, if I have to go to an elderly client's home and yes I have had some bed ridden clients, the laptop and portable printer is a good option for this as well. Folks in my office see a monitor for review that is connected to the dock so they are not looking at a laptop screen.

I guess we can drill as far down on this subject as we like. Most of my property owners do not give me the details of the "roof replacement" just the cost involved. I don't see how a roof replacement is a capital improvement. It is a repair to maintain the integrity of the structure. I do agree with Mr. Pencil again that you cannot begin depreciation until the property iks rented. Then you can determine whether there is a capital improvment or repair.

I agree with both of you. I just wanted to confirm my own thinking. I guess the statement that I made regarding when the depreciation begins implied the expenses were incurred to make the property available for rent. Thus the need to capitalize.

As I read the information provided, your statement doesn't appear to apply. The real question is what do the amounts paid actually do for the property. Do they maintain the original usefulness or do they actually improve the property. That is the question and it appears the documents given by Mr. Pencil back this up.

Nice read and thank you for the links. While I have not obviously taken the time to read the document at lenght, there is a section regarding capitalized costs for improving the property. As I see it, the changes will allow for the expensing of repairs which in this case there are quite a few. There is still a difference of opinions regarding expensing or depreciating roof replacement which I had intended on depreciating the costs of the roof repair. Renovating the property to make it usable is improving the value of the property and those costs I feel are to be capitalized.

Wroking with a partnership of a few guys that are in the business of buying and renting property. No problem so far. I am of the opinion that amounts spent to renovate and make the property available for rent are capitalized. With that said, the depreciation begins in the month the property became available for rent as well. One of the partners has included the amounts of the renovation in the list of expenses which again I say no. I think he is expecting to see a significant loss on this particular piece of property and I just want to be sure my thinking is correct.

I have the same questions as Joan. I would check your local Secretary of State to see if the S-Corp had indeed been dissolved. If not, then no need for a final return yet. However, the assets and what happened to them are another question. May need to file a 2012 1120S and a final 2013. Just remember, it is okay to leave an S-corp return open as it usually, depends on the size of the S-Corp, takes some time to wind up business matters.

I agree totally that it depends is a great answer. There is no one size fits all in this business. I have gotten caught in the past giving a quote for a return and when the client shows up it is hard to explain that because they didn't disclose all of the forms they needed the price just went up.

Thanks jack you know that form number sounds famaliar and I am wondering if I got the wrong information from OneDesk as I dealt with them and had them walk me through the process. Can't remember back that far but now I am scratching my head about that form. I will wait to see what the client comes up with. I guess the fact that we made some kind of attempt to be timely even though it seems to have been wrong, may have some merit to it.

Ditto jack

I filed a 7004 extension for form 5227 for a CRUT. That extension was transmitted and accepted on April 15, 2013 at 3:30 PM. I used OneDesk software for this return only simply because I didn't have to pay for it. Some forms had to be manually completed because One Desk was not able to calculate and properly allocate the capital gains. My client mailed the return to the IRS in early June. My client has recieved a notice from the IRS that he failed to file the return. Don't know if he mailed the return certified with return receipt or not. He has also received a notice of a 2k penalty for failure to timely file. Using this OneDesk software, how does one print the transmission and acceptance results to prove the return was indeed extended? I have called OneDesk support and got a recording so I left a message. I hope someone here has more knowledge of this software than I.

I thought I was on the list of testers as I would like a peek at their product to see if I may be interested in returning. Hopefully, I will get the e-mail when the first beta test is launched.

I agree with Jainen that no single answer is best. i am assuming the property is held for rental?? If so, it is best to work it out with your client. Maybe involving an estate attorney might not be a bad idea either,

I agree with mcb39, jack and Bulldog

Me neither.

<<<I don't know if I should ask why he is coming back to you, or why he left you. I guess both questions are relevant.>>> Jainen you are perfectly fine in asking this question. I teach Automotive Technology at a local Career & Tech Ed Center. This former client is trying to donate the remaining equipment to my program and is not trying to return to me as a client. His first thoughts were to donate the equipment and take a charitable deduction on his personal return. I am not advising him in anyway as he is not my client and to be quite candid, I withdrew my engagement from him four years ago because he didn't want to comply with the employee vs subcontractor rules set forth by the IRS to which he has later suffered serious penalties for missclassification of employees. There were a few other things that I didn't want any part of as well. I want to be sure that if I take this donation that my school system and I are not part of any illegal acts or receive equipment from someone who technically or elsewise doesn't own it. I was never part of the formation of the LLC so and I am assuming this was single member LLC and if so it very well could have been a disregarded entity. I base my belief here on the fact that he would not answer my questions during the time of our engagement regarding the formation of the entity structure and how his son was involved who partnered with him in operations but not on paper. His son's wages reported on a 1099 were the wages the IRS went after. Just to add, I never have prepared any tax returns for him because of his indecision with the entity structure. If the LLC is taxed as a disregarded entity, the write-offs or loss from the equipment has already been realized by him and therefore he cannot make the donation as a chartiable deductible item. Again, I am not sure. My concern was his accountant has told him he doesn't own the equipment that the LLC did and it has been written off but, he should try to sell it first and if he can't then he should just donate it and cannot receive any charitable deductions for it. I totally agree with the later part but not the selling part. If he sells it, he is selling equipment that he doesn't own and profiting from it. To me, this falls under the same as donating it, how can he donate to my school something he doesn't own. Personally, it doesn't concern me how he does his business/personal taxes and I am not getting into that with him nor as I said am I advising him. Also, because of the previous attempts to thwart the IRS regs as I mentioned, I would not consider re-entering an engagement with hiim. Matter of fact, I think that under the ethics in circular 230, I could suffer greatly for doing so. Not sure but those are my thoguhts. I will reiterate, it is my school and program that I am concerned about. If he doesn't sell this stuff he wants to try to donate it to me in December. At this time, I feel like I should stay as far away from it as possible.

The owner of the LLC is the same person who wants to make the donation. I agree with the accountant as well regarding the disposition of the assets. I don't agree with selling the assets for a profit. There is no mention of donating the money. The owner originally wanted to donate the assets for a charitable deduction. If he sells them he is keeping the money. That is what I don't agree with. He claims he was told this would be a way to recoup some of the funds he loaned the company for operations. To the best of my knowledge those loans were written off as well. Books closed, no assets transferred/converted to personal use so he the owner doesn't own them. It would be interesting to see how they were listed on the final tax return.

A former client contact me about donating equipment to my auto class. His business was an single member LlC closed two years ago. His accountant told him he could not donate the equipment because it was owned by the LLC and all assets were written off. I don't know all of the details about the closing or how the taxes were handled. I can assume this would have been a disregarded entity. This client was told to try to sell the assets before donating them and that would be the only way he would get any bebefit from the assets. I don't see how he can do that if he doesn't own them. None were converted to personal use or used as any repayment of funds he loaned the company. I bowed out of this donation because the way he wants to handle it makes little sense to me.

Hey jack, I just returned from Ohio where I had met with an attorney for a will and other documents for my mother. The attorney informed me that Ohio has now eliminated any estate tax. Have you heard anything on this?

it would seem that the only way you will know what the actual expenses incurred would come from the 1098T form issued by the educational institution.

Crank did you get asked to beta test the TRX program? I did and don't really have time to do so. Even if the beta test proved good, I would be scared to death to use it.

Agree with Catherine. Mail it in.