On Aug 13, 9:40*pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

They can distribute enough to pay taxes due. If they have the
knowledge and auhority and there is a profit to distribute it is
constructively received.
- quote -

partnership, not necessarily for a a C-Corp. It is unfortunate that
they hanged their minds, but if the AI method works against them, they
can always resort o the "last year's tax" or "90% of current year's
tax" safe harbors (which are automatically built into the AI
method).

ed

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On Aug 10, 7:44 pm, ed <edcos...[at]sbcglobal.net> wrote:

- quote -

But there's a problem. Say the company with a fiscal year from Jan 1
to Dec 31 makes 1M profit in each of its quarters. They don't
distribute any money until Dec 31, and at that time they distribute
3.5M to say two (2) 50% shareholders. Are you saying that the
shareholders have to report this 3.5M as received in equal amounts
every quarter and pay taxes on it? But how can they pay taxes if they
haven't received any money?

Or let's say that the company intends to distribute 3.5/40=87.5% of
its profit to shareholders. Let's say for Q1, the two shareholders
report 875k of income on their tax return for that quarter and pay
taxes on it. But in the fourth quarter, the company decides to not
pay the 3.5M but instead reinvest it, such as buy buying more
equipment. Then the person would have overpaid tax for the first
quarter.

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On Aug 9, 9:49*pm, taxspecia...[at]earthlink.net wrote:
- quote -

In general, if you are trying to determine your AI installments in
advance as they come due it's more difficult than applying the Ai
after-the-fact. If you are a 2% or more owner of the S-corp, the
trustee of a trust, or a general partner you must include the net in
your AI calculations as of 3/31, 5/31, 8/31 and 12/31. In most cases
this shouldn't be a problem, but iet might require your CPA to issue
quarterly reports within 15 days after the close of each tax
quarter.

If you are a limited partner of a public entinty that can only declare
its earning on an annual basis, you report its net income iin the
quarter it is declared. If the income isn't reported until after Jan
15 of the following year, you can't include it in the AI, but it wold
be includiable in the "90% of current years' tax" safe harbor
calculations. If you are the benificiary of a trust and can ask the
trustee for the quarterly information, you must report it. If you
cannot get the tax/non-tax makeup of distributions you get, use your
best judgement as to what type of indome it is, or guess, using last
year's data or other indications.

In other words, if you do, or can, know quarterly results they must be
included in AI calculations.

ed

There are specific rules for fiscal year entities which I cna't recall
ofhand.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

When doing the annualized method - is there a requirement for which
quarter(s) the income from pass-thru entities is to be picked-up?

It first blush I'd figure a smooth recognition of the K-1, by using
hindsight once the K-1 was in hand. But then, that's not really a
fair way to do it. Especially. if say the K-1 is for a year-ended
January 31st. For a January 31st year-end pass-thru entity, I think
that perhaps the fair thing to do would be to pick up the whole K-1 in
the 1st quarter.

Using that same logic of fairness, I'd think that a K-1 with a year-
end of December 31st should all be picked up in the 4th quarter.
But then, perhaps that isn't fair either, since it is possible that
the pass-thru entity earned the income prior to the 4th quarter.
But then again, even if the pass-thru income was earned early in the
year, the individual taxpayer would not necessarily be privy to that
information, so he couldn't make the determination at the time, even
if using hindsight after the K-1 was issued.

All I've found so far is IRS Publication 505 that says: "Enter your
AGI for the period. This is your gross income, including your share
of partnership of S corporation income or loss, for the period..." It
doesn't say "your theoretical ratable share of each quarters' earnings
as earned during each quarter by the entity." nor does it say "your
actual pass-thru share as of the year-end date of the K-1."

Any thoughts ...or any rulings on this issue?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >