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socrateaser, Lawyer
Category: Tax
Satisfied Customers: 37864
Experience:  Retired (mostly)
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I am not sure if this should be under legal or tax. We had

Customer Question

I am not sure if this should be under legal or tax. We had a buisness with someone that was an LLC with 50% ownership between my wife and the other person. We closed the business in 2010 liquidating all equipment at auction. The business had done well and had even loaned $25,000 to the partners other business. He was supposed to pay my wife back the $25,000 and never did. He told his accountant that the $25,000 loan was forgivin. Since they were both on the banck account & LLC, he raced to the bank and cashed the $91,000 in auction proceeds as well as keeping one of the vehicles that was jointly owned and transfering title into his other business name. We had sold an identical vehicle at that auction that went for $82,000.

My question is not wether we should or could sue him as that seems clear. We don't want to spend the money and just want to be done with that. We are responsible for the taxes on the $25,000 for 2009 and for 2010 we would have the following.
$91,000 auction proceeds (we didn't get)
$82,000 vehicle kept by him (we didn't get)
He will try to stick us with the taxes on stuff we didn't get. His accountant who is stuck in the middle (he had filled for both of us in the past) will no longer corrispond with us. He will send us a schedule K at the end of the year but, I am sure our old partner wont give him the right information. We have the proof for all of what I am telling you including reciepts. How do I make sure we arent responsible for those taxes? I am sure that no other accountant would touch this (dont blame them) or we could file and send him a schedule K.
Submitted: 5 years ago.
Category: Tax
Expert:  socrateaser replied 5 years ago.
File a partnership return for the business before your ex partner, and assign him all of the money that he actually received. If the partner files a second return, then you will get an audit letter, and you can explain that your partner has all the money, and you received nothing. Assuming that you want nothing to do with recovery of the money, then you can agree with the distribution and the partner will be liable for the taxes.

Hope this helps.

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