TaxGuyBill's Posts

cancel
Showing results for 
Search instead for 
Did you mean: 

TaxGuyBill's Posts

It is not the job of an S-corporation to keep track of shareholder's Basis; that is the job of the shareholder.  Therefore the K-1 does not show "excess distributions".  The K-1 shows distributions.... See more...
It is not the job of an S-corporation to keep track of shareholder's Basis; that is the job of the shareholder.  Therefore the K-1 does not show "excess distributions".  The K-1 shows distributions.  If the distributions are in excess of Basis, that is calculated by the shareholder and entered on the shareholder's 1040.
I agree with Lisa.  Preparing taxes isn't much about math, it is about knowing Tax Law and the rules.  Corporations have a bunch of extra stuff, and it is foolish for a business owner to do the corpo... See more...
I agree with Lisa.  Preparing taxes isn't much about math, it is about knowing Tax Law and the rules.  Corporations have a bunch of extra stuff, and it is foolish for a business owner to do the corporate taxes themselves (and even more foolish to start a corporation without first sitting down with an experienced tax professional to determine if that is the best way to do things). As for your question of "Proof of Net Income", that depends on who is asking.  The "proof" is generally the tax return itself (along with Schedule C).  But what "Net Income" numbers they look at depends on who is asking.   It might not be any of those possibilities you listed (they might start with one, but then make adjustments to it based on other things).  That is something that only the one asking for it can answer for you.
@taxea96786 wrote: who stated that he will eliminate Trump's tax cuts, raise the capital gains rates and possibly eliminate the step-up on basis of real property?   Is he abolishing Congress... See more...
@taxea96786 wrote: who stated that he will eliminate Trump's tax cuts, raise the capital gains rates and possibly eliminate the step-up on basis of real property?   Is he abolishing Congress and taking over as dictator?  The President does not have the power to create laws like that.  He may be able to influence Congress to some extent, but he does not have the power to do any of that himself.  So if that is what he said, he is just blowing a lot of hot air (like all of the politicians do). As for any law changes that do eventually happen, *IF* any of those changes that you listed do happen, there is NO WAY they would happen quick enough to happen for the 2020 tax returns.
@deleted_username wrote: So what is the CPA’s responsibility here if he recommended 1099 for owners comp or just Corp check to owner.   still trying to understand how the funds on line 7 of ... See more...
@deleted_username wrote: So what is the CPA’s responsibility here if he recommended 1099 for owners comp or just Corp check to owner.   still trying to understand how the funds on line 7 of 1120s owners comp would be classified if there was no w2.  Is it considered business income ? SE tax was applied to the full amount    The tax preparer is responsible for correctly preparing the tax return(s) they are being paid for.  If they give wrong advice, they could be responsible for paying any costs to correct the situation, such as penalties. The shareholder received compensation.  That is wages.  If a W-2 was not prepared, one needs to be prepared, along with the other employer forms.  There will be late penalties.
@mlcpa wrote: Dear TaxGuyBill,      The tax treatment of fringe benefit paid to owner-employees of an “S Corp” is different form the tax treatment for other employees.      26 U.S. Code Section... See more...
@mlcpa wrote: Dear TaxGuyBill,      The tax treatment of fringe benefit paid to owner-employees of an “S Corp” is different form the tax treatment for other employees.      26 U.S. Code Section 1372(a) provides that, for purposes of applying the income tax provisions of the Code relating to employee fringe benefits, an S corporation shall be treated as a partnership, and any 2-percent shareholder of the S corporation shall be treated as a partner of such partnership. In short, more-than-two-percent shareholders are treated like partners in a partnership. Interesting feedbacks but they do not address the point I'm asking. For your convenience you can check https://www.law.cornell.edu/uscode/text/26/1372 and then let me know. If you still understand that feedbacks are correct, I'm going to close this discussion. To All, thank you for your time and consideration.   Yes.  That is what everybody is saying.   Fringe benefits are tax-free to most employees, but are taxable to the shareholder employees. Fringe benefits given to a Partner are Guaranteed Payments, subject to income tax and sometimes Social Security tax, and Medicare Tax. As you keep pointing out, the same rules apply to the shareholder-employee of the corporation.  They are subject to income tax, and sometimes Social Security tax, and Medicare tax.  In other words, they are wages on the W-2.  That is what everybody keeps telling you, and you keep citing the same thing that just proves what everybody else is saying.
@mlcpa   Can you clarify why you keep pointing those out?  Everybody is agreeing with those.   Your first point means it is TAXABLE to the employer/shareholder.  That means it goes on the W-2. You... See more...
@mlcpa   Can you clarify why you keep pointing those out?  Everybody is agreeing with those.   Your first point means it is TAXABLE to the employer/shareholder.  That means it goes on the W-2. Your second point means that on the corporate return (at least for depreciation), only 80% is taken as a business expense ("qualified business use").  The other 20% is wages.  So 100% of the expense is on the corporate return, but it is split between "qualified business use" and wages.
If the worker really was an employee the entire time (such as a shareholder/owner of the corporation, based on your comment on another question), yes payroll forms need to be filed for all quarters t... See more...
If the worker really was an employee the entire time (such as a shareholder/owner of the corporation, based on your comment on another question), yes payroll forms need to be filed for all quarters that the employee receive wages.  The shareholder never was a "1099 contractor". If that is not your situation, you need to add some more details about the situation.
As Lisa pointed out, Support should be able to give you access to older years for free (but you will prepare those returns on a Pay-Per-Return Basis)..  When you call back, maybe the new person will ... See more...
As Lisa pointed out, Support should be able to give you access to older years for free (but you will prepare those returns on a Pay-Per-Return Basis)..  When you call back, maybe the new person will know what to do.  If not, ask for a Supervisor.  Or maybe even call the Sales department, as they may be able to do it.
To me, it is fairly clear the IRS guidance is correct according to how the law was written. If the Senate Finance Committee wants to criticize somebody, they need to criticize themselves (and the re... See more...
To me, it is fairly clear the IRS guidance is correct according to how the law was written. If the Senate Finance Committee wants to criticize somebody, they need to criticize themselves (and the rest of Congress) for allowing the law to be passed as written AND for not passing a subsequent law to clarify/correct things.  But the fact that they are blaming the IRS/Treasury for something that is their fault, shows how clueless they are, so I'm not holding my breath for them to change things anytime soon.
If I remember correctly, ProSeries carries it forward from year to year. At least it does in my state.  I have stuck in the back of my mind that a Moderator had told us some states don't want it to ... See more...
If I remember correctly, ProSeries carries it forward from year to year. At least it does in my state.  I have stuck in the back of my mind that a Moderator had told us some states don't want it to transfer, so those states don't.  But for all I know, I imagined that.    🙂 My State does not require that information (and the IRS does not require it), so I never enter it.
@qbteachmt wrote: That's the only way it impacts the subsidy.   Not necessarily.  Logic, reason and the principal of balancing things dictate that when the premiums are partially refunded, i... See more...
@qbteachmt wrote: That's the only way it impacts the subsidy.   Not necessarily.  Logic, reason and the principal of balancing things dictate that when the premiums are partially refunded, it potentially SHOULD retroactively affect the previous year's Premium Tax Credit because lower premiums have the potential to have reduced that credit.  If the refunded premiums had been done in the year of the Premium Tax Credit, the credit could have been smaller.  Logic and reason says there should be an offsetting to that in the current year by recalculating the previous year's credit. That is what the OP asked about, and that is why that Q&A says the IRS is considering issuing guidance. But because there is currently no guidance, we are left hanging, which typically means we ignore the situation.    🙂
@qbteachmt wrote: The qualification for the subsidy is based on the table for poverty levels and on the income computation. The Rebate is not used to compute against the Premium; they are not part ... See more...
@qbteachmt wrote: The qualification for the subsidy is based on the table for poverty levels and on the income computation. The Rebate is not used to compute against the Premium; they are not part of that computation for the year     Not entirely true.  As I mentioned above, besides income/poverty percentage, the Premium Tax Credit is based on the Second Lowest Cost Silver Plan (SLCSP).  BUT when the credit ends up being higher than the actual premiums paid, the credit is limited to the amount of premiums paid.  So the amount of premiums CAN be part of the computation.  It is those situations where "guidance" should be issued from the IRS.
@Mike12321 wrote: In this case the insurance co said there was a $3000 credit, so that is a lot of money to leave on the table.   But as I pointed out above, would it even change the Premium... See more...
@Mike12321 wrote: In this case the insurance co said there was a $3000 credit, so that is a lot of money to leave on the table.   But as I pointed out above, would it even change the Premium Tax Credit?  In many cases it would NOT, and even if there was guidance, the guidance in those cases would say that nothing needs to be done. There is almost no point in asking the IRS about it.  They have specifically said there is no guidance yet.
As was pointed out, that is zero guidance in this regards.  So as it is, I would say "no". Even if/when the IRS does issue guidance in this regards, in MANY cases there won't be a repayment anyways.... See more...
As was pointed out, that is zero guidance in this regards.  So as it is, I would say "no". Even if/when the IRS does issue guidance in this regards, in MANY cases there won't be a repayment anyways.  That is because the potential credit is NOT based on the cost of insurance (which was partially refunded).  It is based on the Second Lowest Cost Silver Plan (SLCSP).   Because of that, in most cases the credit would not change due to partially refunded premium. However, the credit is reduced if the potential credit is higher than the actual cost of insurance.  So in those cases, then there hypothetically should be a repayment due to the MLR rebate.  But as I said above, there is zero guidance from the IRS about it, so I would not do anything until the IRS issues guidance about it.
@sjrcpa wrote: Or await until efiling opens again in January. I'd wait if the client is getting refunds since a return efiled in January will get processed quicker than a paper return mailed in D... See more...
@sjrcpa wrote: Or await until efiling opens again in January. I'd wait if the client is getting refunds since a return efiled in January will get processed quicker than a paper return mailed in December.   But be very cautious about filing a tax return late.  Just because there is a refund does not necessarily mean filing late is okay.  The are some elections that need to be on a timely filed return, and filing late would void those.  One example is the Standard Mileage Rate.  If you want to elect to use the Standard Mileage Rate in the first year of the vehicle, it must be on a timely filed return.  If it is not, you are stuck with Actual Expenses.  
@IRonMaN wrote: The correct road to follow is to report 100% of the costs on the Corp return and the value of the personal use goes on the employee’s W-2.   I agree that is the correct way. ... See more...
@IRonMaN wrote: The correct road to follow is to report 100% of the costs on the Corp return and the value of the personal use goes on the employee’s W-2.   I agree that is the correct way.  But how do the deductions work for the corporation?  If it deducts 100% of the vehicle cost AND deducts wages, isn't that double deducting a non-business expense?  One of those are offset by the taxpayer reporting it as income (on the W-2), but then the net result is deducting a personal expense. Hmmm.  
@HudsonCPA wrote: This can't be the only instance of different treatments of business issues at State and Fed level (bonus depreciation is one example of different treatments.)   In my State... See more...
@HudsonCPA wrote: This can't be the only instance of different treatments of business issues at State and Fed level (bonus depreciation is one example of different treatments.)   In my State (Minnesota), the State uses the Federal forms but then adds a separate form for adjustments from Federal (such as Bonus depreciation).  And I suspect that is the case is many other states.  So in those cases, there is no need for a separate Schedule C. It is EXTREMELY unlikely that ProSeries will add that capability.  So unless MA comes out with a separate form, it seems likely your only option is to do as I suggested above.   While I wouldn't want to suggest doing it against MA rules, personally, I wouldn't be overly concerned about audit potential if it were done wrong.  If audited, what is going to happen?  They switch a few numbers and end up with the same result.
Unless MA comes out with a state-specific Schedule C, I think the only way you can do it is to prepare the Federal.  File the Federal.  Then change the Schedule C to file State. Maybe I'm missing so... See more...
Unless MA comes out with a state-specific Schedule C, I think the only way you can do it is to prepare the Federal.  File the Federal.  Then change the Schedule C to file State. Maybe I'm missing something, but I think that MA rule is rather odd.  Won't it have the same result as the Federal way?
And the Draft Instructions for Form 1040 specifically states "don't enter more than $300". https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf#page=30
Unless I missed it, there is no indication that Joint filers can use $600 The CARES Act seems a bit murky in this regard and just said $300.  From what I remember, I think I read that the congressio... See more...
Unless I missed it, there is no indication that Joint filers can use $600 The CARES Act seems a bit murky in this regard and just said $300.  From what I remember, I think I read that the congressional notes ("blue book") says $300 on a Joint tax return.  So unless the IRS clarifies it, it is limited to $300 per tax return. Many charitable organizations are claiming that $600 is deductible for joint return because they want larger contributions.  But as far as I know, there is no indication from Congress or the IRS that $600 is allowed.