OldJack

I question if the 351 transfer of accounts receivables from a cash basis partnership to a corporate entity. Technically I believe the partnership terminates and distributes the assets and the individual then uses sec. 351 to transfer in exchange for shares of stock. Since the individual has not recognized the accounts receivable for income tax purposes the transfer would result in the tax basis for the corporation as zero requiring the recognition of income as received. The corporation's tax basis in contributed property is the same as it was in the hands of the transferor (IRC 362) >>IRC 362a) Property acquired by issuance of stock or as paid-in surplus If property was acquired on or after June 22, 1954, by a corporation - (1) in connection with a transaction to which section 351 (relating to transfer of property to corporation controlled by transferor) applies, or (2) as paid-in surplus or as a contribution to capital, then the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain recognized to the transferor on such transfer. << >>IRC 351a) General rule No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in section 368©) of the corporation. <<

>>Don't we have to keep our clients' identities confidential? << Well.. we all do keep them confidential for our own protection, but that is not a requirement or a violation of any law or ethics that I know of.

The very fact that you are questioning this relationship with the per diem firm and their client is exactly the reason you should contact the per diem firm and discuss this situation. Then, if the per diem firm has an objection, you should turn down the engagement with the new client. You should not need a client so bad that you have to terminate business relationships with other professionals.

And we have a WINNER!!!! Of course Maura knew that and knows what it is all about. And its a dollar amount for line 8 on page 1 of form 4797. A form we all fill out for many clients (and a line we frequently overlook).

Exactly my point John. We are all ignorant if we don't immediately recognize and understand what someone else thinks we should recognize and understand.

So we still do not know if the aunt died and the taxpayer inherited the stock or if it was a gift before the death. I guess some are just to busy to read the posts before they respond.

But didn't the post say "excludes CRP payments from self-employment tax for individuals receiving social security benefits". What about farmers that are not receiving SS. edit: Excuse me I mean "Social Security".

She will probably call you back tomorrow and tell you her income was really $48,000 the same as last year.

At first I just thought they had a typo and had left out the letter "A". :dunno:

Nice try Bob, but that was not what the abbreviations meant. :)

I Like what JohnH said. I would not even give government my email address let alone do their survey.

Very true John. I expect you were one of the few that understood the abbreviation that I used in my example.

Good post. I did not know that. Thanks.

I have several farmers but not ones that are receiving Conservation Reserve Program payments. I don't understand why someone that is wanting other peoples opinions would ask a question that contains slang or abbreviation such as "NNS1231LPY" that would not be easily recognized by everyone.

>>He is a civil engineer << So what.. that does not mean he automatically has activities that qualify. Read the requirements for a domestic production activities deduction real close.

Ok.. I guess I am new at this. What is a CRP payment and how much trouble would it have been for you to have spelled it out for us dummies.

The real question here: Is there really an activity that qualifies for the domestic production activities deduction?

Well.. the questionable transaction in my thought would be the transaction from the S-corp to an inter vivos trust. Such trust is not normally recognized as far as federal taxes but the question is did ownership transfer out of the S-corp causing a gain or loss transaction. I expect it was a taxable transaction as it was legally (title) distributed from the S-corp and would be reportable as a sale on form 4797. A transfer from the Old S-corp direct to a New S-corp could be tax-free if it meets the requirements of a split-off or tax-free reorganization. Maybe the trust was only holding title as a straw party until the new S-corp could be established....attorney should provide you with a written document explaining why it would not be taxable.

Before deciding what to do I would prepare the financial information to do a corporate tax return for those years because regardless of what form, the returns have to be prepared. At the same time find out if the corporation had filed to be a S-corp when it was first established.

>>That doesn't seem right at all<< And it doesn't seem right that you are paying tax at a higher tax bracket than I am either. Nothing is fair with the government. They like to use the word "targeted" when they mean discriminate.

If the 2008 tax return has a tax calculated, after you have deducted the NOL on line 21, there is no need to waste time filling out the NOL worksheet as there can't possibly be a carryforward to 2009.

I am not sure what you mean by this comment. You could be implying that the dad should report the rent at FMV rather than what she paid him. If that is what you meant, I don't believe a landlord is required to report FMV as income instead of the actual rent received.

While working on 2 houses at the same time certainly might imply that this was a business operation, it might still be considered improving investment assets and recognized as business assets for form 4797. Its a gray area. You really need to talk to the owners as to their intent of operation. Are they investing or rehabbing? Would they rehab anyones property?

>>I don't think that should be counted as an error. I always use the 1040. << I also only use the long form 1040. I have always thought that using the same form might keep you from making an error.

I am a CPA and I know Jack! However, I learn something new every day just like the professionals that are not afraid to ask questions on a forum like this one. To imply that someone here does not know much about taxes because they ask questions is a wrong attitude. Questions are sometimes ask to confirm an opinion or to simply get other opinions on a gray area of the tax laws. We don't need posts that imply that we are not professionals on this a professional forum.