Buisness contract

[Adehm]

This question is from New York.

I became partner in a small business years ago but became suspicious of my partner. I never received a copy of my contract but she was family and so I trusted her plus I was too busy running the business to care.
Several years later I asked for my contract but she refused. I asked to audit the company and she refused.
I’ve since left without being bought out or signing anything to separate me from this company.

How can I go about getting a copy of my contract?
Do I need to run an audit before taking her to court?

 

[Zigner]

This question is from New York.

I became partner in a small business years ago but became suspicious of my partner. I never received a copy of my contract but she was family and so I trusted her plus I was too busy running the business to care.
Several years later I asked for my contract but she refused. I asked to audit the company and she refused.
I’ve since left without being bought out or signing anything to separate me from this company.

How can I go about getting a copy of my contract?
Do I need to run an audit before taking her to court?

What contract?

 

[Adehm]

Not positive, I was not involved with the paperwork side of things; I ran the day to day operations. From what I was told, I signed a contract that added me as a partner of the business.

 

[Zigner]

Not positive, I was not involved with the paperwork side of things; I ran the day to day operations. From what I was told, I signed a contract that added me as a partner of the business.

Right...what contract?

YOU don't even know what you're entitled to (if anything.) How can you claim there was the required meeting of the minds for any purported contract?

 

[Adehm]

Yeah, that is my issue. From what I was told, I am entitled to 15% but like I said I never received my copy of the contract. I was working 15 hour days keeping the company going and never had time for anything so cut me some slack. I was purposely mislead, I know that now, but that contract must still exist somewhere on record for tax purposes right?

 

[LdiJ]

Yeah, that is my issue. From what I was told, I am entitled to 15% but like I said I never received my copy of the contract. I was working 15 hour days keeping the company going and never had time for anything so cut me some slack. I was purposely mislead, I know that now, but that contract must still exist somewhere on record for tax purposes right?

In a partnership or S-corp the income from the business passes through to the partner's or shareholder's personal tax returns via Schedule K1. Therefore, if you were truly a partner or shareholder you should have received Schedule K1's each year, and those Schedule K1's would show your percentage of ownership.

If you did not receive Schedule K-1's, then you were never treated as a partner or shareholder for tax purposes.

 

[Adehm]

Thanks, gives me somewhere to start. I'll look into that.

 

[latigo]

Along with this mysterious, if not mythical "contract", also missing here is any explanation as to how this "small business" is/was supposedly structured. So rather than hazard a guess, let me ask you the following:

Did this so-called "small business" receive income during any of the years you purport to have been "running" it?

If so, how was that income reported to IRS? On Form 1065 or Form 8832? During any those said years did you ever file IRS Form 1040 with or without a completed, attached Schedule C?

If you are not aware of either a 1065 or 8832 having been filed or no nothing about a Schedule C, I suspect you can claim not greater association with the business enterprise than that of an employee.

 

[LdiJ]

Along with this mysterious, if not mythical "contract", also missing here is any explanation as to how this "small business" is/was supposedly structured. So rather than hazard a guess, let me ask you the following:

Did this so-called "small business" receive income during any of the years you purport to have been "running" it?

If so, how was that income reported to IRS? On Form 1065 or Form 8832? During any those said years did you ever file IRS Form 1040 with or without a completed, attached Schedule C?

If you are not aware of either a 1065 or 8832 having been filed or no nothing about a Schedule C, I suspect you can claim not greater association with the business enterprise than that of an employee.

A Partnership does not require an election or a form 8832. An employee would never file a Schedule C. Only an independent contractor would file a Schedule C. A minority partner would have no reason to know about a 1065 being filed unless they received a Schedule K1.

 

[latigo]

A Partnership does not require an election or a form 8832. (?) An employee would never file a Schedule C. Only an independent contractor would file a Schedule C. (?) A minority partner would have no reason to know about a 1065 being filed unless they received a Schedule K1. (So?)

Please identify whomever it is that you are accusing of making the absurd assertion that a business partnership IS required or IS even entitled to be recognized as an eligible entity to be treated by IRS equally with that of a C-Corp? Do you know of any entity or association other than a limited liability company that is afforded that option?

(Also how could such an entity make that election other than on Form 8332? The confusing construction of you first sentence - "an election or a form 8832" - implies that there is an alternative means. If so, what is it?)

For your needed enlightenment either Schedule C or Schedule C-EZ (Form 1040) is applicable NOT ONLY to "independent contractors" as you would have others falsely believe, but alike to any individual singularly and regularly engaged in any trade, occupation, profession or activity "primarily for income or profit", TOGETHER WITH "workers that are treated as employees by statute", some "full-time life insurance and annuity sales people", AND, among other select vocational categories, ANY member of a multiple held limited liability company!

Now perhaps you might care to don another hat and offer suggestions to the poster as to the circumstances and elements that need to exist in concurrence in order for a court of law to impose a partnership relationship upon this business association - sans any written documentation. Because that may be the only recourse he has.

 

[LdiJ]

Please identify whomever it is that you are accusing of making the absurd assertion that a business partnership IS required or IS even entitled to be recognized as an eligible entity to be treated by IRS equally with that of a C-Corp? Do you know of any entity or association other than a limited liability company that is afforded that option?

A Partnership is a default status. Any two or more people operating a business together are automatically a partnership unless they set up some other form of legal entity. I never said that a partnership was treated similarly as a C Corp. I said that both partnerships and S Corps have pass through income and use Schedule K1

(Also how could such an entity make that election other than on Form 8332? The confusing construction of you first sentence - "an election or a form 8832" - implies that there is an alternative means. If so, what is it?)

See above.

For your needed enlightenment either Schedule C or Schedule C-EZ (Form 1040) is applicable NOT ONLY to "independent contractors" as you would have others falsely believe, but alike to any individual singularly and regularly engaged in any trade, occupation, profession or activity "primarily for income or profit", TOGETHER WITH "workers that are treated as employees by statute", some "full-time life insurance and annuity sales people", AND, among other select vocational categories, ANY member of a multiple held limited liability company!

In this context I did not see it necessary to go into all of the other people that might file a Schedule C. However, I do not know what your source of the above is, but a multiple member LLC automatically defaults to a partnership unless a corporate election is made, therefore that part is completely wrong. Only a single member LLC defaults to a Schedule C. Also, so as to no confuse anyone else, a statutory employee is someone who is employed in an industry that the IRS has determined may deduct their employee business expenses on Schedule C, rather than on form 8606 and Schedule A, which have limitations.

Now perhaps you might care to don another hat and offer suggestions to the poster as to the circumstances and elements that need to exist in concurrence in order for a court of law to impose a partnership relationship upon this business association - sans any written documentation. Because that may be the only recourse he has.

I do not have any suggestions to offer. My purpose in posting my first response to him was to give him an idea regarding tax documents that would be in his current possession that might show the partnership status. My response to you was to correct all of your incorrect tax advice.

 

[Adehm]

I never got any tax forms unfortunately. No k1 to give me my percentages throughout the years and no w2 saying I was an employee. It was all handled by the business accountant. I can’t even find how I am supposed to go about getting any of my tax information. I can ask for only 3 years of information from the IRS for $50.00 but I am not sure it’s going to help. Didn’t realize it was so easy to be cheated. I’m back at square 1.

 

[LdiJ]

I never got any tax forms unfortunately. No k1 to give me my percentages throughout the years and no w2 saying I was an employee. It was all handled by the business accountant. I can’t even find how I am supposed to go about getting any of my tax information. I can ask for only 3 years of information from the IRS for $50.00 but I am not sure it’s going to help. Didn’t realize it was so easy to be cheated. I’m back at square 1.

So you never received any tax document at all regarding the money you were paid? No K1, no W2, no 1099? How did you do your personal tax returns? Are you saying that the business accountant did your personal tax returns and never gave you copies?

You do not have to pay the IRS anything for tax return transcripts...only for actual copies of tax returns.

 

[Adehm]

The business accountant and president handled it. I can only remember getting a tax return check once however and never received any tax form.

 

[LdiJ]

The business accountant and president handled it. I can only remember getting a tax return check once however and never received any tax form.

Then tell the business accountant that you need copies of your personal tax returns for the years in question.