Lee B

Well today, I received the Designation Letter signed by all 3 partners. In addition, I picked up a related new LLC Form 1065 client

I don't think so, it will some months down the road.

Is the superseded return going to reduce their refund causing them to repay part of their refund?

I have had this problem 2 or 3 times when the student filed their own tax return and claimed themselves. There is nothing you can do until the superseded students tax return is processed which might take months. unless you want to try paper filing the parents return with an attached copy of the student's superseded return which will also take many months.

https://www.thetaxadviser.com/issues/2011/jul/clinic-story-10.html

Check some of the prior year's threads about ATX print cache problems.

Has the father signed an 2848 or an 8821 authorizing his son to receive information and/or act for his father? If not, just tell the son you are not authorized to discuss the father's tax return with him. Unfortunately, no matter what you do, this is going to continue to be a PITA.

When did they actually receive the benefits?

I would think it would be basis only deductible if the coop liquidated and ceased to exist.

"• Certain family members may be eligible to receive monthly benefits, including: —A widow or widower age 60 or older (age 50 or older if disabled). —A widow or widower of any age caring for the deceased’s child who is under age 16 or disabled. —An unmarried child of the deceased who is either: ◦ Younger than age 18 (or up to age 19 if they’re a full-time student in an elementary or secondary school). ◦ Age 18 or older with a disability that began before age 22. —A stepchild, grandchild, stepgrandchild, or adopted child under certain circumstances. —Parents, age 62 or older, who were dependent on the deceased for at least half of their support. —A surviving divorced spouse, under certain circumstances"

Usually SS monthly benefits are paid about the 10th of the month. If the recipient passes away before the end of the same month, the SSA will reach out and take back that month's payment. I am not aware of any reason that adult children will receive anything other than the death benefit or $255.

Drake has 4 different check boxes which covers all of the various options

I have been in my current practice for over 30 years and I have never heard of this requirement

IR 2022-38 dated February 16th https://www.irs.gov/newsroom/irs-provides-further-details-on-additional-relief-for-certain-partnerships-preparing-schedules-k-2-and-k-3-for-2021 FAQ 15 https://www.irs.gov/businesses/schedules-k-2-and-k-3-frequently-asked-questions-forms-1065-1120s-and-8865 I haven't seen anything about this notice in the various tax news sites for which I am signed up? I just did an online search for "Schedule K 2" and this stuff popped up. Amazing! This time the IRS has totally dropped the ball with the way that they have handled this issue!

In all the court cases of which there are many, the focus is on the payment and/or avoidance of employment taxes directly related to whether or not reasonable compensation has been paid. Since the Health Insurance added to Box 1 is not subject to employment taxes, there is really no difference taxwise from a distribution of profits.

My understanding is that only wages subject to employment taxes are "reasonable compensation"

If you read the detailed instructions for filing for an EIN what to do is explained. There was a thread discussing this situation sometime last summer.

If the required January 15th letter was not mailed out to the S Corp owners then your only option is to file Schedules K2 & K3.

"Consider the Option to Just Prepare the Forms Advisers may wish to consider the other alternative to qualifying the S corporation to meet either the Domestic Filing Exception or the Form 1116 Exemption Exception—just preparing the Schedules K-2 and K-3 for an S corporation with only domestic activities. *Several professional tax software publishers have added the option to check a box that tells the software that the entity has only United States operations. When the box is checked the software uses the information entered on the forms to complete the rest of the Form 1120-S to populate Parts II and III of Schedules K-2 and K-3 based on the normal allocation information for profits and losses for the return, as well as the average book value for assets reported on the corporation’s depreciation schedule. For many simple S corporations, this procedure will produce either a correct Schedule K-2 and K-3, or a starting point for quickly creating proper Schedules K-2 and K-3 for the corporation. In that case, taking the additional steps to meet the requirements to meet either exceptions may consume far more professional time than simply preparing these forms for filing with the Form 1120-S and providing the appropriate Schedule K-3 to each shareholder."

For years I have dealt B with whom I have a working relationship. I would prefer not to work with either A or C. Therefore I gave B the Designation Letter and it's up to her to get A and C to sign it.

It's the first bullet point for Georgia's "Where's My Refund" page

Georgia says error free efiled returns may take up to 5 business days.

Either ATX is waiting for the final IRS approval or they just received final approval but haven't updated their software?

The only way I would prepare this return is with a 3115 correcting the depreciation which would give him a 4 year forward spread on paying the additional tax. I would clearly state that in an email and as Tom says," Make him make the choice to stay or go."

Until we receive clearer updated guidance all you can do is advise your clients that you and Putnam have interpreted the requirements differently and let them decide what to do. Perhaps you could put that in writing and get your clients acknowledgement that you have informed them.