|
Posted by Wayne Rivers on November 14, 2006, 8:28 pm
Please log in for more thread options
Question:
An LLC formed back in 2004 and I believe started operating
as a partnership with two partners. Unfortunately, one of
the "partners" was paid payroll with taxes taken out for
work she performed in the partnership (instead of taking
guaranteed payments). The other (main) partner was not paid
and the company did not make money. Since they really were
really operating as an S-corporation and withholding taxes
as they went, we requested to be taxed as an S-corporation
for both years under Rev Proc 2004-48. The IRS denied the
request because the request wasn't received within 6 months
after the due date of the 2004 return.
1. How could we file a partnership return with one of the
partners receiving wages?
2. Since the IRS doesn't really know who the partners are
yet, what about filing the partnership return with the K-1
going to the partner's (who received wages) husband?
3. If neither of these would work, would it be beneficial to
request a Private Letter Ruling?
Thanks for any input.
Wayne Rivers, CPA
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by Harlan Lunsford on November 15, 2006, 10:06 pm
Please log in for more thread options
Wayne Rivers wrote:
> Question:
>
> An LLC formed back in 2004 and I believe started operating
> as a partnership with two partners. Unfortunately, one of
> the "partners" was paid payroll with taxes taken out for
> work she performed in the partnership (instead of taking
> guaranteed payments). The other (main) partner was not paid
> and the company did not make money. Since they really were
> really operating as an S-corporation and withholding taxes
> as they went, we requested to be taxed as an S-corporation
> for both years under Rev Proc 2004-48. The IRS denied the
> request because the request wasn't received within 6 months
> after the due date of the 2004 return.
>
> 1. How could we file a partnership return with one of the
> partners receiving wages?
>
> 2. Since the IRS doesn't really know who the partners are
> yet, what about filing the partnership return with the K-1
> going to the partner's (who received wages) husband?
>
> 3. If neither of these would work, would it be beneficial to
> request a Private Letter Ruling?
You've got a hard row to hoe. Been there done that.
Except this was before LLC's. In my client's case, he told
me corporation, found out no corporation was filed, had to
go back and amend 941's to zero, then coax IRS to transfer
the money paid in into his personal 1040 account. But it was
done.
Here you'll have to do same for the 941's filed for 2004
into that faux employee's personal account; or maybe get
refunds. Then file the 1065 with no wages of course and
take it from there with inevitable penalties and interest.
Glad it's not me. (grin
ChEAr$,
Harlan Lunsford, EA n LA
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by Paul Thomas, CPA on November 15, 2006, 10:06 pm
Please log in for more thread options
> An LLC formed back in 2004 and I believe started operating
> as a partnership with two partners. Unfortunately, one of
> the "partners" was paid payroll with taxes taken out for
> work she performed in the partnership (instead of taking
> guaranteed payments). The other (main) partner was not paid
> and the company did not make money. Since they really were
> really operating as an S-corporation and withholding taxes
> as they went, we requested to be taxed as an S-corporation
> for both years under Rev Proc 2004-48. The IRS denied the
> request because the request wasn't received within 6 months
> after the due date of the 2004 return.
>
> 1. How could we file a partnership return with one of the
> partners receiving wages?
As Nike ads go, "Just do it". Most likely the net tax
impact is going to be in favor of the government (FUTA and
SUTA tax being paid on those wages).
No, it's not "right", but it is what happened.
> 2. Since the IRS doesn't really know who the partners are
> yet, what about filing the partnership return with the K-1
> going to the partner's (who received wages) husband?
Nope. Keep the K-1's going to the partners. Send the W-2
to the partners.
> 3. If neither of these would work, would it be beneficial to
> request a Private Letter Ruling?
It's probably not worth the effort and cost.
I have a partnership LLC that added a new member a few years
back who, earlier that year, was an employee of the
partnership. Now, they received a W-2 as well as a K-1 in
that year. They since have received a K-1 only.
The point being, no one at the IRS or the state will care on
this topic. No taxes are being dodged to any degree, and
there are unemployment taxes being paid on "wages" that
might not otherwise be subject to those taxes.
Fix it for 2007 and move on.
Otherwise, go back and amend all the 941's and get the
payroll taxes refunded. If you do, remember that that
partner might now be underpaid on estimated tax.
--
Paul Thomas, CPA
paulthomascpapc@bellsouth.net
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by Harlan Lunsford on November 17, 2006, 1:19 am
Please log in for more thread options Paul Thomas, CPA wrote:
>> An LLC formed back in 2004 and I believe started operating
>> as a partnership with two partners. Unfortunately, one of
>> the "partners" was paid payroll with taxes taken out for
>> work she performed in the partnership (instead of taking
>> guaranteed payments). The other (main) partner was not paid
>> and the company did not make money. Since they really were
>> really operating as an S-corporation and withholding taxes
>> as they went, we requested to be taxed as an S-corporation
>> for both years under Rev Proc 2004-48. The IRS denied the
>> request because the request wasn't received within 6 months
>> after the due date of the 2004 return.
>>
>> 1. How could we file a partnership return with one of the
>> partners receiving wages?
> As Nike ads go, "Just do it". Most likely the net tax
> impact is going to be in favor of the government (FUTA and
> SUTA tax being paid on those wages).
>
> No, it's not "right", but it is what happened.
AS you say, it's not right, and that is why is should be
corrected. Partners do not receive W2 forms and are not paid
wages.
ChEAr$,
Harlan Lunsford, EA n LA
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
|
Posted by Stuart A. Bronstein on November 17, 2006, 11:11 pm
Please log in for more thread options
> AS you say, it's not right, and that is why is should be
> corrected. Partners do not receive W2 forms and are not paid
> wages.
How would it be treated, then, if the partners don't put in equal time
and efforts, and have agreed to be paid in part based on the number of
hours they work?
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
|
| Similar Threads | Posted | | Relief for late S-Corp election | November 2, 2006, 12:52 am |
| f8832, Late Filing Election | August 8, 2007, 7:08 pm |
| 83(b) election | May 20, 2008, 5:16 pm |
| Partnership and 754 election... | March 5, 2008, 12:08 pm |
| Need help with Trust Tax ID and section 645 election. | January 11, 2008, 9:29 pm |
| Controlled group election and Schedule O | March 6, 2007, 5:25 am |
| Divorce decree exemption election | January 26, 2008, 2:41 pm |
| Revoking an 83(b) election - Rev Proc 2006-31 | June 16, 2006, 3:19 am |
| another late filing of TD F 90-22.1 | February 2, 2007, 7:17 pm |
| Late filing? ? ? | April 3, 2007, 2:07 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap