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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12065
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I need to speak with an expert on bookkeeping when it refers

Customer Question

I need to speak with an expert on bookkeeping when it refers to a partner being bought out of a very small S corporation. I am the bookkeeper and I have to accommodate the transaction in the books. A new partner is coming into the s corporation. The advice I receive must be 100% correct and I must be totally satisfied
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 1 year ago.
do you need my phone number
Customer: replied 1 year ago.
I will have to leave this web site soon....I need to give my phone number to the expert. Where are you
Customer: replied 1 year ago.
I will have to leave in 10 minutes...do you want my phone #
Customer: replied 1 year ago.
I will be leaving very shortly my phone # ***** *****(###) ###-####
Customer: replied 1 year ago.
why doesn't someone answer me. whats going on here
Customer: replied 1 year ago.
I have only given a very small part of my enquiry...I have questions that I need answers on
Customer: replied 1 year ago.
i am having to log out now......please please call me on(###) ###-####
Expert:  Lane replied 1 year ago.
Looks like no one's picking this up. So I'll try to help...Your phone number has been scrubbed from the system to protect your anonymity in this public forum...I'll make the offer now, so that once you accept, we will be provided with a private link to share contact information....Once you accept, I'll enter my office phone...Lane......I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, since 1986.
Customer: replied 1 year ago.
I want to receive answers and I do not want a phone call service
Customer: replied 1 year ago.
is mr lane there please
Expert:  Lane replied 1 year ago.
Not at this price ... (this is a severely under-priced question) I bill out 150 to 250 per hour for my work ... and apparently you've never used this service before, but you've asked a VERY open-ended question ... that's not what this service is for ... not at this price ... Further, you've intimated that there will be many questions ... and offered an ultimatum about a requirement that they be correct when you don't know the answer yourself ... I'd prefer not to work this way..... ...But before I go, as a show of good faith, let me give you some general direction, and then maybe someone else can help...(1) You need to let the expert know whether this is a stock sale or an asset sale(2) S-Corps have shareholder/employees not partners(3) A sale of a shareholder's interest to another shareholder isn't accounted for on the S-Corps books at all (other than listing the new shareholder arrangement in the company's required stock ledger under you state's corporate law.(4) The reporting for a sale such as this is done at the individual level (the buys HAS no reporting other than POTENTIALLY starting depreciation at a stepped-up basis IF this was an asset sale - but there;s no taxable event her for the buyer at all, just a basis adjustment.(5) the SELLER will have a capital gain or loss DEPENDING on the seller's basis in the S-Corp(6) There WILL be a final (be sure to check the "final K-1" box) for the time that he/sha WAS an owner ... but this has nothing to with the sale (other than the fact that the K-1 will only cover the time period that the selling owner WAS an owner
Expert:  Lane replied 1 year ago.
One last thing ... depending on whether this is an asset sale or a stock sale, here's how the sale price between the buyer and seller must be allocated (again an allocation of sales price issue NOT an 1120-S issue)
Expert:  Lane replied 1 year ago.
From Jim Pease CPA:...Stock SalesValue placed on Stock:Seller: Capital gains tax rate (currently at 15%) for stock held more than one yearBuyer: No write off; must accept assets at current book value (i.e., existing depreciation schedule)Value placed on Covenant Not to Compete:Seller: Ordinary income to recipient (is considered personal to seller/principal)Buyer: Amortize value over 15 yearsValue placed on Training/Consulting Agreement:Seller: Ordinary income to recipientBuyer: Expense out as paid...Non-Stock ("asset") SalesValue placed on Tangible Personal Property (trade fixtures, furniture, equipment):Seller: If held more than one year, the gains in excess of depreciation are long-term capital gain; otherwise ordinary incomeBuyer: Establishes basis, depreciate per IRS schedulesValue placed on Leasehold Improvements:Seller: If held more than one year, the gains in excess of depreciation are long-term capital gain; otherwise ordinary incomeBuyer: Establishes basis, depreciate per IRS schedulesValue placed on Premise Lease savings (if the lease is at below market rent, it is an intangible asset):Seller: If held for more than one year, is long-term capital gainBuyer: Amortize value over 15 yearsValue placed on Covenant Not to Compete (include time and distance of covenant):Seller: Ordinary income as receivedBuyer: Amortize over 15 yearsValue placed on Training/Consultation (include schedule of time, hours, etc.):Seller: Ordinary income as receivedBuyer: Expense out as paidValue placed on Registered Vehicles (do not include in Tangible Personal Property above):Seller: If held more than one year, the gains in excess of depreciation are long-term capital gain; otherwise ordinary incomeBuyer: Establishes basis, depreciate per IRS schedulesValue placed on Liquor License (include license type and number; is an intangible asset):Seller: If held for more than one year, is long-term capital gainBuyer: Amortize over 15 yearsValue placed on Customer List:Seller: Ordinary income as receivedBuyer: Amortize over 15 yearsValue placed on Goodwill:Seller: If held for more than one year, is long-term capital gainBuyer: Amortize over 15 yearsValue placed on Buildings:Seller: If held more than one year, the gains in excess of depreciation are long-term capital gain; otherwise ordinary incomeBuyer: Establishes basis, depreciate per IRS schedulesValue placed on Land:Seller: If held more than one year, the gains in excess of depreciation are long-term capital gain; otherwise ordinary incomeBuyer: No immediate tax impactsValue placed on Inventory:Seller: Ordinary income, to the extent that it is over basisBuyer: Treated as "cost of goods sold" upon sale of productsKey PointsConsistency between the seller and buyer in their reporting of the allocation is important. Work with professionals (licensed and/or accredited Brokers, CPA's, attorneys) in these transactions to save you time and money down the line. Tax laws change frequently, so treat this article as a guideline subject to change by the IRS, and subject to interpretation by the appropriate professionals/advisors.The larger the transaction the more likely there will have to be a formal valuation performed, wherein some, or many of the various asset values may be indicated.
Customer: replied 1 year ago.
thank you
Expert:  Lane replied 1 year ago.
You're very welcome ... Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …is thanks enough!…That’s how we’re credited for the work here...If no one else picks up .. and there's really not much else to tell, I'd appreciate....In looking at your questions, (you have 9) you only three have positive ratings ... this means that on the others, the expert was not credited for their time and expertise....I tell you this, only to help you understand how this works. Experts are being left with no crediting. If you'll rate positively (when it's deserved) the whole system works better...Thank you,Lane…