Level 10

Corporate client

Forum|Forum|1 year ago
October 4, 2024
4 replies
12 views

S Corp stared 2017. Never filed. Long Story. Cannabis.

Expenses in 2018 and 2019. Large, 500K NOL is projected

A CPA colleague suggested filing an Initial and Final in 2023. Problems? Good Idea?

Tax Talk

abctax55

Level 15

IRS hasn't asked for prior year returns? You state 'expenses' which implies activity DID take place.

What State? If CA... they'll be wanting 2017, etc plus the $ 800 for each year (maybe not for the first year, depending...).

HumanKind... Be Both

S

strongsilenceAuthor

Level 10

IRS hasn't asked for prior year returns? No.

You state 'expenses' which implies activity DID take place. Yes.

What State? If CA... they'll be wanting 2017, etc plus the $ 800 for each year (maybe not for the first year, depending...

CA, yes, $800 required.

rbynaker

Level 13

Not many facts to go on here but I'd be shocked if there's an NOL. Isn't IRC 280E going to limit expenses to only COGS?

S

strongsilenceAuthor

Level 10

Not many facts to go on here but I'd be shocked if there's an NOL. Isn't IRC 280E going to limit expenses to only COGS?

They performed testing only so 280E didn't apply, per the attorney they consulted in 2019. I have that letter. "no cannabis is touched....instead it sells a service." is the rationale, along with the CHAMP case.

What is the best source for regulations and latest laws pertaining to cannabis.

BobKamman

Level 15

First thing I would do is figure out if I had a corporate client. Several Tax Court cases involving California weederies have been tossed out because the company's corporation franchise was revoked by the state, for failure to do this or that. There's a public database where you can check.

S

strongsilenceAuthor

Level 10

Thanks. It was registered and it was dissolved by the CA SOS in 2021. For that reason, I will file all years, instead of the 2023 as proposed by the CPA of one of the investors.

BobKamman

Level 15

How do you file 2022 and 2023 returns for a corporation dissolved in 2021? Or is that not what you mean? And in what years was the loss incurred? The K-1s might not do much good for the shareholders, if the statute has expired on their 1040's.

Just make sure you follow Rule 1 for tax practitioners in situations like this.

"Get paid first."

PATAX

Level 12

@strongsilence If you want to punt on this and are able to: "There are other CPAs and/or tax attorneys who have more experience and/or knowledge in this complex matter than I do, and it may be better for you to go to another CPA and/or tax attorney who specializes in this complex matter."

S

strongsilenceAuthor

Level 10

If you want to punt on this and are able to:

Thanks for that suggestion. He is a friend of a friend. And I have the cannabis guidance for any questions and issues. S Corporations are straightforward other than that.

PATAX

Level 12

@strongsilence you're welcome

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