Discussion:Tobacco buyout 1099s
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Discussion Forum Index --> Tax Questions --> Tobacco buyout 1099s
| 11 April 2006 | |
| On the 1099s that the goverment send out it shows the total payment for the 10 years. We make the election to use the installment method on form 6252. This question just occured to me. A lot of these payment are going to older people who have not been required to file taxes in years.
I'm got to thinking today, should they be filing a 6252? Do you have to elect the installment method? If they don't will the IRS consider the full amount taxable now? If so, I lot of people will be in trouble. I think it getting to close to 4/17, and my brains is on overload. | |
| 1 May 2006 | |
| Monday, May 01,2006
Are these lump sum payments or 10 payments over 10 years? | |
| 3 May 2006 | |
| SW, taxpayers have 2 basic options, report buyout at one time or installment (Form 6252). 90% of my clients went the installment route but a few took lump-sums in 2005 after 1st installment and some are taking lump-sums in 2006. A very good resource that I used was the NC State University Agriculture website. That address is as follows:
www.cals.ncsu.edu:8050/advancement/tobaccobuyout/index.htm. The site is full detailed information regarding buyout. For your elderly clients, a lump sum buyout might be their best option if the payout is not too large. One of my clients had a payout of over $800,000 which included the imputed interest. I definitely went installment on him. | |
| 5 May 2006 | |
| Friday, May 05, 2006
Greetings to all. Form 6252, as an attachment to the federal form 1040, IS ONLY FOR THE SALE OF PERSONAL TANGIBLE PROPERTY. You cannot use Form 6252 for proceeds received from a settlement, whether it is one lump sum payment or payments over a period of time. Thank you.
Numbers Done Right...The First Time Business Address: 20 Ford Court, Meadow Glen, Monroe, New York State 10950 - 4946 Business Telephone Number: (845) 782 - 5228 Business Facsimile Number: (845) 782 - 5582 Business E - Mail Address: meadowglenatmonroe@frontiernet.net
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| 5 May 2006 | |
| Angela you are incorrect in this matter as the Fed/IRS along with the USDA are allowing the tobacco farmer to use the Form 6252. Please refer to IRB 2005-57 dated 8/8/05.
Under Q&As, question #3's answer per this bulletin states the following: "The installment method may be used to report gain if an Owner receives at least one Owner Payment after the close of the Owner's taxable year that includes the Sales Date. The amount of gain is the excess of the total amount of Owner Payments to be received, reduced by any amount treated as interest, over the Owner's adjusted basis in the quota. Under the installment method, a proportionate amount of the gain is taken into account in each year in which an Owner Payment is received. See the instructions for Form 6252, Installment Sales Income." My county is probably ranked 5th in flue-cured tobacco sales in the US. We have seen a tremendous amount of these payouts. Darlyne You are right......Never forget 9/11 | |
| 5 May 2006 | |
| Friday, May 05, 2006
You are correct, Acctax. I was not aware of IRS Notice 2005 - 57. The 2005 instructions to federal Form 6252,under the caption of "Installment Sale Income", does not mention anything about this. Thank you for bringing it to my attention. The $ 10,000.00 annual installment reflects a payment from the government, but does not necessarily mean that this is the income to be recognized in each of these 10 years, or all in the year of sale. The adjusted basis of the tobacco quotas must be determined. Thank you.
Numbers Done Right...The First Time Business Address: 20 Ford Court, Meadow Glen, Monroe, New York State 10950 - 4946 Business Telephone Number: (845) 782 - 5228 Business Facsimile Number: (845) 782 - 5582 Business E - Mail Address: meadowglenatmonroe@frontiernet.net
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