We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

My husband and I had to deal with canceled debt from a Deed in Lieu of Foreclosure on a second home with our 2012 taxes. We never had to deal with this type of tax experience and needless to say, we were fearful. Owing taxes on possible additional income was stressful. We searched for CPA’s as well as info about DILs and how Insolvency worked. When we came across Gary’s website, we were impressed. We found his website 8 months prior to tax season. We kept it as a “Favorite” as we knew we would need to contact him for assistance. When it was time to get a CPA, we called Gary. We felt relieved that we actually had someone that not only understood our concerns but was an expert in this area. He walked us through the process and all the time telling us not to worry. When our taxes were completed, you cannot imagine the relief we had when we actually were able to get a refund.

Gary is a dedicated professional and attentive to his clients. We love the virtual office as it is convenient during tax time and he’s fees were fair and affordable when you consider the depth of work accomplished on our taxes!

We’ve already started recommending Gary to others. We are so blessed and grateful for all that Gary did to assist with our taxes.

 

Patty and Tim, Fredericksburg, VA

Free Consult

Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Subchapter S Corporation CPA discusses Property Distributions | Form1120S Tax Preparation

Subchapter S Corporate CPA discusses proptry distributions.

Proactively planning non-standard transactions in a Subchapter S Corporation is prudent. (910) 399-2705

Subchapter S Corporations are usually have only a few shareholders.  Property often passes from the S Corporation to the shareholders.  Technically cash is property, but let’s make it interesting with a IRS Form 1120-S example utilizing land.  The main point is to consult with your CPA before committing the S Corporation to a non-standard transaction. Things get tricky fast. As in all our examples, we’ll use Subchapter S Corporation CPA, Inc., as our demo S Corporation.  The tax implications of Form 1120-S are stressed below and we assume the transaction makes sense for both Subchapter S Corporation CPA, Inc. and the Shareholder.

Basic Scenario

One Shareholder of Subchapter S Corporation CPA, Inc. wants a piece of corporate owned land.  SSCC  bought the  5 acres of land years ago, as an investment, for $300,000.

Land Worth $250,000 at time of transfer – $50,000 Loss

Generally, distributions of loss property should be avoided in S Corporations, at least from a tax perspective.  Here’s why. Subchapter S Corporation CPA, Inc. doesn’t ever get to take the $50,000 loss on the IRS Form 1120-S.  It can only take a loss if the it sells the land.  But the Shareholder’s basis in the land would have been the $250,000 FMV. So the $50,000 loss on the transfer never benefits the Shareholder either.

Land Worth $350,000 at time of transfer – $50,000 Gain

Essentially the IRS treats this transfer like a sale of the land to the shareholder at FMV. The tax consequences for the land are the same if Subchapter S Corporation CPA, Inc. sells the land to a Shareholder and he/she disposes of it, or SSCC sells it and distributes the cash to Smith.  Assuming it can be sold.  At the time of transfer, the S Corporation recognizes a gain of $50,000.  Form 1120-S allocates this gain to the Shareholder’s basis, through the Form 1120-S Schedule K-1 according to the percentage of Subchapter S Corporation CPA, Inc. they own.  Simultaneously, the shareholder’s basis reduces by the entire $350,000, but not below $0.

“Documenting Fair Market Value (FMV) at the time of  transfer is crucial if the S Corporation or shareholder is audited.”
– Gary Bode S Corporation CPA and Form 1120-S Tax Accountant

Moral of the Story

In S Corporations, the tax consequences of non standard transactions on Form-1120S deserve proactive consideration with your CPA.

I’m a Subchapter S Corporation CPA because my firm operates as an S Corporation. So I devote considerable time, including S Corporation related Continuing Professional Education to stay current on new issues. And our virtual office means we can serve your S Corporation wherever it is. Need a free consult? (910) 399-2705.

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