Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

You really answer tax questions for free? How much does it

Customer Question
You really answer tax questions...
You really answer tax questions for free?
JA: The Accountant's require payment for their services. It's way less expensive on JustAnswer than face-to-face would cost.
Customer: How much does it cost? Are they CPAs?
JA: I'm not sure of the exact price, but there's only a $5 deposit. The rest of the price information will be on the page I send you to. The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: How long is the turnaround on getting an answer and can they assist with s corp questions?
JA: Is there anything else the Accountant should be aware of?
Customer: I just have a question about my husband's K-1 and if it means the company literally owes him the net amount shown? Or the gross amount?
Submitted: 1 year ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Customer reply replied 1 year ago
Also, what does the retained income signify an on 1120s?
Answered in 14 minutes by:
8/12/2016
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 year ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 482
Experience: Former IRS Revenue Agent
Verified

Dear Customer,

On a K-1 from Form 1120S, that is, the K-1 form an S Corp issuing to its shareholder, all items, information, listed in Part III, are income (loss) items the individual, the shareholder, needs to recognize on his/her tax return. Some of the items are for information only and have no tax effect on the shareholders tax return.

These items are not items the corporation owed to him. The only item I can see with the word of "net" is column 2 of net rental income or loss. That means the bot***** *****ne of the rental property income or loss for this taxable year. This is not the amount the company owed to him.

The K-1 is the flow-through tax liabilities which can be different from the actual cash to be received from the S Corp.

"Retained income" on a 1120S. Do you mean "retained earnings" under the balance sheet, page 4? This number can be positive or negative. This is accumulated earnings and losses the business has had throughout the years. This number is ***** the actual cash in the business. If you are interested in understanding the financial strength and position of this company, it is suggested that you make an appointment with a CPA to sit down and review. Otherwise, by looking at some numbers on a part of a form is unlikely to give you a correct picture of the business.

Please feel free to follow up with questions.

Regards,

Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP

Ask Your Own Tax Question
Customer reply replied 1 year ago
When I say net profits on the K-1 I mean the profit before any write offs. If we have to pay taxes on the profit amount on our K-1 does that mean we should get a distribution for that amount of profit at some time?
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 year ago

Dear Customer,

The simple, short answer is NO.

A K-1 may say that we need to recognize say K-1, line 1, ordinary income, 500. It does not mean that we will get 500 in distribution.

For one example, a company may have a gain of 500 (our portion) of income for this year 2015. But it may need to use the money to pay back loan.

For a second example, if we have 500 positive income for this year, which we need to use to purchase goods next year. Then, we cannot distribute to shareholders now.

If you have like more fundamental questions on whether the company has been treated its shareholders correctly, you may need still have a professional consultation. I don't want to disregard some of the possibly important questions you have for this particular business. I am answering question from a more technical S Corporation and K-1 viewpoint.

Regards,

Fiona

Ask Your Own Tax Question
Customer reply replied 1 year ago
Thank you. What if the shareholder will be leaving the company and it's a mutual decision for the company as a whole. Is that shareholder owed his share of profit reported his K-1 for 2015 and again for 2016? Assuming he's never taken a distribution and the company is profitable.
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 year ago

Dear Customer,

This is not a simple question.

Owe to whom? The shareholder does not owe the amounts on the K-1.

Whatever are reported on the K-1 issued to the shareholder, the shareholder needs to report on the tax return.

For the shareholder to depart from/leave the company, there is a value to his/her share. There are a lot of considerations such as the value of his shares and to whom he is going to sell his shares. The agreement needs to be signed by everyone. If you feel that some money needs to pay to you, that discussion needs to be held. So, you may need to consult with a CPA as well as an attorney. Also, if you think that there are cash or cash equivalent, profit, remaining in the company and your husband should get a portion of that cash, the subject needs to be raised.

This amount is in addition to and can be with the value of the stock shares.

Regards,

Fiona

Ask Your Own Tax Question
Customer reply replied 1 year ago
If a shareholder has never received any money (in wages or distributions) but has to report K-1 profit on a personal income tax return and pay the taxes on that amount, shouldn't they receive money at some point? Are we paying taxes on money that just stays in the business? I'm sure it's my fault I'm not understanding that part. And in regard to retained earnings for a company, if that number is ***** that means the company is profitable correct? The company has been in existence for less than a year if that makes my question less complicated.
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 1 year ago

Dear Customer,

If the company has been in business in less than one year, it probably has gone from 2015 to 2016, and that is why you received K-1s.

There are two aspects to your questions.

1) Yes, it is proper for an S corporation to be profitable; and yet in the same time, for this S Corporation not to distribute any cash or property to its shareholders. It is normal.

2) If you don't feel comfortable and would like to question some aspect of proper management of the corporation in terms of the fiduciary duty and fair treatment of the corporate officers or major shareholders to the minority investment shareholders, it is a separate question and should be looked into separately.

Regards,

Fiona

Ask Your Own Tax Question
Ask Dr. Fiona Chen Your Own Question
Dr. Fiona Chen
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 482
482 Satisfied Customers
Experience: Former IRS Revenue Agent

Dr. Fiona Chen is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I bought a rental property for 49000 and sold it for 29000
I bought a rental property for 49000 and sold it for 29000 many years later. During those years I depreciated it entirely. So do I it don't I have to pay capital gain on the entire 29000? … read more
abci168
abci168
Principal
27 satisfied customers
How to report cancellation of debt on rental property?
I received a 1099-C for my rental property that I held for over 1 year. According to the worksheet provided in IRS Publication 4681 I was insolvent just prior to the debt being canceled. My question i… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
My wife inherited a piece of rental property from a
My wife inherited a piece of rental property from a revocable trust that her parents had set up after her father and brother died her mom did an amendment that made her trustee and sole heir. Her mom … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
My question is about depreciation for rental property. My
Hello. My question is about depreciation for rental property. My rental property had no income during one year. In this case, since there was no income, I do not need to claim depreciation for that sa… read more
Fred Rook
Fred Rook
Corporate Controller
BSBA
31 satisfied customers
Is the sale of customer list a capital gain or ordinary income?
Is the sale of self-created intangibles, such customer lists, digital files, web sites, etc subject to capital gain or ordinary income treatment?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I got a 1099 A of a rental property with information on Box
I got a 1099 A of a rental property with information on Box 2 and Box 4 how do I report it on my tax… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Would owning a second home that is used for rental property
Would owning a second home that is used for rental property income affect VA survivors benefits? Would SSDI income?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,444 satisfied customers
I have a rental property that required major repairs this
I have a rental property that required major repairs this year. The repairs minus deductible were covered by my insurance. Is the entire amount of repair an allowable expense or only the insurance ded… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Are you familiar with Capital Gain taxes on rental property?
Are you familiar with Capital Gain taxes on rental property? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I recently received a car as a payment for rental property
Hi, I recently received a car as a payment for rental property and I was wondering how the tax treatment would be … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I have a question regarding the ordinary income tax. If the
Hello, I have a question regarding the ordinary income tax. If the ordinary income tax due is negative does that apply anywhere? This pertains to the sale of an S corp .business. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
If my Schedule E loss is disallowed for a rental property
If my Schedule E loss is disallowed for a rental property (due to income level), can I take the mortgage interest and real estate taxes paid on Schedule A instead of on Schedule E?The entire expense a… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
717 satisfied customers
Can individual take residential rental property losses on
Can individual take residential rental property losses on their tax returns … read more
abci168
abci168
Principal
27 satisfied customers
Is 1120-S K1 non-passive ordinary income also taxable to
Is 1120-S K1 non-passive ordinary income also taxable to self-employment tax? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,444 satisfied customers
Disposition of Rental Property. Rental property: Gross sale
Disposition of Rental Property.Rental property : Gross sale price: $600K Cost or Other Basis plus Selling Expenses: $300K Depreciation allowed or allowable: $100K (Form 4797 line 22)Adjustment: $300K … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Does an LLC need to file K-1 forms if they claim no profit
Does an LLC need to file K-1 forms if they claim no profit or loss? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,444 satisfied customers
My LLC partnership K-1 form shows nothing in Box 19 and
My LLC partnership K-1 form shows nothing in Box 19 and shows $$$ in box 14 A and C. I have no problem with that, but when trying to refinance my home the bank refused to consider the business income … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
How do I request my 2016 Individual Personal Income Tax form
Sir, how do I request my 2016 Individual Personal Income Tax form (form 1040) on line? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,444 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x