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business tax question. i would like an expert in bankruptcy

and IRS setltement arragements....
business tax question. i would like an expert in bankruptcy and IRS setltement arragements.
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Answered in 8 minutes by:
12/4/2012
Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 31,876
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
Verified

Kirk Adams :

Hi - my name is XXXXX XXXXX I'm a Business litigation attorney. What is your question? Thanks.

Customer:

Hello, kirk. here is some background and some questions for you.

Customer:

 


My partner, XXXXX XXXXX, and I , Gary Oakley, own 2 LLCs: Monument Plaza llc and Sundance Mountain Lodge llc, in equal proportions: Gary owns 80%; jim 20%.


 


Monument Plaza llc bought the property in 2006 from a Dr. Hai Bui, who carries a note for $1.8m still. Monument plaza pays him $7,600/month interest.


 


In 2008 Monument Plaza llc leased the property to Sundance Mountain Lodge llc.


 


Sundance Mountain Lodge llc has been operating since then.


 


Several 941 taxes were not paid over the past few years, totaling close to $180,000.


 


IRS is pressuring to pay, but Sundance MountainLodge has no money. IT can barely make current 941's. SML has been negotiating a settlement agreement to pay it off over a few years.


 


IRS has put levy on SML, but has not shut them down; actually, if they shut SML down there are very few assets to get: used furniture, tv's but not much more.


 


Ideal situation: keep them off my back to stay open long enough to sell. If business is open it can likely be sold for $2.5-3M. this would pay back IRS and Dr. Bui.


 


Another option is to lease to another hotelier.


 


Questions:


 


What is best way to keep them off me:


 


chapter 11 is an option but I have a few questions:


1) would it impede ability to book events or groups at hotel if it is public.


2) How "public" is chapter 11?


3)would it make my sale price go down if buyer knows it is in chapter 11?


4)If chapter 11 is filed and the property then sold or leased does the chapter 11 go away once creditors are paid?


5) Does chapter 11 have to go through to fruition? I have heard it cannot be stopped once started so it cant be used as a stopgap measure…And does that get expensive?


 


Settlement Agreement is another option to keep them off me for a while:


Questions


1)if an agreement is signed it must be paid back with sale or lease corrcct? This would impede ability to lease?


2)can I sign a settlement agreement for just a few months while it sells?


 


 


Sale or Lease


Questions:


1)Monument Plaza llc leases to another company conceivably the taxes would go away if SML closes. Correct?


2)would such a lease be suspiscious because SML and MP are owned by same people, in same proportions? Would IRS fight that and go after MP?


 


 


 


2)


 


 

Customer:

hello

Customer:

kirk are you there?

Kirk Adams :

Hi - I'm here. Just reading through your post......

Customer:

i hit the "reply" button thinking i was sending a chat back to you. instead it finished our session.

Kirk Adams :

Our session is still open.

Customer:

ok. take your time.

Kirk Adams :

1) In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court. This means that you re-structure your business and continue to do business, while reporting to the trustee. Thus, your business should not be interrupted by filing - - including the ability to book events, etc.

Kirk Adams :

2) Chapter 11 is public record, there is no legal requirement that the information be published or printed in the local newspaper. Usually, bankruptcies are not very public unless it's someone like GM who has filed.

Kirk Adams :

3) Probably not. Chapter 11 is a reorganization of debt, so the business is ongoing and isn't in liquidation mode. If you were in a Chapter 7, that would be a viable concern.

Customer:

ok. so what about the leasing option?

Kirk Adams :

4) Yes, a chapter 11 can be dismissed if all debts are paid off and there's nothing else to be done. This would take a motion to voluntarily dismiss the case and consent of the US trustee and all parties.

Kirk Adams :

parties = creditors.

Kirk Adams :

5) Chapter 11 is VERY EXPENSIVE because it usually lasts 3-5 years and there are monthly reporting requirements, etc. However, the case can be dismissed or ended early for several reasons - - including if the debtors pays off all creditors.

Kirk Adams :

Settlement Agreement

Kirk Adams :

1) You can negotiate whatever terms you like. However, your best resource for cash is by selling or leasing the property and improvements. This shouldn't impede the ability to lease the property. It's not going to make the lessee any difference where the money is going to so long as the money is being paid on time. You'll just execute an assignment of rents over to the creditor evidencing that rent shall be paid over to it.

Kirk Adams :

2) Again, you can negotiate whatever terms you'd like with the creditor. If you want to make an agreement that settlement will be paid in full within 2, 4, 6 months, etc., that's fine if the lender agrees.

Kirk Adams :

Sale of Lease

Kirk Adams :

1) The taxes already incurred would still be due and payable. However, if SML closes, the ability to collect the taxes may be difficult or even impossible.

Kirk Adams :

2) I don't think so. This is not unusual so long as you keep the companies and their funds separate. I don't think the IRS could go after the other separate legal entity unless there was some proof that they were one in the same. Because corporations, llc's, etc. are separate legal entities, it's just like they are two different people. Thus, the IRS couldn't collect my taxes from you; and it shouldn't be able to collect SML's taxes from MP.

Customer:

Kirk, i am willing to pay more for additional followup.

Customer:

 


 


So do I hire a bankruptcy attorney to file chapter 11 for me?


 


"ability to collect difficult and impossible." So I could close SML and lease it to somebody else…. Would the IRS want to come and take what they can to sell..furniture etc..?

Customer:

i would hope they are separate entities, even though same owners and same percentage of ownership. it just seems risky to me to close and then re-lease to another company, who would want to keep the Sundance name...

Kirk Adams : Sorry. I stepped away from the computer for a moment.
Kirk Adams : Yes, a bankruptcy attorney could help you do this.
Kirk Adams : Also, any assets of the LLC can be seized and liquidated to pay the debt.
Customer:

ok. i still want to decide whether to lease or sell.

Ask Your Own Business Law Question
That may depend on what your lender is agreeable to in terms of settlement. You may need the money from the sale in order to pay the settlement.
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Hi

Please let me know if you have any additional questions related to this issue. Also, please positively rate our conversation so that I may receive credit for my research and response.

Thanks,

Kirk
Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 31,876
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
Verified
Roger and 87 other Business Law Specialists are ready to help you
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Roger
Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 31,876
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