User talk:JR1

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Clean up time........Ahhh, much better now.

thanks.

Hi JR take a look at my response to your 'I officially hate people post" taxea

Contents 1 single member llc to c corporation 2 Riviera Maya R&R 3 Anything I do can be undone 4 Part 2 5 just got back from the Riviera Maya 6 SMLLC elects S Corp -- does section 351 apply? 7 Now that you've answered your own question 8 S- Corp Distributions in excess of basis 9 S Corp distribution in excess of Basis 10 5329 penalty 11 Blrg is mistaken 12 Illinois pass thru IL-1000 clarification 13 Hope you got the other message I just sent you? 14 looking to contact you. 15 forgot to leave my name 16 Please clarify something for me... 17 thanks 18 disolving Illinois Corp 19 Thanks 20 Not black or white 21 Bankruptcy 22 Been there 23 Self Employment tax

single member llc to c corporation

under section 351 there would be no "tax free" exchange where the liabilities exceeded the basis of the assets of the single member llc to the c corporations, am i correct? Jmjcpa 12:48, 21 April 2009 (CDT)

Riviera Maya R&R

I have a timeshare that I traded for a week at the Grand Mayan resort which is supposed to be southwest of the Cancun airport (away from Cancun) for a week, then I bought 2 additional nights at the Omni Resort in Cancun on Priceline for 80 bucks a night. Taking my scuba gear, although I don't know if we'll get over to Cozumel to dive or just off the coast there. By staying 2 extra nights for $200 total including taxes and fees, we save about $300 in airfare and get two more days of FUN! Well, we'll spend the extra $100 in food, but that's still 2 free days of VACATION.

About 4 years ago I traded the timeshare for a week on La Isla Mujuers, which is off of Cozumel. Very nice diving there, but it was August so it was unbearably hot anytime you were not in the water.

I used to go to Cancun more often before almost every resort became Mandatory All Inclusive. I drink 2 or 3 drinks a day while on vacation and enjoy visiting local restaurants (not chains), so I don't get my money's worth by staying tied to one resort all week. I like getting out and exploring part of the week, and part of the week just splashing in the ocean or floating in the pool. Too much of any one thing gets boring to me.

Kevinh5

Anything I do can be undone

So thanks for the feedback.

What I actually did was split the S corp Owner Salary vs Distributions discussion into two parts, one with all of the consumer questions (and the related responses) and one with all of the tax pro questions (and related responses).

The new discussion is probably what you noticed in "All topics" today: Consumer Questions on S Corp Owner Salary vs. Distributions.

The original discussion remains in the Tax Forum: S Corp Owner Salary vs. Distributions.

Both would be found in a search, and both are near the top of the list if you sort "all topics" by "number of replies."

I split the discussion for two reasons:

1. The discussion was too long to be readable, both in my opinion but more importantly as stated by others (Jdugan, natalie) right in the discussion. And it *is* a discussion we want to be able to refer people to, so it should be readable.
2. Important points seemed to be obscured by repetitive posts from people starting up S-corps and unsure about what to do. There were great insights and debates, but to get to them you had to skip past way too many posts that start out "I have a new business" and usually included "60/40" at some point, to which the answer was almost exclusively "no you need to find out what a reasonable salary is." I wondered if people were hitting a couple of these kinds of posts at the top and stopping right then - missing a lot of the best stuff later.

My hope was that this change would make the original discussion even more valuable to the tax pros who need to be referred to it, while also providing a (separate) place to refer the non-pros if needed. Both discussions contain good info, and somebody who has the time could surely benefit from reviewing both, but someone who only reviews the "pro" discussion will not be missing out on all that much in terms of learning what the issues are.

Okay - so that's my side of the story. If you wouldn't mind, please take a look at the two discussions as they are now, and then let me know if your opinion is still the same - that the discussion shouldn't have been modified (that's a paraphrase of the message you left me this morning). If you still feel the same way, I will revert the original discussion back to how it was.

Thanks,

Trillium 10:38, 25 April 2009 (CDT)

edited to add:

You probably already know this, but in case you want to review the original discussion as it looked before I made the changes, open it up, go to the "history" tab, and click on the link that says "19:56, 27 October 2008" (the last post prior to my changes). Trillium

Part 2

I am preparing for part 2 and have passed part 1 and 3. I'd like to find someone to go through question nightly for a couple of hours. Do you have interest in geting together on Skype from 8-10 for a few nights a week? Regardless, I wish best in your studies.

Thanks for your quick answer.

just got back from the Riviera Maya

yesterday. The resorts were only about 1/4 full (should be half full at this time), but with the Swine Flu outbreak, many left early or didn't go at all.

Shopping at the Mega grocery store in Playa Del Carmen, one day the only people wearing face masks were in the meat and bread departments (working with open food), two days later everyone working there was wearing them, two more days later only the meat and bread depts again.

All the ruins were closed (got down to Tulum but couldn't go in) and all the large discos and nightclubs in Cancun were closed, as was Wet N Wild. Apparantly all non-essential businesses where over 80 people could congregate were closed. No problems getting into the smaller restaurants, though.

Had to pass through 3 health screening checkpoints before they would let you check in for your flight yesterday at Cancun airport. I guess if you failed they wouldn't let you inside the airport or on your flight.

Anyways, went snorkeling at Akumal Bay two days, saw 2 turtles just offshore from the webcam both times. Waived as I walked by it, in case you were watching. So beautiful!!!

Kevinh5

SMLLC elects S Corp -- does section 351 apply?

JR, help please.

A SMLLC was formed in 2006 to purchase a pool service & repair business. Purchased occurred 01/02/07. Sch C filed in 2007 showing a $71K profit.

A timely filed S Corp election was made with 01/01/08 effective date. Assets at 12/31/07 were Cash $90K, Inventory $5K, F&E (net) $20K and Goodwill (net) $725K for a total $840K. Liabilities at 12/31/07 were NP to Seller $226K, NP to Owner $543 and RE $71K for a total $840K.

PPC guide for S Corp states: “LLC Converting to S Status Must Conform to S Corporation Rules. Once the LLC has elected S status, the entity is operating as an S corporation and, therefore, must conform to the S corporation rules.”

Does this mean section 351 applies? I think yes but am not 100% sure.

My concern is the large drop in value of the business (i.e. goodwill). The business was purchased 01/02/07 for $825K and then sold 22 months later (11/10/08) for $475K. A $350K drop in value.

So I have all the usual questions. How to handle NP to Owner? Owners basis in stock & debt?

Thanks, Thom Thom 19:46, 12 May 2009 (CDT)

Now that you've answered your own question

Want me to delete it for you? Or would you like to accumulate a couple responses from other people, too!!

Trillium 14:03, 10 June 2009 (CDT)

JR1 thanks for the input, you are right my question was too open ended. I will be more specific next time.

S- Corp Distributions in excess of basis

Hi JR - I have read through a lot of the discussions on this topic and respect what you have to say about this. I inherited a new client who has taken out excess distributions. I plan to report the distributions as normal on the 1120s and on the 1040 report capital gains. HOWEVER, her taxable income will be zero due to her schedule A deductions. Therefore, she won't be taxed anything on her capital gains. I feel like this is not the intent of the of the tax law...she basically gets to take excess distributions without being taxed. Am I missing something? Or am I over thinking it? In addition, the prior preparer did a reconciliation: Ending AAA: 45,000 RE deficit from C Corp (17,000) Ending Retained Earnings 28,000

My thought that this doesn't effect anything since it was a deficit from the C Corp.

I would appreciate any thoughts you have. Thank you in advance. Your posts have been a huge assistance in the past.

BearAcct 10:56, 19 June 2009 (CDT)BearAcct

S Corp distribution in excess of Basis

Thank you for your input!! BearAcct 12:30, 19 June 2009 (CDT)BearAcct

5329 penalty

Hi Jeff, I've read many of your thoughtful responses over the years and want to see if you have any thoughts on the following: Have a client that suffered a fire in their owned home. They were displaced for nearly a year as the contractors, insurance company and city reeked havoc on their lives. They went out of pocket nearly $40k on temporary living expenses. Without my knowledge they dipped into the husband's SEP IRA for $55k. I realize there's no 5329 penalty exception for financial hardship, but this $5,500 hit on top of everything they've been through is tough for me to stomach.

Any pearls of wisdom? Thanks. MMSBM 16:51, 3 July 2009 (CDT)

Thanks for the inputStunts65 15:19, 6 July 2009 (CDT)

Blrg is mistaken

LOL, yes, you are correct. I could count on one hand the number of posts she has made in the last two or three years which were 100% correct. You would think that she would get the message. Obviously not. Others have tried to be polite in pointing out that she might want to actually think before answering a question. I do feel sorry for her clients. But I don't believe that she is intentionally incorrect. Kevinh5

Illinois pass thru IL-1000 clarification

Jeff..I am reviewing 2008 Form 1065 for potential 2009 client and notice that the two Illinois partners income were not reduced on line 27 (using Sch B) of the IL-1065 and IL-1000 was filled out and tax paid on a non resident for his share. Bottom line seems to be that a balance due of over $6,000 is due with the IL-1065. Does this sound right to you? The Illinois partner's share is not being removed from the Sch K-1-P so tax is being paid twice. Thanks for any input if you have time.

JR, My name is Jerry Simmons. To start off I am not a tax professional, infact I am looking for one. I will explain.

I started a LLC in UT this last year and had an attoney set up the articals of operation, it is a whole booklet but it allows me to make changes with amendments. (I could try to send a copy to review)

Anyway I have always done my taxes myself before now and I will admit that back in April I tried to do it my self and had to guess on so much I finaly decited to just extend it and that is what I did. In my effort to do them I was researching on line and that is how I found a post on here about Bifurcation and you were involved. I liked your veiw point and it interested me enough that I was searching again tonight to find you. I hope you get this message and will contact me since I can not find another way to contact you.

I really need to get my taxes done soon and I need some one that can help me set things up to best achive a few goals and minamizing taxes is one of them and I got the feeling from your post that you would be a good fit.

Is this something that you can do and what is the fee? (I will admit I am a cheap skate, that explains why I tried to do the taxes my self.) What would you need?

Hope to hear from you soon. Jerry Simmons 801-830-5483 Cell

Hope you got the other message I just sent you?

I just tried to send you a message but not sure how this thing works? Looking to contact you. Please call me, looking for your services. Jerry Simmons 801-830-5483 cell

looking to contact you.

Lets try this again. Also here is my email. mortgagesbyjerry@gmail.com

JR, My name is Jerry Simmons. To start off I am not a tax professional, infact I am looking for one. I will explain.

I started a LLC in UT this last year and had an attoney set up the articals of operation, it is a whole booklet but it allows me to make changes with amendments. (I could try to send a copy to review)

Anyway I have always done my taxes myself before now and I will admit that back in April I tried to do it my self and had to guess on so much I finaly decited to just extend it and that is what I did. In my effort to do them I was researching on line and that is how I found a post on here about Bifurcation and you were involved. I liked your veiw point and it interested me enough that I was searching again tonight to find you. I hope you get this message and will contact me since I can not find another way to contact you.

I really need to get my taxes done soon and I need some one that can help me set things up to best achive a few goals and minamizing taxes is one of them and I got the feeling from your post that you would be a good fit.

Is this something that you can do and what is the fee? (I will admit I am a cheap skate, that explains why I tried to do the taxes my self.) What would you need?

Hope to hear from you soon. Jerry Simmons 801-830-5483 Cell

forgot to leave my name

my question was regarding the IL-1000 above..

Pink Pearl 10:24, 6 August 2009 (CDT)

Thanks

Please clarify something for me...

JR, I was re-reading a forum topic that I started back in April. (here's the URL) http://taxalmanac.org/index.php/Discussion:Best_way_to_maximize_deductions you made a recommendation that one of my client's incorporate...(as an S Crop),... "buy a loft for office use, personally, taking rent out of the corp...". Question: did you mean the owner (an SMMLC currently) should buy and title the loft in her personal name? (as opposed to title in the entity's name). Just double checking myself here. Client coming in later today so I'm reviewing old notes. Thanks! Anchorman 13:15, 6 August 2009 (CDT)

Hi JR1,

There is a thread going on at http://www.taxalmanac.org/index.php/Discussion:S_Election_for_LLC and I was hoping you could shed some light on the issues discussed. Kevinh said you were the expert on SCorps. When you get a moment please look at the thread. I would truly appreciate your input.

Diane Offutt, EA, MAcc Accounting Conections, LLC Woodstock, GA 30189 mailto:dianeoffutt@accountingconnections.org http://www.accountingconnections.org

thanks

Jeff, Thanks for checking back with me and clarifying. Still trying to figure out a way to fax you over some cold frosty ones in return for your help... Anchorman 10:18, 12 August 2009 (CDT)

disolving Illinois Corp

Jeff...I have Illinois S-Corp client who will be terminating operations as S-corp this month. My understanding is that Illinois will involuntarily disolve the corp if the annual fees are not paid. Is there any real downside to this as opposed to filing the forms and sending a fee to have them do this? thanks for any input..Pink Pearl 10:19, 26 August 2009 (CDT)

Conversion of C to S Corp.

After conversion of a C to S corp, when and how can the RE be used as a tax deductible expense? Thank you.

Ron Caballero, CLU RCaballero@AdvTaxStrategies.com

Thanks

Thanks, JR1. I'm not too worried about it. It's a completely legal discussion, as you know. I just forget sometimes how many thousands of people look at this website every week that we don't ever really think about! Take care.CrowJD 15:05, 12 October 2009 (CDT)

Not black or white

There's no easy answer. I appears that the root of her problem is the business slowdown. So, it would be hard to blame you for that.

A couple of years ago, I had a client that would not cooperate, and I pulled out on their return in late February (1065). It was a business. I felt the same way you did, and I did not want to put my name on that return. Especially since I had warned them repeatedly that their accounting was a mess, I KNEW it was a mess, and they were very clever about manipulating me into a situation where they did not think I could refuse.

Nevertheless, I anguished over the decision longer than I should have, but I did pull out. To be liable, you have to fall below the local standard of care for tax preparers (malpractice) OR you have to have made a promise to them that you are not keeping now (contract claim). Of course, I'd be more worried about a real promise, in writing, that you would do the return. Hopes this helps a little.CrowJD 15:24, 12 October 2009 (CDT)

Bankruptcy

And you are right, I would want to be paid in full at the time my service was rendered. Or you could end up on the bankruptcy petition.CrowJD 15:29, 12 October 2009 (CDT)

Been there

One thing about the husband. Sounds like he's reverted to childhood and has to blame somebody. The way to handle these people, in my opinion, is to be very factual (firm but nice on the facts of what happened), and don't use the word "you", as in "You did this" "You did that".

It helps a little to diffuse people if you just make observations..."I see this" "I am hearing this". "I remember it this way." But always keep coming back to the facts. I've said a million times, the worst thing about practicing law is the clients! Good luck. CrowJD 15:55, 12 October 2009 (CDT)

Self Employment tax

Have a client who has 14K income before 22K 4797 loss. Net is 8K loss. Is the 22K added back to determine SE tax?