davidturrigiano[at]optonline.net wrote:

- quote -

Followup back on MTM, where it belongs.

Nonbusiness bad debt on Schedule D.

Phoebe

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davidturrigiano[at]optonline.net wrote:

- quote -

Officer debt guarantee for the whole amount (sales taxes
plus fees) would be my first thought. But I haven't looked
to see if your situation would qualify.

Phoebe

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I have a case where an S-corporation that closed during
2004, had a sales tax audit during 2005 that was settled in
2006. There was $39,000 in total sales tax paid as a result
of the audit to New York State along with $9,000 to the CPA
(not me) which is divided among 3 S- corp shareholders

I do the personal taxes for two of the shareholders. My
question is this. How does the $13,000 in sales tax paid by
each of the two shareholders get recorded? Even though the
corporation was closed during 2004, would a 2006 corporate
return be filed (which would then flow to their individual
returns since it was an S-Corp) Or, would it go somewhere
directly on their personal returns without filing a
corporate return? I know there is a sales tax category on
Schedule A, but that is for personal sales tax and even if I
put it there, then the state and local taxes taken from
their W-2s could not also be claimed.

Also, if the sales tax goes on the personal return, I assume
the $3,000 in CPA Fees would just go on Schedule A as tax
preparation.

Does anyone have any idea on what to do? Thanks!

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