User talk:DgR

From TaxAlmanac

Revision as of 16:23, 2 October 2009

Your S-corp formation Article

You asked a question today, but you put it into an article, S_corp_formation, rather than posting it to one of the discussion forums. It's unlikely anyone will notice it there, to reply. As yet, I haven't figured out how to "move" articles into the discussion forums, so you should probably just start over with Ask New Tax Question.

Trillium 21:43, 19 November 2008 (CST)

Here's the text of the article, in case you just want to copy it to paste into a discussion:

"I may need to go to a re-fresher course in s-corp's as to determination of how much for stock vs s/h loans. I recall something about "thin corps". Can anyone suggest a good course (even if self-study)? Over the years it seems that capital stock #'s on s-corps have just gotten smaller and smaller and the s/h money to start-up as s/h loans bigger & bigger. Any particular rules of thumb?"

Update - I was able to move your article today - you will now find it in the Tax Forum. ....Trillium 14:41, 5 December 2008 (CST)

interest tracing

Hi,

You asked: "My direct question should really be, what is everyone doing out there in return preparation when clients have mixed use, business etc. & personal use on equity money out refi's and outright equity loans, something that in real life happens a lot. Are you making the election, or just plain allocationg.? " I want to respond, in case my experience is helpful to you.

I have worked for several different firms, and not one of them ever made the election. The interest was simply traced according to the use of the loan proceeds. What I read quite a while ago was that there was an unresolved issue as to whether one loan could be traced to multiple sources, and rather than call attention to the issue by making the election, it was better to just do the tracing. Especially since there doesn't seem to be a specific requirement in the code or regs that a specific election be made. Plus my recollection is that form instructions don't require an election, and I believe that RIA recommends an election be made, because of its importance, but that is different from what RIA says when an election is required. Of course, these latter two are not authoritative.

However, all that said, when I do this tracing for my client, I let them know that there is a huge issue here. Election or no election, the issue remains: can we trace one loan to multiple uses?

I have a client with very complicated tracing, and his equity line of credit is traced to 4 different businesses. He was audited, and I met with the auditor this week. The auditor, who had about 15 years of experience, did not seem concerned about this issue. I know that his work will be reviewed, so we will see if the reviewer has a problem with it.

I am posting this information to you rather than on the thread because the last time I posted a tax position that I was taking and that an auditor had accepted it, a couple of other posters were really rude to me. They disagreed and felt that my client and I were cheating. I have just had it with so much rudeness and generally horrible behavior on this board, so I am really limiting my participation. Nevertheless, I hope that this is helpful for you.