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07-15-2004, 06:47 AM
| | | | Sale of Property in 2004, but taxed in 2003
What is the name of your state? PA
If a Sub S Corporation sells a piece of property and goes to settlement in 2004, but received an agreement of sale in 2003, is there any way possible for the income received from that sale in 2004 to be counted to the shareholders in 2003?
Thank you. |
07-15-2004, 02:16 PM
| | Senior Member | | Join Date: Aug 2002 Location: Washington
Posts: 3,484
| | | Only if both the corp AND the individual shareholders are on an accrual basis. Since hardly any individuals are accrual basis taxpayers, as a practical matter the answer is no.
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07-17-2004, 09:41 AM
| | | | PA - Thank you for this advice. Do you know if there is any law that says that that I can see actually written? I am looking for anything which will help me with this.
I know that the company is on an accrual basis, but we as indivdual shareholders are not. Can you tell me where to look to find this law?
Thanks. |
07-17-2004, 01:51 PM
| | | | PA - There is another catch to all of this. The deed, which I just saw today, says that it was sold for $1. A shareholder of the S Corp (buyer) is also a sharehold of the LLC (buyer). |
07-19-2004, 01:02 AM
| | Senior Member | | Join Date: Aug 2002 Location: Washington
Posts: 3,484
| | | The deed is irrelevant. They commonly say "for $1 & other good & sufficient consideration".
Here's the US tax code. Search for "accrual basis". [url]http://www4.law.cornell.edu/uscode/26/index.html[/url]
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This post does not constitute legal advice, nor does it create an attorney-client relationship. Postings are based only on the information provided and you should consult an attorney in your area before relying on information contained in this post.
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07-19-2004, 09:27 PM
| | | | Thanks, I looked all over but was unable to find anything out. I did find out, however, that the property was a 1231 asset. I do know for a fact, that there was no agreement of sale for the property as of April of 2004 (still don't know if one was ever done). So, that leaves me with this question....how can I pay capital gains taxes on property that wasn't sold?
What, if any, recourse do I have at this point? I haven't filed the taxes yet, and am planning on filing for another extension. Do I have any recourse against this company for trying to make me pay taxes for something that didn't happen? Or for having the accountant who prepared the company's taxes and my personal taxes do this in error? How can an accountant, list a 1231 asset on the K1 form, but not have an agreement of sale in hand?
I guess the company doesn't have to give the tax preparer the information until after the fiscal year ends, but then they can't go and back date an agreement of sale when so much other documentation is in existance that states that they don't have an agreement of sale yet. |
07-20-2004, 02:09 AM
| | Senior Member | | Join Date: Aug 2002 Location: Washington
Posts: 3,484
| | | Contact the IRS & ask how you protest a K-1 that contains erroneous information.
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This post does not constitute legal advice, nor does it create an attorney-client relationship. Postings are based only on the information provided and you should consult an attorney in your area before relying on information contained in this post.
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