Talking with TaxSpeaker: Video 65
1. An LLC Partnership is owned ½ by a Trust and ½ by an individual. The individual has died, and his daughter is sole heir to the Trust assets and the Estate assets (not a 706 Estate). So, until settled, it appears the Trust & Estate are the LLC partners. Would we get a business valuation and account for any goodwill or just an appraisal on the assets of the business (machine shop equipment, etc)? My thought was to liquidate the Trust and Estate and distribute the assets to her with a stepped-up basis at FMV at date of death and she contribute the assets to her new entity, a single-member LLC... Or, shall we continue with the same LLC only as a sole proprietorship? Perhaps a 754 election would be applicable. Also, I’m not sure how goodwill would come in play here, if at all, and that may lead to the decision to get a business valuation rather than just an appraisal on the assets.
2. Bob, you mentioned in your Sales Tax Client Letter email that you were going to add a special paragraph addressing sales tax issues to all of your engagement letters. Could you share an example of what the paragraph would say? I’m thinking specifically of my clients who we do sales tax, payroll, and bookkeeping for tax returns (no compilations). Do you do a combined engagement letter for all services or a separate engagement letter for the monthly nonattest services and an annual engagement letter for tax returns? We currently do not have engagement letters for the monthly bookkeeping/sales tax/payroll.
3. Maybe I am anticipating a problem, but this is what I know so far. Mom is 96 and has a trust, Dad is deceased and has a trust with a lot of LTCL and mom is the beneficiary. The daughter who has POA and her husband talked to an elder attorney who suggested that the trusts be combined, Will I have 3 trust returns (hers, his and theirs) to do this year? If MLynch does not sell enough stocks with profit to use up the LTCL, will they be lost?
4. Taxpayer is a single parent, Taxpayer is employed, Taxpayer has custody of their child, Taxpayer claims their child as a dependent, Taxpayer pays an individual to supervise the visits between the other parent and their child… Are these payments, (to the individual who supervises the visits between the dependent and the other parent), eligible for the dependent care credit?
5. Would you please consider having a seminar on the Form 8594 and the importance of filing the form right? I have dealt with this form the last few years and honestly must be missing something on it because I tend to deal with sellers that are extremely angry over the Form 8594. Accountants who are always threatening miserable consequences over the form. I honestly do not know how and why goodwill is added to a real estate transaction when in reality you have an appraisal stating the value of the land, buildings and personal property. Thank you in advance for your work. If this is already in your information, please just tell me where it is located or the name of the seminar. I will happily pay for the product.
6. How many partners does a partnership require?
7. Is the 180-day concurrent for the gain and the reinvestment? (Opportunity Zone)
8. Bob answered a question a few weeks ago about an individual who holds his interest in a partnership through a wholly owned S corporation and whether or not the individual is allowed to receive a W-2 for his services to the partnership. I believe Bob stated that the individual should not receive a W-2 from the partnership nor the S corporation, and he referenced a newly finalized regulation regarding the issue. ~ Was the referenced regulation, Reg. 301.7701-2? This regulation seems to address disregarded entities owned by a partnership, and I’m struggling to see the application of the regulation to layered ownership via an S corporation. Am I misinterpreting the language of the regulation? Did I not find the correct regulation? Help!
9. I’m using the 263a calculation provided by TaxSpeaker (thank you!). I’m just not sure how to handle the indirect expense calculation allocated to COGS. I get that the ending inventory adjustment is reported on the tax return as a 263a adjustment but I’m unsure “what to do with” the indirect costs allocated to COGS. The spreadsheet seems to take all indirect expenses and allocate them to either ending inventory or COGS. If I adjust COGS, then I would need to reduce the actual expenses reported on the tax return to offset these amounts, right.??? This particular client is quite large, and the calculation adjustment is expected to be about 7 million dollars.
10. 2018 Partnership Tax return (Initial Tax return) was filed before 06/15/2019. Small Partnership of 2 Partners has been billed for late filing fees of $1,200.00. Partnership is eligible for Election out of the Centralized Partnership Audit Regime and has accordingly filed Schedule B-2 with the tax return. Can we still request the abatement for Small Partnership exception (Rev. Proc. 84-35) or utilize First Time abatement request?
11. I have a client with several children under 12 who pay the Kiddie tax each year. The tax burden was much much higher for 2018 since they were taxed at Trust rates. Assuming that they would otherwise qualify (no overpayment from the prior year, no estimates having been made, and income limit) would the family have been better off to have included this income on the return of the parents by using the appropriate IRS form to do so? If so, could the client have us prepare an amended return for the parents and the children?