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?
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...
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?
@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.
" 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?
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