"Brian Collie" <bc[at]sbcglobal.net> wrote:

- quote -

I believe it was Winston Churchill who said "An appeaser is
one who feeds the crocodile, hoping to be eaten last." If I
were you the first thing I would do is advise the client in
writing that doing what he intends to do will quite likely
encourage the "purchaser" to pursue him when he next wants
another piece of property.

That being said - it is hard to argue with someone whose
mind is made up. I'd make this client sign an
acknowledgement letter stating that I had advised him to
contact the State's Attorney General's office and that I
could make no guarantees or warranties about the tax outcome
of this transaction. Clients like this are usually looking
to hang all the associated problems on someone else, be
careful and CYA.

Gene E. Utterback, EA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

I can think of worse: the real estate is deemed distributed
to the shareholder as a dividend, generating corporate tax
on the gain, in addition to the tax on the shareholder
(which is at least at a lower rate than in past years). this
reminds me of the two rules for putting real estate into a
corporation:

Rule 1: don't ever put real estate into a corporation.
Rule 2: if in doubt, refer to rule 1 (courtesy of Mike Weatherwax, CPA).

But I wonder if he isn't getting fair value in terms of
relief from harassment. Is this harassment being done to the
shareholder as an individual, or in his capacity as an
officer of the corporation? In the latter case, there may
not be a dividend issue. Even if he doesn't want to have an
attorney pursue the harassment, he might still want to have
one lay out the issues in the most favorable light before he
acts.

--
Thomas E Healy, CPA, PC
1650 38th St., Ste 202W
Boulder, CO 80301
Please send email to: tom[at]tomhealycpa.com, since I block all email at my
newsgroup address.
phone (303) 443-1804
fax (720) 489-3772

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Brian Collie wrote:

- quote -

I don't even see the worse case scenario. After all, it's
not he who is selling, but the corporation. and you did say
"unrelated party".

If IRS could (upon audit of course) force such a worse
case scenario you describe above, then I'd better rethink
my largess when I give a client an old computer which still
has 200$ of depreciation yet to be deducted.

Oh, and you've probably already guessed that your client has
something to hide.

ChEAr$,
Harlan Lunsford, EA n LA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I have a client, the sole shareholder of a C corp, who wants
to sell a piece of real estate, owned by the corporation, to
an unrelated party for $50,000. The property is valued by
the tax appraisal district at $320,000.

I know, the first question is why would he do this. The
answer is basically because the purchaser is harrassing him.
He knows that by selling the property, the harrassment will
stop. Don't tell me to tell him to get a lawyer or call the
police; I have already done that. The bottom line is he is
going to sell.

I have told him that the worst case scenario would be a
$270,000 corporate dividend to him and a $270,000 gift to
the purchaser. Is there any way this could be worse?

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->