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I need help with preparing a tax return and I may need to…

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Hi I need help with preparing a tax return and I may need to file form 3520 as well. Please let me know if you can assist.
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Answered in 1 hour by:
10/1/2017
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,141
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Welcome to Just Answer! Thank you for giving me the opportunity to assist you! I will do my best to help!

What is your issue? I've been practicing in the international tax area for over 30 years. I've done many Forms 3520 and 3520A

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Customer reply replied 9 months ago
Hi - I helped a family member resolve a real estate problem here in the US after their relative passed away. They rewarded me with a large gift (above $100K) as the property was quite expensive and I helped them avoid loosing it altogether.So I am trying to figure out if the wire transfer I received will be reported to the IRS as income. And also I am trying to figure out how do I report this to the IRS correctly. Is form 3520 the correct way to go? This is for 2016. I filed an extension earlier this year.
The property was in florida and I helped them sell it in may last year. It was under a limited partnership between the deceased's corporation and his partner. When the sale was all done and all the partnership tax filings were done, I received my gift money.
Customer reply replied 9 months ago
The gift came from a partnership. The partners were one foreign individual and the other was a florida corporation with 100% ownership by a foreign individual. So I am assuming with this info the form 3520 still applies
Customer reply replied 9 months ago
Also to help facilitate the sale I was listed as a manager of the partnership.

Usually, a corporation cannot give a gift. However, a nonresident individual can gift property including cash. Also, partnerships cannot usually gift cash to partners or employees (a manager would probably be considered an employee).

If the gift came from the nonresident individual to you personally in your capacity as a relative and not as a manger, then the gift would be reported on a Form 3520, and no tax would be due as it was a gift.

However, if the partnership deducted the gift in any way, or if the gift was to be compensation for the assistance that you gave, then it is not really a gift and a Form 3520 would not be required, as it would be taxable income and reported on your Form 1040.

So you have to look at the spirit and the intentions of the person who sent you the gift, and who it actually was. If it was the nonresident relative, then you just file the Form 3520. If it was the partnership, then it would be income.

I hope this answers your question. If you have more, please feel free to ask and I will be happy to answer.

Thanks! Have a great week!

Roger

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Customer reply replied 9 months ago
I see. I was only acting as a manager at the time to be able to act on their behalf to to work as an employee as there was no agreement or anything to that regard for any compensation. When the sale was done, they decided to send me money as a gift as I was able to stop the other partner from selling the property from under them for 2 million whereas I was able to list if with the help of a real estate agent and sell if for 3.3 million. So essentially I was not getting completion as an employee.
Customer reply replied 9 months ago
I see. I was only acting as a manager at the time to be able to act on their behalf ** not to work as an employee as there was no agreement or anything to that regard for any compensation. When the sale was done, they decided to send me money as a gift as I was able to stop the other partner from selling the property from under them for 2 million whereas I was able to list if with the help of a real estate agent and sell if for 3.3 million. So essentially I was not getting completion as an employee.
Customer reply replied 9 months ago
They did deduct the money the sent me I believe. in all they had a loss of over $300,000 in this so they ended up with no taxes liability either,

If they deducted the money that they sent you, technically it is compensation to you and should be reported as taxable income.

However, if you were told it was a gift, and that it was intended to be a gift and you had no agreement for compensation, then file the Form 3520. Make sure you keep any documentation from them that stated it was a gift, then if the IRS questions it, you have documentation to support your position.

Thanks!

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Customer reply replied 9 months ago
I see. So I can ask them for a letter to indicate that it was meant to be a gift.

Yes, that would be a help. Otherwise, you risk income tax on at your normal tax rates, plus self-employment tax at 15.3%.

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Customer reply replied 9 months ago
ok thank you. Do you help file tax returns? I was looking for someone to help me with preparing this so that I don't make any errors.

I do. You can contact me at***@******.*** and I will see what I can do.

Thanks!

Roger

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Customer reply replied 9 months ago
Will do. What are your fees normally? I usually file a 1040 and a schedule C for a small coffee shop business that I have. I can send you the W2's from my work, 1099s from my school grant (working on my PhD), and profit and loss from 2016 for the business. Anything else? I also pulled wage and income transcript from the IRS's website and can include that.
Customer reply replied 9 months ago
My wife has a 1099 for part time work she did last year also.

My fee for something like that would generally be $250 to $350. If my firm did it the fee would be about 3 times that.

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Customer reply replied 9 months ago
I see. That is reasonable. This includes the 3520 form as well correct?

Yes, that assumes that you provide the information to me in good order.

I will also need your prior two years' tax returns.

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Customer reply replied 9 months ago
Ok. I'm working on my profit/loss report. Should have that by tomorrow.

Do you have any more questions for this thread?

If not, please rate me so that this question can be closed.

Thanks!

Roger

taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,141
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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