User talk:Smokeytax

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- Tim Doyle, TaxAlmanac Moderator - Talk to me 08:49, 29 December 2006 (CST)

Corporation owns auto and employee has mixed use

I agree with smokeytax. How does the corporation deduct the auto expense when let's say 40% is used by the employee for personal use? When the Value is added to the ee W-2, Does the employer deduct 60% of auto expense as auto expense and the 40% added to W-2 as wages and then has to pay the FICA also? Nei

Thank you for your offer for help!

I did get one response from an individual here but thank you very much!!

I have had an issue with a potential client that got my contact info from TA and I did not know how to proceed with a very unorthodox request they had of me...to prepare a sample tax return with numbers they said they were just "pulling out of a hat so to speak" so they could see how if they proceed with their plans to organize an International corporation it would look on a 1065.

I have already given them over 20 hours of research on their issues which I don't mind since it was general information, but when someone wants me to plug #'s into software to prepare a return and send it to them, they could be using this for an actual return and/or use adobe to change numbers or create a tax return from numbers they see on my work...

Anyways, thanks and if you have any input, please let me know. I have yet to respond to their request...wanted to bow out of this gracefully if I could :)

Sandysea

Invoicing a client

My name is Tracy and I as part of my business; I invoice clients. I also have clients that I have taught how to use the invoicing feature on several levels of QuickBooks. I have this client that invoices as per our advice and she is being told by a woman that is way past due that the way she invoices is illegal simply because her invoice does not have the 1-30, 30-60, 60-90 and over 90 days past due boxes on it and that is why she is not paying. I have never heard of a law that requires this information especially since these invoices are due upon receipt. I understand that certain information is required by law to be placed on an invoice, such as, the company's name, address, phone number and that are the only laws I am aware of. Plus, you put what you are billing for and how much and when it is due. Am I correct in advising my client that this client of hers that is saying that she (the non-paying client) is incorrect in saying that the invoice must also, by law, show how behind she is? --TLCTaxGirlAZ 21:42, 22 August 2007 (CDT)

Tlcqbadvisor@msn.com

Could you send me the below information... I seem to be having a hard time finding it... or just the link... Thanks..

Check out TC Memo 1998-408, which has a good discussion of true leases vs. "capital" or "conditional" leases

Could you send me the info or a link to it... Thanks

e-mail: desertsatellite@hotmail.com

Check out TC Memo 1998-408, which has a good discussion of true leases vs. "capital" or "conditional" leases

I noticed that you determined cosmetic surgery after weight loss (removal of excess skin) was considered an allowable medical deduction for Sch A.

I have a client under audit for this deduction. I am beginning my response and would like to know what tax provision that you are have referenced.

If you have a moment, I would love your assistance.

Thank you, delanecpa in Oklahoma

Recent post (flippers & printing money)

You recently posted to the "where are the flippers" discussion, so I'm letting you know that the discussion has been moved over to the Chat forum since it (a) is not really about tax questions and (b) has some political or semi-political posts, which the community has, in the past, wanted to be able to avoid in the tax forum.

You could also still get to that discussion by going to "my contributions" at the top of your screen, and looking at your recent contributions. Click on the flippers discussion title and you'll jump to it from there.

Trillium 11:08, 14 February 2009 (CST)

PS - with regard to your question on printing money - here's a nice NYT article that gives an overview of both what it means (literally and figuratively) and what the implications of it are: Printing Money – and Its Price (12-29-08). ...Trillium

Moved "Crazy Calls" to Chat

Smokeytax – I’ve moved your Crazy calls discussion from the tax forum to the Chat forum because (a) it’s rolled off of the first page of the tax forum without getting all that much attention yet and (b) it seems like it’d be a good chat topic. Hope that’s okay; if you'd rather just have it fade away on the tax forum, let me know and I'll move it back.

Trillium 00:29, 12 March 2009 (CDT)

Are you willing to discuss some issues with me via email or let me call you and talk over the phone? I'm a CPA working full-time and trying to start my business from home and I would love to be able to talk to someone that has been able to do it.

Thanks. copelandh@sbcglobal.net

Noir

Smokey, I've been watching some of the old detective and gangster movies from the 1930's and '40s today, so it's got me in the mood to say "rough underbelly of the city." Forgive me, but I couldn't help it.CrowJD 18:02, 15 June 2009 (CDT)

Added a link to the WSJ article on Garnett case

Hi, Smokeytax - your Garnett discussion has recently been bumped again, which reminded me that I wanted to add a link to the wsj.com website for that article. Turns out that this is an ungated article (didn't need to sign in to see it), so I've added the link to the article to your post, replacing the text of the article that was there. It's my understanding that copying small parts of articles published elsewhere is allowed under standard copyright rules, but that copying entire articles may not be, so I figured it was probably safer to just have the llnk.

PS, thanks for starting this discussion, and for posting the article - that's turned out to be a very interesting back and forth there!

Trillium 11:37, 22 July 2009 (CDT)

Smokeytax:

I have read the information on the Thompson case.

It is favorable to the taxpayer. In summary, a person who "materially participates" in an LLC will not have their losses limited solely because their libility is "limited'.......

it appears to me that the material participation rules should be evaluated (as we have since the beginning of the 86 codes...)

The LLC is a complicated entity in that every tax line item has to be "evaluated" and in many cases is the outcome (is this aggressive or not?) "unknown"......

Is it aggressive to deduct losses on an LLC's member's 1040 when she clearly materially participates????? The cases help reslove this.

My goodness, the Passive Loss rules are just now being tested..... The issues are just now being resolved......

The ambiquity of the LLC either makes the entity a "great" entity for great tax planning or a great entity for a big fat tax tax burden....... The old, you tell me and we will both know analysis seems to fit......

Additional food for thought as disclosed by Aaron P. Nocjar of Steptoe & Johnson LLP

"If Congress were to act in response to these developments, it seems that a reasonable response would be to simply remove 469(h)(2)", Mocjar added. "however, if Treasury [the IRS] acts withhout any furhter direction from Congresss, we might see something analogous to the proposed regulations that define 'limited partner' for purposes of the exception for a limited partner's distributive share of partnership income from the self-employment tax under section 1402(a)(13)"

Again - the ambigouity of this entity......

Question: Has the issue Mocjar raises ever been resolved???????

Sincerely,

Joe Tax.....

your payroll tax answer

Smokey Thanks so much for your clear and concise answer to my recent query. Exactly what I needed, but is sometimes lacking when other 'drive-by' posters post something but never quite answer the question.

Good luck this tax season, Anchorman 11:48, 27 January 2010 (CST)

did you figure out a solution for SEPIRA and solo 401k?..is backing out of sepira and xferring to solo 401k for same year a workable solution ? thanks very much

Hi~You answered that you thought my client would not need to match 2010 1040 and 1120. The other CPA is adamant that the payment to shareholders should be cash basis. Given: Compensation of officer of closely held c corp in Q2 and Q3 with FY 12/1/09-11/30/10--W-2 issued, all employee/employer taxes paid in Q2 and Q3. Wages reported cash basis on 1040 for 2010. Company tax return filed for 2009 for year ended 11/30/10. Question: Does the W-2 have to match Corp? Do payments to shareholders have to be cash basis? Is it allowed to report the compensation to the officer in tax year 2009 or must it be reported in 2010? I need an answer from the Code if I am going to be able to debate him. I have searched and cannot find what I'm looking for. If it's debatable I don't see why the client needs to come up with the extra tax owed because of losing the deduction for the compensation of the officer.[600,000x34%] The other CPA says go ahead and report it, but if you want the deduction on the corporate side, the owner employee will have to report it twice for 2010. He says the timing has been done in error in the past and skipping the deduction on the corporate side is the only way to "true it up". ???????

Hi~thank you for posting to my compensation of officer for a c corp question. You answered that you thought my client would not need to match 2010 1040 and 1120. The other CPA is adamant that the payment to shareholders should be cash basis. Given: Compensation of officer of closely held c corp in Q2 and Q3 with FY 12/1/09-11/30/10--W-2 issued, all employee/employer taxes paid in Q2 and Q3. Wages reported cash basis on 1040 for 2010. Company tax return filed for 2009 for year ended 11/30/10. Question: Does the W-2 have to match Corp? Do payments to shareholders have to be cash basis? Is it allowed to report the compensation to the officer in tax year 2009 or must it be reported in 2010? I need an answer from the Code if I am going to be able to debate him. I have searched and cannot find what I'm looking for.

If it's debatable I don't see why the client needs to come up with the extra tax owed because of losing the deduction for the compensation of the officer.[600,000x34%] The other CPA says go ahead and report it, but if you want the deduction on the corporate side, the owner employee will have to report it twice for 2010. He says the timing has been done in error in the past and skipping the deduction on the corporate side is the only way to "true it up". ???????Cpa2112010 15:08, 23 November 2010 (UTC)

Hi~ I was gone for the holidays - long distance travel to family. The SEPIRA was actually a question from another person. Re: Compensation of Officers, sadly the other CPA I was disputing is probably correct. He has since pointed out that the timing error from the former CPA went the other way--where the income to the officer was reported before instead of lagging the 1120 deduction. So, the income to the officer reported in 2010 actually was deducted on FY 2008, period ending 11/30/09. I'm still going to look at prior period tax returns to verify this. The next question, however, is ok, let's say the former CPA was wrong, my colleague is correct, then how do we mitigate the hit to our client? What kinds of expenses could be taken now? The suggestions have been presented to delay invoicing long term jobs, purchase machinery/equip, take bonuses paid within 2 1/2 mos. of the next period... I am going to look into the mid quarter convention for depreciation-isn't there some issue with things purchased in the last period that you can't take as much depreciation? My 6 tax seasons experience is predominantly with individuals, so a c corp case is quite interesting but I'm still just a rookie...(UTC)Cpa2112010 16:30, 29 November 2010 (UTC)

I will be able to get you the info tomorrow a.m. I'll post as soon as I can. Thank you for your helpCpa2112010 18:06, 29 November 2010 (UTC)

Can I email you directly re: compensation of officers? The client doesn't want a post online with their business detailCpa2112010 15:22, 30 November 2010 (UTC)

NTPI fellow designation for your user page

To add this designation to your personal user page, add the text {{NTPI Fellow}} to your user page - including the two squiggly brackets at each end. It'll look similar to the CPA designation you already have.

Trillium 23:57, 8 August 2012 (UTC) - edited for wiki formatting!

Thanks

Sorry I missed you too. Kevinh5

Financial planning

Yes, I am licensed and available to do that. Do you know in what part of NC the client lives? I'm in Asheville (Western NC), but we can always talk by phone if he is 6 hours away. Thanks for thinking of me! Kevinh5

Thanks

Thanks for the welcome. PEH 06:07, 9 January 2013 (UTC)

Thanks

Hey, thanks for the message Smokey. Of course, being voted the best dancer, might, well, be totally made up...

Ckenefick 15:00, 3 February 2013 (UTC)ckenefick

No Problem

No Problem, Smokey...based on what you wrote, I tend to think the attorney may not be very well versed in the SEE rules (substantial economic effect)...not many of them are, unless they are high profile tax attorneys. I wonder if this attorney is just a general business attorney that so happens to draft operating agreements?

Ask Mr. A what he thinks about the attorney's notion of "a permanent reduction" to A's investment. You see, if LLC earns $1k next year, and we credit A's capital account for only $500 and B's capital account for $500, B will be entitled to a $500 payment upon liquidation. As such, A will be shorted.

Also see if OA includes language about "Adjusted Deficit Capital Accounts."

Option

No problem. But note that if the "partnership interest" to be acquired via exercise of the option is unclear, it is most likely a capital interest. If it just has boilerplate language like, "If you exercise the option, you will own x% of the LLC," this is a capital interest. I'm not sure if a knowledgeable tax attorney drafted the attorney or not. If profits interests was intended, a good tax attorney would have drafted the option clearly to that end. Without further facts, I've got to believe its a capital interest.

Ckenefick 16:05, 9 February 2014 (UTC)ckenefick

Research

Hi Smokey,

I use RIA (Checkpoint) and BNA. I also subscribe to certain PPC materials and a wide variety of other publications.

Tax Practice Series, by BNA, is a pretty good product and is much cheaper than BNA's regular portfolios. And, RIA can put together a good package for you.