DANRVAN

My example might be hypothetical but not unrealistic. Let's say generous employer #2 had a plan where the full annual addition was funded by employer and new hire met requirements for the plan in first year (2024). In that case it seems a $69,000 E'R contribution would be mandatory. As Tex cited above, the 415(c) annual addition limit is not aggregated by unrelated employers. So new hire is entitled to whatever amount is allowed by E'R #2 plan, whether it be the full $69,000 of another $46,000. Also, the employee could have an unrelated side business with contributions to a solo 401(k). Sect 415(c) and 1.414(c)–2 look black and white to me.

It sounds like the following would be true for an employee who switched jobs during the year: If employee's annual addition was maxed out at $69,000 with first employer plan. Then he takes a job with an employer unrelated to the first. The employee cannot make any contributions to the new E'R plan for the year, but looks like 2nd employer could contribute the full $69,000 annual addition under his plan. Maybe I am missing something?

That is also my understanding, although I have not dealt in this situation.

The limits were recently increased for 2024 per Notice 2023-75. The total sec 415(c)(1)(A) annual addition, which is the sum of E'R and E'E contributions is $69,000 for 2024. The E'E contribution limit under sect 402(g) for 2024 is $23,000. The annual addition limited by 415(c)(1)(A) is per plan participant as I read, as long as the two employers are not related. I am curious if you are planning for employee or employer?

For an authoritative cite see 1.16-2(c) which has been referred to in many cases. "Where, however, pursuant to an agreement or understanding, services are rendered to a person for the benefit of an organization described in section 170(c) and an amount for such services is paid to such organization by the person to whom the services are rendered, the amount so paid constitutes income to the person performing the services."

Sounds like a "Donations in Lieu of Honoraria", received under constructive receipt doctrine since he had control of the funds.

But there is a huge difference in the complexity and knowledge needed to prepare a K-1 (and related 1065..etc) vs a 1099. Also, self prepared 1099's are wide open to mistakes like reporting rents as SE income. I see it every year!

I think part of the issue is the confusion with the two types of ERC. They are similar in some ways and quite different in other ways; particularly in the manner the credits are claimed. The ERC for an inoperable business due to a designated disaster falls under sect. 38 as a general business credit and used as an offset to income tax via form 5884-A. They should have been given different names to avoid the confusion!

But OP indicated that ERC was due to a business that became inoperable resulting from a qualified disaster and therefore should be claimed on form 5884-A. In that situation, both the credit and wage deduction flow from form 5884-A to the actual income tax return; which is 1120-S in OP case. Which ERC credit are you talking about? The ERC for COVID-19 reduction of business income is reported on 941. There is also a ERC for businesses that became inoperable because of qualified disasters during the years 2018 - 2020 and continued to pay wages. After reading your post again, it appears that Paychex amended form 941 for COVID related ERC. If that is the case, then you simply amend the 1120-S (and K-1s) to reflect the reduction in wage expense. But you do not file form 8554-A, or you will be double dipping and filing an inaccurate tax return. You only use form 8554-A when a business was inoperable due to a qualified disaster. That results in an income tax credit rather than a credit applied to payroll tax deposits on form 941.

For sure!

I would not attach anything unless it is required. Is that what you are doing in the above statement? Depends on the facts and circumstances. But with all the ERC abuse I would ask for some sort of summary. How well do you know your client, how reputable is Paychex vs some of the ERC mills that have popped up? Bottom line is you are relying on clients representations, but doesn't hurt to ask for additional information given the recent ERC abuse.

That is correct, I think of 1245 and 1250 as subsets of 1231 property. Sec 1231(b)(1) includes property "of a character which is subject to the allowance for depreciation provided in section 167, held for more than 1 year". Section 1250 applies since 1250(c) states "the term “section 1250 property” means any real property (other than section 1245 property, as defined in section 1245(a)(3)) which is or has been property of a character subject to the allowance for depreciation provided in section 167." Therefore, the undepreciated portion of the building and land are taxed as capital gains. Because of the above definitions, the rental does not need to rise to the level of a trade or business to be classified as either 1231 or 1250 property.

It is not a new form or concept, been around for as long as I can remember doing taxes; and referred to in multiple replies to the OP above.

You can e-file the previous two years when they start accepting business returns in the next week or two.

Use 2022 for periods beginning in 2022 and ending in 2023.

I think you are confused. That does not make any sense at all.

How did he find this out? I suppose he could file using those as his representations. Still lots of unanswered questions. How long has the business been closed. Was this a Sub S? Does he know if any returns were ever filed? Was he the sole shareholder? Did he take a wage? Has be been filing his personal returns? Did the Corp own any assets, and if so what happened to them? Most likely not. If he really wants to know if any any assessment have been made try calling the PPS hotline.

No, the gain from the first property is deferred to the sale of the second property. The total gain is the same, but there a possibility that the combined gain on the second sale could push the taxpayer into a higher tax bracket.

and Merry Christmas to you and all on this board!

Without knowing all the facts, I would probably let him know there it not enough information to file complete and accurate tax returns after all these years. I would be carefull how I phrase it, but after 10 years how likely is the IRS going to contact him now?

So to get this straight, you are trying to set up client accounts for the first time? Go to the home page but do not log in. You will see a tab to "enroll" https://www.eftps.gov/eftps/direct/EftpsHome.page I just did one few days ago.

That is correct. I am curious, are these 1120-S returns that you prepared?

You are making it way to complicated. You don't need to read past paragraph (a) titled "Deduction Allowed".

Wages are not reduced on form 941, just the employer's deposit liability by the credit. That is true to prevent a double benefit.

Incorrect. Suggest you review sect 172(a).