Q:

Subject: just wandering

Can cash withdrawals from the corporations business account be considered a payroll expense if it’s withdrawn from an ATM machine at a casino?

Seriously,

A:

As you know, every bit of activity in the corp bank account has to be accounted for on the corp’s books and reported on the 1120.

If an employee receives his payroll via ATM withdrawals, you could post it that way on the books.  Of course, if it’s a W-2 employee, you will need to gross up the actual cash taken out to arrive at the gross pay and applicable tax withholdings, which you will also have to report on the 941.

There are obviously many other ways to treat ATM withdrawals, such as loans from the corp, or even as straight 1099 pay.  You obviously need to work with the persons concerned to make sure everyone is in agreement with how the withdrawals are being posted on the corp books.

Good luck.

Kerry Kerstetter

 

Q:

Subject: Schedule C

Hello.

What do you charge for an EBAY type Schedule C and SE?

Thanks,

A:

If you are asking this in order to compare with what other tax preparers charge, that is not possible.  I have never used a flat rate or per schedule fee system.  I have always charged based on my actual time spent, at my current billing rates.  Clients who have their books in good order pay much less than those who have messy or non-existent accounting records.

If you are asking because you want me to prepare your tax return, that is also not possible.  We are still in the pruning back phase of adjusting our work load and are not accepting any new clients.

If you haven’t already done so, please check out my info on selecting a new tax pro on my website.

Good luck.

Kerry Kerstetter

Q:

Subject: Is an S corp transferable?

 

Tax Guru,

           Upon the sale or transfer of the business (assuming that it is an s corp. in the first place); do the new shareholders have to sign a new IRS 2553 or does it just remain in effect?

Thanks for the advice

A:

The original 2553 remains in effect until either formally revoked or if the corp fails to qualify for S status by violating one of the restrictions.

Assuming the new owners are not one of the ineligible types, and the total number of shareholders is still less than 100, the original S election will continue to be in effect.  The new owners will be obligated by the original 2553 even though they have not signed it.  This mean that they will have to include their pro-rated share of the corp’s income on their 1040s.

If the sale of stock is effective mid-year, how you allocate the income or loss to be reported on the K-1s is negotiable between the buyers (old shareholders) and sellers (new shareholders) and should be spelled out in the sale agreement so that there is no messy dispute when the 1120S is prepared.

I hope this helps.  A tax pro can help work with your particular situation.

Kerry Kerstetter

 

Q:

Subject: RE: tax question

 

I have a question for you, if I have lived in my home less than 2 yrs and I sell it and take the money and put in to the new home will I pay capital gaines tax on that money. I am married

A:

You can see all of the residence sale rules here on my website.

You can see that what you do with the sale proceeds has no effect whatsoever on your possible tax obligation.

You should work with your own personal tax advisor to see if you qualify for the pro-rated tax free exclusion.

Good luck.

Kerry Kerstetter

 

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