income to closed S Corp

[Possi]

My client closed an S Corp in 2016 and filed a final 1120S. (I don't do corp returns, an accounting firm did it)

This year, she has 2 1099s issued to the S Corp tax ID number.

I can put this on her personal return, but will it blow back at us because they were issued to the S Corp tax ID number?

[Evan S. Golar]

Was the S Corp prepared under the accrual method of accounting where it could possibly have been included in the final return?

[Possi]

4 minutes ago, Evan S. Golar said:

Was the S Corp prepared under the accrual method of accounting where it could possibly have been included in the final return?

Good question. I only have the K1, Basis Sch and letter from the firm. Will that be on her 1120S?

[Bart]

There is a check box at the top of page two of the 1120S that indicates the accounting method used.

[BHoffman]

Maybe the client needs to take the 1099 forms to the accounting firm that prepared the 1120S?  

[Abby Normal]

Whenever these things happen, the first questions I ask are: who got the checks? Where and when did they deposit them? And how in the world did they negotiate a check made out to a corporation?

Did your shareholder client receive any cash from this late windfall? If not, she should be making inquiries or filing complaints.

[Possi]

1 hour ago, BHoffman said:

Maybe the client needs to take the 1099 forms to the accounting firm that prepared the 1120S?  

She is going to contact them on Monday.

 

1 hour ago, Bart said:

There is a check box at the top of page two of the 1120S that indicates the accounting method used.

I will tell her to look there as well.

Thanks!

[Abby Normal]

Contact the issuer of the 1099s and ask for copies of the cancelled checks or other proof of where the money went.

[Evan S. Golar]

The issuer isn't obligated to cooperate with anyone other than the client - the S Corp ,

The S Corp shareholder should have received a copy already of the 1120-S - no need to even contact the preparer

[Abby Normal]

How do you talk to an S corp?  You talk to the shareholder or an officer of the corporation.

[Possi]

She will contact the firm that prepared the final 1120S and see if this was already included as income. If it was, I'm done. If it wasn't, I'll be back here asking how to negotiate this!

[Possi]

2 hours ago, Evan S. Golar said:

The issuer isn't obligated to cooperate with anyone other than the client - the S Corp ,

The S Corp shareholder should have received a copy already of the 1120-S - no need to even contact the preparer

She did receive the 1120S... for 2016... and it was the final 1120S. The issue is that I now have 2 more 1099s issued to the (now) closed S Corp. She will contact the preparer to see if this might have been the accrual method and if it already reported that particular income.

[mircpa]

They need to find out If they followed accrual basis of accounting & if in fact this amount was included in 2016's tax return if not amend 2016's tax return & include this income OR if cash basis of accounting file 2017's tax return as final & include income.

[Possi]

2 minutes ago, mircpa said:

They need to find out If they followed accrual basis of accounting & if in fact this amount was included in 2016's tax return if not amend 2016's tax return & include this income OR if cash basis of accounting file 2017's tax return as final & include income.

So, what I'm hearing is that there is no way I can put those 1099s on the personal return. I didn't think I could because the tax ID numbers won't match. I'll let you know when I find out tomorrow from my client. thanks!

 

[mircpa]

Ever if you were to choose to include in personal tax return you still need to file corp tax return & back it out (may be you can take this approach if client deposits check in their personal account)

[Gail in Virginia]

You can't put the 1099's on the personal return, but if the income was earned by the person and not the corporation, then the income can go on the personal return.  You can either have your client contact the people who issued the 1099s and explain that the corporation was out of business and they were dealing with him/her personally and ask that they correct the 1099s accordingly; file a corporate return and back out the income that was never theirs; or wait to see if the corporation gets a letter regarding their failure to file on these 1099s and answer the letter explaining where the income was actually earned and reported. 

I personally might take a chance on the wait and see approach, especially if the corporation was accrual.  IRS might assume these are already reported in the accrued income and not question the 1099s.  BUT it might also depend on how nervous your client gets if they receive letters from the IRS. 

[Possi]

The client closed the S Corp when she moved from TX to FL. Then she established an LLC with a new tax ID number. So two of the 1099s are under her SS number and 2 are under the LLC tax ID number. All will go on the Sch C, since it's a single owner LLC.

 

[Abby Normal]

Oh, so if she didn't get the money, it's possible it's lost in space somewhere. Either that or she got all the money.

[mircpa]

This is unclear to me. You said client closed S corporation. Now what does it has to do with single member LLC. Is it that this LLC was treated to be an S corporation  & now it is closed ?

[Abby Normal]

I bet all these payments went to the taxpayer and were deposited into her new LLC bank account. If the name of the LLC is close to the old S corp name, the banks would have no problem depositing them.

[Lee B]

1 hour ago, Possi said:

The client closed the S Corp when she moved from TX to FL. Then she established an LLC with a new tax ID number. So two of the 1099s are under her SS number and 2 are under the LLC tax ID number. All will go on the Sch C, since it's a single owner LLC.

 

This is really confusing. What a mess !

[Possi]

The S Corp was closed, and the new EIN is for the LLC.

She's a doctor, not a tax pro.

Poor thing.

[Richcpaman]

51 minutes ago, Possi said:

The S Corp was closed, and the new EIN is for the LLC.

She's a doctor, not a tax pro.

Poor thing.

There is your answer.

The Insurance companies never update info as practioners move their practice's tax status.  (And the Dr's never try, except the address or bank account so that the checks go to them..)

Report the 2 "extra" 1099's to her med practice return, whatever it is (Sch C, 1065, etc).  If the IRS asks you for a Corp return in the future, then you deal with it.  Not very....

This in NOT accrual income.  It was payments she received in 2017 for services she provided in 2017. And she is not "Poor Thing"  She is a Dr.

Rich

[RitaB]

20 hours ago, Possi said:

The S Corp was closed, and the new EIN is for the LLC.

She's a doctor, not a tax pro.

Poor thing.

You know the difference between engineers and accountants?

Accountants know they're not engineers.

[Possi]

On ‎4‎/‎9‎/‎2018 at 3:45 PM, RitaB said:

You know the difference between engineers and accountants?

Accountants know they're not engineers.

You know the difference between Alcoholics and drunks?

Alcoholics have money.