Lanny Williams, CPA wrote:
- quote -

In response to this, I looked back at the forms for 2004 and
2003. It appears that there is a change in the 2004 form
that makes the W-2 approach unnecessary. However, for 2003
and earlier, just HOW would you have gotten the FICA tax
(employee's share) for a partner who actively [participates]
works for the partnership for a LIMITED partner (who thus
doesn't have an entry on 2003's line 15a because that, per
the instructions, is for general partners only)?

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Dick Adams <rdadams[at]smart.net> wrote:

- quote -

Like the guy who read that smoking was bad, so he gave up
reading?

In Chinese medicine they say that the way to heal one limb
faster is to shake the opposite one. So try shaking your
left arm for 10 to 20 seconds two or three times a day. It
might just help!

Stu

Moferator:
rotflmao - you are correct
Please note you are now my attorney and my reference for
why I should not give up alcohol. Susan is 5'2", 105 lbs
of vicious terror and she may may come after you if she
ever learns of this. I will protect you for $1,000 a
month. Wait that's extortion. so I will do it for free
or until you change your opinion.

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Please note I replied to Tom's submission without posting it.

Thomas Healy <tomhealycpa[at]earthlink.net> "Dick Adams" <rdadams[at]smart.net> wrote:

- quote -

OK, Tom. Now if Susan pays for the out building and I pay
for the equipment. I get to 179 the equipment and she gets
to rent me the out building. She declares rent and
depreciation and I expense it on a Schedule C. And when the
Schedule C is negative (which it will be in the first two
years), it gets written off against her W-2 and my Social
Security income?

Great news - I got a shot of Cortizone in my right shoulder
which has a hairline fracture where the clavicle meets the
joint. If the choice came down to Cortizone or Alcohol. I
really would give up alcohol.

Dick

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Dick Adams wrote:

- quote -

Sure you can, no law against that. HoweVER! since we're
talking taxes, and if you are the owner of the building,
there's no tax effect.

ChEAr$,
Harlan Lunsford
who did a double take today in Wal-Mart, seeing the word
"Che | ers" prominently displayed on the rear of a nice
set of female hot pants. Walking of course.

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rdadams[at]smart.net (Dick Adams) wrote:

- quote -

I guess I don't understand all the underlying facts, but I
don't see why you can't lease it out yourself. The only
time self-dealing is a problem is when you could use it to
benefit yourself at the expense of those to whom you owe a
duty. If there are no others in that position, or those
people all agree that you can do the leasing, there
shouldn't be a problem.

Stu

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D. Stussy wrote:
- quote -

SNIP
- quote -

This is not correct. Unless a partner has less than a 2%
interest in the parnership can he/she be an employee and
receive a W-2. Otherwise, all allocated income, including
any guaranteed payments, are reported on the K-1.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans->
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Thomas Healy <tomhealycpa[at]earthlink.net> wrote:
- quote -

Thank you. The franchise is out; the other business is in.
Gets to be a proprietorship and the equipment gets 179'd.

Now can I really lease the out building to myself? That
seems like excessive self-dealing!

Dick

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Dick Adams wrote:

- quote -

60 months if it's a start-up cost.

- quote -

No. Partners who work for the partnership will get a W-2
for their wages for services rendered. The 1065 K-1 should
only be reflective of the net income or loss.

- quote -

Same answer as #2.

- quote -

Only if a joint return is filed and the other IRC 179 limits
are met can he take the full deduction. If he were to file
separately, his net business income is insufficient to
permit a current year deduction for all of the 179'ed items.
The excess carries forward to the next year.

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"Dick Adams" <rdadams[at]smart.net> wrote:

- quote -

15 years. If some or all of this counts as startup or
organization costs, up to $5,000 can be expensed once the
company is "in business."

- quote -

Correct, unless the LLC has elected to be taxed as a corporation.

- quote -

Yes, for wages paid. Whether to be an LLC, S corporation, or
C corporation depends on circumstances (see the thread
"Advice on Starting Own Company" for some good pointers.

- quote -

This will depend on how that business is organized. If it is
a corporation or partnership, there will be no Section 179
until there is income inside the entity. If it is a
proprietorship, the W-2 income can be used to allow Section
179. But income inside a different entity doesn't help.

Generally, buildings should not be owned by corporations.
Consider leasing the personal property to the business if
the business is a corporation or partnership, in order to
utilize Section 179 (but you'll have self-employment tax to
deal with in subsequent years).

- quote -

That reminds me of rehearsing for our wedding (37 years ago
next Sunday). The organist had a stop on the organ named
"Fuchs Schwanz" (German for "fox tail"). Visiting organists
couldn't resist trying it out, only to discover that it
suddenly pulled a ratty-looking fox tail across the manuals.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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Dick Adams wrote:

- quote -

I see these fees not as orgnizational expenses, in which
case the first 5000$ could be expensed first year, but
amortizable over the life of the franchise agreement.
Remember, I used to be a franchise manager in Bal'mer.

- quote -

If the LLC is by default taxed as a partnership.

- quote -

there are no real "partners" in an S corp, but
shareholders. Now, if your LLC makes the S corp election,
fine, and some income may escape se tax thereby. However,
like in case of my client for whom I'm (well "they" are)
making a belated S corp election, if granted by IRS, and
they begin to operate as an S corp, somebody must start to
get a formal salary, probably my client, the administrative
member.

On a related note howver, at our recent seminar is was
mentioned that subjecting LLC earnings in case of a 1065 to
SE tax, is NOT completely settled. Let's here from others
on that point.

- quote -

First, what type of business would this be? a sole
proprietorship?

A pax on your house. (pax = peace)

ChEAR$,
Harlan Lunsford, EA in LA

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"Dick Adams" <rdadams[at]smart.net> wrote:

- quote -

Section 179 is calculated on an entitiy by entity basis and
can not be utilized to generate a loss in the original
entity.

Thus an S Corp - No
LLC taxed as a partnership - No
LLC taxed as a disregarded entity - Yes

under the circumstance you described

--
Regards,

Mark Rigotti

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An LLC is formed by husband and wife for a service business
that is a franchise.

1. What is the minimum period of time for amortizing the
franchise fees?

LLC receives an annual 1099 from franchisor. Revenue,
expenses, et al are shared per the LLC agreement.

2. Partners in an LLC do not get W-2's. Is that correct?

3. Do partners in an S-Corp get W-2's? Which might make a
S-Corp more appropriate.

Husband wants to start another business which requires
building what is effecively a large garage with
refrigerators and freezers.

4. Ignoring the depreciation on the building, can the
husband 179 the refrigerators and freezers even though
his W-2 income and his LLC/S-Corp income is less than
the cost of the equipment. But the wife's W-2 and
LLC/S-Corp income is more than adequate to cover
the 179 items. Can these 179 items be taken?

Fox Paw

Dick

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