"Kenneth G. Jarvis, CPA" <kgjarvis[at]cpadvantage.com> wrote

- quote -

Yes.

- quote -

It's probasbly not necessary as most of the resulting
expenses would be deductible by the partner who pays the
expense in the long run.

- quote -

Either, an installment payment plan (good for starters) or
an offer-in-compromise if there aren't any personal assets
they can get.

- quote -

Notate it on the 4797 on the assets "disposed" of.

- quote -

I've been down similar roads ~WAY~ to many times. I'd be
thinking if I really want the client.

--
Paul A. Thomas, CPA
taxman at negia.net

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Kenneth G. Jarvis, CPA wrote:

- quote -

Oh boy, we all should have one of these at least one in ten
years to keep us humble.

Along with many others I have a natural bias against
partnerships (and preachers but that's another thread). You
asked for a copy of their partnership agreement? Don't
hold your breath! Chances are there isn't one. In fact I
read once where in some state spouses may NOT sign
partnership agreements, but I can't vouch for that.

Based on what you say, I would not take this one on. First
reason is that another accountant did work before, and
naturally question is: why not this time? Hmmmmmmm???

But if you do take it on, simply report results of cash
basis operations (at least I hope that is the case on
previous 1065's), and under certain circumstances, no need
for balance sheets. (that's answer to # 1 above)

2. When business operations cease, the need for a 1065
ceases. All outstanding liabilities are simply transferred
to the partners.

3. Urge them to pay them. No doubt they owe them, assuming
all the 941's and 940's were correct to begin with. the
only thing yu can do, is, absent bankruptcy proceedings, to
help them work out an installment agreement with IRS.

4. The assets landlord "acquired" in lieu of rent are just
that: rent expense.

5. Main question. Can you get all the projected fee up
front? If not, well...... I think you know what not to do.

Cheer$,
Harlan Lunsford, EA n LA

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Have a new client that has a partnership in TN. I am in
the process of deciding whether I should hand this off to
another CPA firm. I don't do a lot of partnerships,
however, I believe I understand the fundamental concepts and
have a good tax library (PPC) but I am a little nervous
since it has some twists not covered in my tax library.

Facts
1. Partnership is a small, one location service shop (Tanning).
2. Two partners. 50%/50% Husband and Wife.
3. Partnership went belly up and landlord shut the doors and
kept everything inside.
4. Partnership has outstanding payroll tax liabilities of $14K
5. Partnership also has other outstanding notes.
6. Partnership has not filed for bankruptcy
7. Partnership does not have their books for the last 6 months
of operations.
8. Partnership began in 2000.
9. Will work on a retainer arrangement

What I Have Done So Far
1. Received their 2002 Federal and TN tax returns
2. Had them requested copies of their 2000 & 2001 tax
returns, basis, debt and asset schedules from prior
CPA firm.
3. Requested copy of their partnership agreement.

Questions
1. I am going to have them estimated their financial
statements from 01/01/2003 through the time when their shop
closed. Do I need to disclose on the tax return that they
are all estimates?
2. Does the partnership continue to file their 1065 tax
returns until all debts (including payroll tax liability)
are finalized (i.e., bankruptcy finalized)?
3. What can I do for the client (if anything) about these
outstanding payroll tax liabilities?
4. How would I show on the tax return the assets that the
landlord kept when they locked the partnership out of their
facilities.
5. What other questions (other than basic tax checklist)
should I be asking the client or myself.

Any help is greatly appreciated. Thank you.

--
Best Regards,
Ken

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