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Thank you in advance for your help! My question is about K1 form. Is it possible K1 to cover cash payments...

Customer Question
Hi! Thank you in advance...
Hi! Thank you in advance for your help!
My question is about K1 form. Is it possible K1 to cover cash payments to employee which were done for a period before the reorganization of a company to a K1 corporation?
Submitted: 1 year ago.Category: Tax
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Answered in 10 hours by:
6/25/2016
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4,778
Experience: 35 years tax experience, including four years at a Big 4 firm.
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Hi from just answer. I'm PDtax. I'll assist.

Reporting will depend on what the payments are for. Return of capital, loan payment, distribution of income, advances, could get post-conversion k-1 reporting.

Pre conversion payments that you want to treat as salary can be converted.

I would want to know the form of entity before conversion, and what the payments are before I committed. Please advise.

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Customer reply replied 1 year ago
Thank you! Let me try to explain the situation.2015 I was working for a dealership company starting 01/15/2015. my salary was $2400 per month. At the beginning my employer did pay us cash, under the table until end of March when I insisted to start payroll.
So, we started official payroll for which period I've received W-2 for the amount of $8400. In order to avoid paying taxes related to employees paychecks, my employer decided to reorganized company structure from LLC to corporation of partnership with income distribution to each employee in the same amount of our existing salaries. That's why on 06/30/2015 my employer registered a new company RealDeal Management which was financial top distributor of "partner 's share of income"./Same salaries we used to receive before/
I left the company 10/2015. April 2016 I received my W-2 form and schedule K-1/form 1065/ where I found out that I'm a partner/member #04 ( I never signed agreement for partnership). In this schedule K-1 there are reported cash amounts which are dated before the registration of new RealDeal Management and I did not receive. By my opinion all cash amounts received under the table during the firs half of the year should be reported with 1099 and W-2.
My name is***** and I will appreciate you help.
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago

I can assist, but my first thought is that the reporting to you via k-1 is wrong. You can dispute that reporting on your 1040, and i would. Here's why:

As a partner, you could be held liable for acts of the partnership, including payroll taxes on your distribution reported on a k-1.

I suggest a phone call to discuss this, add it is private. I will also ask site management to close this thread once we are done to protect your privacy.

PDtax

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Customer reply replied 1 year ago
I do appreciate your suggestion for phone call but I can't afford it. It was problem to pay this $38 for ask question site.
I can scan all documents I have and send them via email.
Thank you once again!
Customer reply replied 1 year ago
By the way was is that form 1040?
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago

I wanted to look at the k-1, but how you were paid and how it was reported are both issues to address.

To do you the service you need will require a review of the documents and a discussion to review your alternatives, including reporting the income on your 1040. In a way that limits your exposure to the unpaid taxes on the cash paid to you. And others.

I can't do all of that for the price of the question alone.

PDtax

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Customer reply replied 1 year ago
Thank you for your understanding!
I already did an extension for 2015 tax filling, trying to clear out my situation.I can send you copies of all documents I have but not before Monday 06/27. Do you think that will help?
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 1 year ago

I'm sorry, but I can't offer all the help I believe your question warrants for the posted price for your question.

Other experts can pick up your request.

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Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year ago
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,393
Experience: Certified Public Accountant
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Hi Zhaklina,

It sounds like you have a little bit of a mess on your hands. Can you provide a copy of the K-1. Please block out your name and social security number. I will be better able to assist you once I have this information.

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Customer reply replied 1 year ago
Thank you Mark! I will send you K-1 tomorrow 06/27.
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year ago

Hi Zhaklina,

That sounds good. I will look forward to receiving this.

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Customer reply replied 1 year ago
Hi Mark! For now I will proceed with the accountant who prepared my tax files. Finally I found him!
Thank you very much and I believe that you will let me contact you in future.
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year ago

You are welcome. It is not a problem.

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