From TaxAlmanac, A Free Online Resource for Tax Professionals

Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Contents 1 UltraTax 2 S corp 3 S corp 2 4 Wow... 5 NY & UltraTax

UltraTax

I am in the Tampa area. I don't want clients coming to my house and actually where I live they don't allow that. So it was causing me trouble. I used UltraTax several years ago when I worked for a CPA and loved it. I just started using it in my firm and couldn't be happier. My sales rep is Daniel Holka and he did a great job of getting my discounts and interest free payments. Good luck!

S corp

Hmmm. Ft. L, huh? I could use some beach time. Haven't seen the sun in about two weeks, or more.

You asked: JR1, apparently you are the person to see for S-corp questions, so I'm hoping you can help me.  :) Both are 50% shareholders. S corp. is cash basis (they just started company last year, so they could be accrual basis, but they're a very small company, so I think it's best to be bash cash basis), they paid themselves uneven distributions throughout the year, but the distributions would basically be even distributions, except they tacked on the amount they each spent initially for incorporation fees & business cards and included it in the distributions. Since they are cash basis, I'm wondering how to handle this.

Also, you mentioned that it's never too late to use the accountable plan to reimburse shareholders for home office deduction. I thought expenses would need to be repaid within 180 days. I understand that I can book this to the SH note payable account, but would this need to be treated as a shareholder loan and follow the strict rules on shareholder loans to S corporations?

Thank you in advance for you help.

OK, Yes, I'd reimburse the expenses, which have nothing to do with distributions at all, don't worry about that. I'm not aware of a 180 day rule, but some distant bell rings...maybe someone here brought that up once. But I wouldn't worry about that. Yes, you must balance the profit distributions via the notes, and follow all the rules. What I do: there is only ONE distribution, and I make it. It's when I close the books at year end, and book the profit split to the notes. Always, if there's more than one shareholder. That way you ensure that there was always proportionate distributions, no matter what. Any monies that come out during the year are on the notes, not the profits.

As to the notes, issue 1099 INT's properly, assess interest at just over the AFR rates, have a signed note agreement...and you should be golden. Jeff JR1 On my way. Don't tell my mom in Stuart or I'll have to stop there, too.

S corp 2

Yeah, my son was on a sailing trip for school and they went in/out of Ft. L...good the day they left and the day they came back, but 17 degree windchills and sleet! in Key Largo up to Biscayne. Wow.

Back to biz: S-Corp Issue. See my answers on each line.....

South Florida is great. If this were a few weeks ago I would have told you that I haven't seen the sun here either. Thank goodness it's back to "normal" Florida weather. Stuart is really not that far away from Ft. Lauderdale, but I'm sure you knew that.  :)

So, back to this S-Corp issue. I'm going to just reimburse the expenses as you suggested, so then we won't have the issue with disproportionate distributions. But, because I'm not an accountant, I've always stuck to the tax side of things, I'm trying to figure out how this works exactly.

But, I'm trying to wrap my brain around the way you use the shareholder note accounts. Correct me if I'm wrong with what I'm assuming here.

1. So instead of booking to each individual shareholder's capital account at the end of the year, when you close the books, you book the profits instead to the shareholder note payable account. The capital acct. should not be touched after setting up. For one shareholder S's, you leave the profits in AAA (aka retained earnings in an S).

2. Any money that comes out throughout the year comes out of the shareholder's loan account instead of out of drawings. You can set up a drawing type account if you prefer, but it's a corp, so not technically correct. Just use the notes. And yes, they'll be upside down during the year as they draw out, until you reload it with the profits at year end.

3. Once you book profits to the notes (instead of capital) at year end, the balance should be the difference between the money taken out of the S-corp by each shareholder (drawings) and their share of profits. Yeah, more or less. Plus interest if you're over 10k.

4. How do you book the actual distributions that the shareholder gets if all the profits are booked to the notes? Dr. AAA Cr. Notes Payable...

5. If the note increases, would we have to do anything else, issue a new paperwork, etc. to appease the IRS. Note agreement with the AFR+ rate, 1099INT.

6. Are there any drawbacks to doing it this way? Not a one. But many for not!

Wow...

One final question, on the tax return, do you report the whole profit balance transferred to the SH's note payable account as a distribution?

Yes, Stefani, I do... Jeff

NY & UltraTax

I haven't been on here in a while so sorry for the delayed response. I did move to NY from FL but 2 weeks ago I moved back to FL. I was in NYC and the market there was tough, although I had a full time job so the tax practice was a part time thing as it was in FL. I set up a great website up there, did lots of online advertising, used Craig's List, and got almost nothing. In FL those things generated lots of individual tax clients (more than anything else). It was especially tough because up there EVERYONE does tax returns. You can walk by a barber shop, insurance agency, even retail store and they all advertise tax services. I do not plan on starting anything in FL any time soon again but perhaps I will for the 2013 season.

As far as UltraTax, I did not have the practice management software. I tested it and think it is great, but it was too expensive for me and did a lot more than I needed- although you can buy only the modules you need. Instead I used File In Time from Time Value. It was around $250, I think, and worked great for keeping track of projects. The only extras I used were FileCabinet, which IMO is top-notch, and Planner, which was also pretty good but perhaps not as good as BNA.