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Received my clients 2022 1120 & 1040 Sch F farming activity info for 2022 last night. Historically they report sawmill inc & exp under a corporation on 1120. They also have farming activity (chickens & livestock) that historically has been reported on 1040 Sch F. They have always kept/provided separate inc/exp records for these entities.
In there email explanation the say that it's become "increasingly more difficult to keep non-farm and farm business items separate" and are "needing to bring the farm business under the umbrella (of the corp).
I don't think this is a reasonable request and not even sure it's in their best interest or proper to do this - no time to research this for sure. What's troubling is that I should have heard on Jan 1 2022 that their bookkeeping was becoming difficult...not 1 year and 10 months later.
I am leaning towards telling them this and also since they did not meet my 09/20/23 doc request deadline their return will be late and to go back through their 2 business bank statements for 2022 to sort out what is what.
Please help! What are your thoughts on how to handle?
Skylane
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My first reaction is to fire them.... but assuming they're long-term clients/friends/relatives. Stuff like this happens when people get overwhelmed, or life gets in the way.......... It 'sounds' like the operations are combinable to some extent and I assume the ownership is the same, but that's your call...
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Thanks for that perspective. Husband 100% shareholder of Corp, 50/50 on the farm. 1) Is it simply additional paid in capital to the Corp 2) would wife have to then be a shareholder?? 3) I would have to manually add in all the Sch F assets correct? 4) and all the attributable loans related to the farm would have to be booked on the Corp side?
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@Skylane @ea_rva aka acctgtaxmatters I agree with Skylane. It is easier to get a bee with honey, than with vinegar. I also was getting ready to fire a client, but they have been with me for many years, since I was a child I have known them, so I took the Beatles advice and just "let it be". It is a little more work for me and a PITA, but sometimes that happens.
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Skylane
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" PITA for sure but they are hard working folks"
Glad you worked it out.... Blame the IRS, et al. for overcomplicating everything! Remember when we could do this with a pencil & eraser?
