Discussion Archives:H2A Employer - Related Party

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Discussion Forum Index --> Advanced Tax Questions --> H2A Employer - Related Party

Discussion Forum Index --> Tax Questions --> H2A Employer - Related Party

SEJCPA (talk|edits) said:

27 March 2008
Company ABC is a farming operation which is a sole proprietorship (Schedule F) owned by Farmer A. Farmer A, along with spouse, formed Company XYZ, a partnership for the purpose of employing H2A (legal immigrant farm laborers) workers to separate the business of the H2A workers and reduce personal liability. Company XYZ is primarily used as a "payroll service". Company ABC is treating the cash disbursements to Company XYZ as farm labor expense (contract labor) - as they are benefitting from the "work" that is being performed.

How does Company XYZ account for and report the cash receipts from Company ABC for payroll and other "reimbursed cash expenses (insurance, etc.)"? How then does Company XYZ report the cash disbursements for labor and insurance, etc.? Are these income and expense items, even if they always net to zero? What happens when Company XYZ doesn't really have any net income? Does it make a difference since these are related parties? Any help would be appreciated!

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