Talking with TaxSpeaker: Video 64
1. It’s an S-corp that was just recently sold as an asset sale. Since all assets are fully depreciated the sale is causing the owner a $300K gain. Right before the sale the owner paid off $300k worth of company’s debt and invested roughly another $200K in the course of last 5 years. What is the best approach as far as the presentation…? Can that $500K overall capital investment be used as an offset to $300K gain on the sch D of the client?
2. Client has real estate that they own and rent to their 100% owned S corporation. S corporation has incurred various costs for leasehold improvements over the years. S corporation has sold the assets of its business and is closing out the corporation. The client has retained ownership of the real estate. Can the S corporation write off the undepreciated costs as a loss on closing of the corporation? Or since related party should the undepreciated leasehold improvements be shown as a dividend to the stockholder and become a part of the basis of the real estate owned?
3. My question has to do with SERPS (supplemental executive retirement plans). I can’t find much information on them. My client is about to receive 2-3 million in SERP distributions over the next 3 to 5 years from her employer and I am trying to find out how the funds will be taxed (on W2 or on 1099-R) and what planning options will I have to help her reduce taxes. I know with certain other qualified plan distributions you can rollover. Some other tax pros who are also financial planners have stated I should consult an estate attorney or trust expert. It seems like my client may be stuck with erosion of the payouts due to taxes. But I want to make sure I am pulling out all the stops to reduce the tax burden if I can. Thank you.
4. Wondering if I could get your take on this. I have a small 2-person firm (Firm A), another CPA office I used to work for (Firm B) is much larger and the 2 partners from that office will be retiring in 2 years. The plan is that I and the 2 CPA’s on staff from that office will take over once they retire and merge both firms together. We decided to form a new entity as the 3 of us (Firm C) that will be purchasing Firm B. We’re trying to figure out the best way to merge my firm into the new firm. Whether it’s that the new entity, Firm C, will purchase both Firm A and Firm B and I am basically the seller and buyer of Firm A or we purchase Firm B and my firm is simply absorbed into the new entity. (Just FYI, I have taken your class on Exit Strategies and purchased Marc Rosenberg’s book on How to Negotiate a Merger, both of those did give some great advice. This is just a very specific situation I can’t find any examples on.) Appreciate any further insight you can provide.
5. If a business or real estate is located in an Opportunity Zone, if the owner does a major renovation now or in the future and the owner holds the business/real estate for 10 years after that renovation is completed and then sells, will a portion of the gain attributed to that renovation be tax free? How will the gain be allocated between the original asset purchase and the renovation?
6. We are receiving an influx of IRS notices on QCD distributions stemming from 2017. My fear is 2018 will right be behind. The IRS claims the 1099R wasn’t reported, but it was handled properly and noted as QCD on the tax return. The IRS has a terrible reporting mechanism for QCD’s, and it seems they can’t trace the contributions to the tax return. Is there anything we can do for this? This is becoming time drain on our resources.
7. Ok I know you just answered the question about “Entertainment” expenses. Could you clarify the ductibility of “company” recreational expenses? Only employees are invited. I understand company holiday parties and picnics are deductible. (100%?) Then what if we add an event to that, say skeet shooting or bowling, golf outing or a baseball game, which after that we have the party/picnic. This is only for employees. Would these deductible and if so 50 or 100%.
8. I understand section 754/743 elections are made at the entity (in this case partnership) level and must be made to claim new depreciation deductions. I am unclear as to whether an election MUST be made to get benefit of date of death step-up. Situation is client (revocable trust now irrevocable) who owned 28% of a real estate partnership at date of death and sole asset real estate has now been sold so depreciation issue immaterial. Can I avoid jumping through the hoops of making a 754 election by attaching a statement to final K-1 noting step up and claiming Schedule D adjustment of basis to offset against 4797 gain?
9. We have a client with a quarry operation inside a partnership which is owned by 2 brothers. The land in and around the quarry is owned by a different partnership which is owned by the same 2 brothers. We are researching the percentage depletion rates/rules related to mining. The quarry operation mines rock for sale or use in multiple settings. It appears that we have either a 5% rate or a 14% rate available, but it’s a little unclear in the material we are finding whether the 14% rate is completely out of the question. We are also not certain whether the depletion can be taken in the partnership that runs the operation of the quarry if the land is owned by another entity, even though closely held. Any guidance/references that might provide a definitive answer that we can use in communications with our client?
10. Bob, I have a client that is waiting until he turns 70 to file for SS and Medicare. He continues to work and is covered by a high deductible HSA qualified plan thru his employer. His wife just reached her full retirement age and is going to file for her SS benefits, and she will be automatically enrolled in Medicare A. She does not need Medicare B since she is on her husband’s policy thru his employer. The question: can her husband still contribute the maximum family amount to his family HSA plan? I have heard conflicting answers to this question.
11. I have a company incorporated in VA that is doing Articles of Conversion to NC then surrendering the Articles of Incorporation in VA. The company is not dissolving & reincorporating so will be retaining EIN. The reason is the company move to NC years ago & wants to be able to stop doing VA filings since no business has been conducted there in years. Is there any IRS implications or notifications needed that I need to be aware of for this issue?