Technical topics regarding tax preparation.
18-Aug-2022 8:24am
- Posts:
- 94
- Joined:
- 21-Jan-2021 7:39am
- Location:
- PA
Strange situation. S Corp with 3 shareholders. Shareholders invested in a mine 11 years ago through the S Corp. Mine struck gold and the are looking at a profit of 10 million. Intiial investment 100,000. Any suggestions on how to handle?
Thanks for any input!
18-Aug-2022 8:54am
- Posts:
- 6043
- Joined:
- 21-Apr-2014 9:31am
- Location:
- Western 'burbs of Chicago
Accounting fees 6.5 mil.
One thing I wouldn't do is change salaries. They didn't do anything to earn that...so pass it thru and hope for no audit. Does it qualify for QBI? Well, won't matter I guess with that income....
18-Aug-2022 9:09am
- Posts:
- 94
- Joined:
- 21-Jan-2021 7:39am
- Location:
- PA
It appears the income was not from a mine but currencies. They will be receiving a 1099 in the name of the S Corp. Treat as either Capital Gain Income or Other Income on K-1? What I'm concerned about is Passive Income. If I treat as Other Income, it will not count as Passive Income and just be taxed to each shareholder. Their has been no income generated by this S Corp since formation. Only Capital Contributions on Balance Sheet. No wages, yes I'm not sure they have put in any time to be paid reasonable compensation. So can they take distributions in proportion to their shares? Worried with all the upcoming audits and the focus on reasonable compensation! Help!
18-Aug-2022 9:15am
- Posts:
- 18759
- Joined:
- 21-Apr-2014 9:28am
- Location:
- Pennsylvania
See if section 1254 might create some recapture at ordinary rates upon a taxable sale. Can the property be 1031'd?
Typed before the change in facts.
Tell us more about this income from "currencies". Facts, please.
18-Aug-2022 9:33am
- Posts:
- 94
- Joined:
- 21-Jan-2021 7:39am
- Location:
- PA
That's what I'm trying to find out. Will update facts when I do.
18-Aug-2022 9:41am
- Posts:
- 6043
- Joined:
- 21-Apr-2014 9:31am
- Location:
- Western 'burbs of Chicago
Is this merely an investment entity?
18-Aug-2022 10:45am
- Posts:
- 94
- Joined:
- 21-Jan-2021 7:39am
- Location:
- PA
That is what I am wondering. No business has been transacted in the past.
18-Aug-2022 10:59am
- Posts:
- 94
- Joined:
- 21-Jan-2021 7:39am
- Location:
- PA
On prior returns, which we did not prepare, they are listed as Lessors of Intangible Assets.
Return to Taxation
Who is online
Users browsing this forum: Google [Bot], Google Adsense [Bot], Joanmcq, keninmichigan, SlipperyPencil, UnlicensedTaxPro, Wiles and 114 guests