Comments for PDXCPA - Portland Small Businesses Tax Blog

Comment on S-Corporation Failure to File Penalty by Dana

Dana — Wed, 25 Nov 2009 18:24:00 +0000

Brian,

I’ve read your 8/14/09 update on this subject and just now forwarded you an email update from the AICPA with reference to their proposal to the IRS (ie. nothing yet)

Since your 8/14 update, do you have any further “Do’s and Don’t” suggestions to get a penalty abated ? thank you

Comment on Worker, Homeownership, and Business Assistance Act of 2009 by Brian Germer, CPA - Parsons & Grinage CPAs

Brian Germer, CPA - Parsons & Grinage CPAs — Thu, 19 Nov 2009 06:27:58 +0000

If you are referring to the NOL extension, yes – it applies to S-Corporations too. The same vague wording was used on the when the 2008 NOL carryback rule was put into place and they later clarified it.

Comment on Worker, Homeownership, and Business Assistance Act of 2009 by Sheri Agnew

Sheri Agnew — Wed, 18 Nov 2009 19:15:13 +0000

I am trying to find out if the Worker, Homeownership & Business Assistance Act of 2009 applies to S Corps as well. All articles that I read say “corporations”.

Thank you.

Comment on Partnership Late Filing Penalty Abatement by Brian Germer, CPA - Parsons & Grinage CPAs

Brian Germer, CPA - Parsons & Grinage CPAs — Wed, 11 Nov 2009 20:57:30 +0000

Not to my knowledge. If a return is properly extended or filed by the due date, then you should not get the penalty notices.

I would just send them copies of the extension ACKS or some proof that the efiled 7004s were accepted. It should be a fairly automatic correction.

Comment on Partnership Late Filing Penalty Abatement by Ken

Ken — Wed, 11 Nov 2009 04:06:25 +0000

We filed Form 7004 electronically by using ProWin Tax software for our 1065 and 1120S clients, and they have received these letters. This is for 2008 tax returns. The actual returns were filed within the extension dates. Does IRS assess penalty even Form 7004’s were filed?

Comment on Loans from S-Corporation Shareholders by Brian Germer, CPA - Parsons & Grinage CPAs

Brian Germer, CPA - Parsons & Grinage CPAs — Sat, 31 Oct 2009 18:22:38 +0000

Actually, loans can only be cash. When you contribute property to a corporation it is valued at fair market value (or net book value if depreciated in a sole proprietorship or another entity) and becomes additional paid-in capital.

Any time you take property out of a corporation, it has to come out at fair market value, and it is effective “sold” to the shareholder.

This why you should never put appreciable property in a corporation.

Comment on Loans from S-Corporation Shareholders by Tammy Kihlstadius

Tammy Kihlstadius — Sat, 31 Oct 2009 17:42:35 +0000

If you placed property into the S-corp as a shareholder loan to the S-corp, can you remove property from S-corp as repayment of that loan to shareholder? This shareholder owns 100%. And how do you value the property? Cost basis or current market value?
What if you never placed property into S-corp only cash? Can you still take property as repayment?

Comment on Update on S-Corporation Failure to File Penalty by Brian Germer, CPA - Parsons & Grinage CPAs

Brian Germer, CPA - Parsons & Grinage CPAs — Thu, 22 Oct 2009 19:50:43 +0000

There is a difference between doing business and having no revenue. Many late year startups have significant business activity without making any revenue, but this is still reportable and subject to the applicable minimum taxes.

However, If you can say that you had no activity in 2009 and did not actually activate the business until 2010, then the answer is no and you would not even file in 2009. This happens quite frequently with new companies that register/organize late in the year. The date of incorporation or organization can be in November or December, but they do not actually start business until the following year. I have never run into a problem with this. Although, if you have payroll, the IRS will come looking for a 4th quarter report unless you indicate on your EIN registration that the first payroll will not be until 1/1/10.

Good question! Thx

Comment on Update on S-Corporation Failure to File Penalty by John

John — Tue, 20 Oct 2009 17:37:36 +0000

A question, loosely related to this post:

If an S-Corp registers/organizes with the Sec of State in late 2009, but doesn’t start “doing business” (i.e. no revenue) until 2010, are they required to pay the OR $150 excise tax for tax year 2009? I would imagine the answer is “no”, but I can’t find any publication/form that states that clearly.

Thanks…

Comment on Loans from S-Corporation Shareholders by Brian Germer, CPA - Parsons & Grinage CPAs

Brian Germer, CPA - Parsons & Grinage CPAs — Thu, 15 Oct 2009 15:21:45 +0000

It is a little rare to reclassify a loan from shareholder (to the corporation) to additional paid-in capital since those funds become part of the permanent capital stock of the corporation; however, there might have been concern that the corporation was too thinly capitalized. I prefer not to do this as it can cause problems later if the shareholder(s) take too much in distributions.

The reclassification would be good enough as far as documentation goes. It would not show up on the K-1.