BHoffman

I'll try this again with different assumptions and better phrasing My client is a 20% limited partner in an LLC. He wants to donate 2% of his member shares to a qualified non-private charity. I was informed on Friday, and he wants to this on Wednesday. The partners are trying to sell the partnership, but no buyer has been identified. It is listed for sale. The asking price is $10m. If my client decides to make the donation, the required qualified appraisal will be performed shortly after the sale and/or before his tax return is due. Unrealized receivable hot assets are $1m. There are no liabilities. There are few fixed assets and not much depreciation recapture. He has no passive loss carryforwards, etc. so let’s ignore all that and assume the only issue is the unrealized receivables. My calculations are this: Estimated FMV of 2% donation = $10m X 20% = $2m X 2% = $40k Less: Hot assets = $1m X 20% = $200k X 2% = $4k Client’s deductible charitable contribution = $40k - $4k = $36k Is my calculation correct? I’m asking because I’ve never actually done this before although I have researched it carefully. I’m hoping for some confirmation if anyone has experience with this unusual transaction.

My client wants to donate 2% of his 20% interest in a partnership to a public charity. I'm trying to figure out if it's worth it. Assumptions: FMV of 2% = $80,000 Ordinary income from unrealized receivables would be $60,000 So, am I correct that my client's deductible charitable contribution would only be $20,000 AND would require a qualified appraisal? Thanks and Happy Summer!

Look at the partnership form 4562 and look for a carryforward of the disallowed 179. I think you are correct. The deduction is first limited at the entity level.

I ask my existing clients for referrals. Works out well because they will prequalify people and you don't get the bums and crooks

Let us not forget friendly form 8846 to claim the tip credit for our restaurant clients https://www.irs.gov/businesses/small-businesses-self-employed/credit-for-portion-of-employer-social-security-paid-with-respect-to-employee-cash-tips-irc-45-b-credit

And if they did write a correct article, the reaction of the general public would be this

I read the article. It was like watching someone trying to chew the cap off a child proof bottle. I don't think the media is going to be able to write correctly informative articles without having at least a basic understanding of how the current tax code works. And, they don't. So, we should be prepared for a lot of amusement and amazement.

Funny story. AZ legisvermin decided to add a line on the state income tax form to report use tax for internet purchases. Evidently, when the lawmakers were confronted with having to list all of THEIR OWN amazon and eBay purchases, they changed the reporting requirement retroactively in the middle of the tax season, claiming it was too much of a burden to look up all those receipts. I think Catherine is on the right track

There is no "free lunch". Except for Wimpy....

It will be a race to the bottom if graduated tax rates go away. Can you imagine the reaction of someone whose entire income is taxed at 25% instead of 10% because she earned $1 too much? I would like to see a lot of the social engineering rewards and punishments be taken out of our tax code, though.

Do you mean M-1 and M-2? M-3 isn't commonly filled out unless the company is huge. I had one SCorp field audit, triggered by a large amount of advertising expense that was valid. The auditor wasn't interested in the Sch L, M-1, or M-2 except to see if the shareholders had basis to cover the distributions. The result was no change. I think the IRS will pick out a return for audit based on revenues and expenses reported. I don't think they zero in on the Sch L, M-1, or M-2 to initiate an audit, but probably look at those items if the return is selected for some other reason.

There doesn't seem to be a contract yet, and they are still negotiating the price and terms. I advised him that it would work out better tax wise if he sold the stock instead of the assets and explained the difference.

Only if I referred the client to a buddy tax preparer, and I would have told my buddy before he accepted the client. Otherwise, no way would I talk about that to a successor accountant.

Well, of course, this raises it's ugly head. I told the seller (my client) to hire an attorney to set up the sale contract. I told him that selling the assets would result in higher taxes, and that he should sell the stock. Based on below, it looks like he is depending on the buyer's attorney and failed to get his own, and looks like he's selling the assets. I get this email : "Buyer's attorney wants our assets and debts to move forward on selling the C-Corp. We took inventory and can look up what is in the banks, value of the vehicles etc. What else do we need to do?" I do not know how to respond, and am still too fuzzy to think. How would you respond to this question?

New avatar? Great idea!! Here's mine

I don't mean to the poster child for tax season misery, and wish I hadn't vented here about being mad at Hubby. We've been married since 1991. He can be a real pr!ck but he's never boring.

Oh, please mention anything and everything! You are such a great source of comfort and knowledge, and my role model for grace under pressure.

Judy, I think BB was talking about my complaint. When I'm tired, I get pretty negative in my thoughts. When I'm over stressed, I have trouble eating and sleeping. Two nights in a row, he rolled over and took the covers with him. In a row. So, for two days I got about 6 hours of sleep. I complained and said I was going to sleep in the guest room. Got the big silent treatment from him and cold shoulder. So, I continued to sleep in our bed and the "tuck and roll" stopped. In my mind, I figured he was just playing some passive aggressive game to get even with me for being generally grouchy but not overtly nasty during the best of tax seasons. My appetite sucks when I'm over stressed. I usually only eat to survive and need lots of lean protein and veggies. Carbs and fried stuff just don't work. And, I need to have dinner by 7pm or else I can't hope to sleep before midnight. He made absolutely no effort to help me out with that, so I ended up spending a fortune on meals delivered by DoorDash and that restaurant food with my nerves ran right through me. I am a little OCD all of time, but it comes out in full force during tax season. If I don't have that diet ginger ale at 3pm, the world will surely end. He is supposed to do all of the shopping during tax season because part of my OCD involves germaphobia and grocery stores are filthy dens of disease. He left me without the ginger ale for about four days until I stopped asking and also stopped speaking to him. Years ago, he used to protect my sleep and guard my health during tax season. I don't know what has changed, but he just seemed not to care this year. I think we need to talk, kindly and as the friends we used to be.

https://www.irs.gov/individuals/tax-trails-self-employment-income-6 Your client could be subject to SE tax for rents reported on one K1 but not the others.

Prayers of comfort for your Mother and her family, Terry.

Rotten disposition. My husband has acted like he hates me more with every passing day this tax season. It's been the worst on record.

I love that glue. I collect it and roll all of it together. I have the biggest ball of glue in the entire southwest.

Drastic times call for drastic measures. I'm still recovering from using my desk scissors to cut my bangs.

Oh, great. Now I have the heebie jeebies for no good reason. Several clients mailed in their extension requests with payments. One of them is my dad. Should I also efile the form, or just let it go. He'll have the cancelled check as proof. I've never worried about these things before. Sheesh.