Questions Answered by D. Mathew Blackburn
Q: What should I do if I made an honest mistake on my income tax return?
D. Mathew Blackburn's answer
The return should be amended using Form 1040X.
Once the return is filed the additional tax owed should be paid and you'll receive a notice for failure to pay penalties. At that point you can either pay the penalty or request an abatement on Form 843 requesting either "first time abatement" or "reasonable cause".
I would suggest contacting a professional so you can have a conversation about whether the "mistake" creates a situation where you need to amend and how to proceed.
The return should be amended using Form 1040X.
Once the return is filed the additional tax owed should be paid and you'll receive a notice for failure to pay penalties. At that point you can either pay the penalty or request an abatement on Form 843 requesting either "first time abatement" or "reasonable cause".
I would suggest contacting a professional so you can have a conversation about whether the "mistake" creates a situation where you need to amend and how to proceed.
Q: trustee kept my distribution (stole) but sent me a k-1 do I have to pay tax
D. Mathew Blackburn's answer
Assuming that the k-1 is correct you are required to report and pay any tax owed. Recovering any money owed to you is a seperate issue.
Assuming that the k-1 is correct you are required to report and pay any tax owed. Recovering any money owed to you is a seperate issue.
Q: I'm a designer. I hired a contractor. He built kitchen cabinets and hired a finisher to finish them.
D. Mathew Blackburn's answer
It would a county court case which has jurisdictional authority on cases between $7,500 and $15,000. You would have to determine venue (Which county to file in) under the court rules. Generally you would sue everyone that did not fulfill their obligations under the contract. In this situation it may be the finisher only or the finisher and the contractor.
You should look for an attorney, county court is complex.
It would a county court case which has jurisdictional authority on cases between $7,500 and $15,000. You would have to determine venue (Which county to file in) under the court rules. Generally you would sue everyone that did not fulfill their obligations under the contract. In this situation it may be the finisher only or the finisher and the contractor.
You should look for an attorney, county court is complex.
Q: Purchasing an existing company, trying to figure out where to incorporate for best tax advantages.
D. Mathew Blackburn's answer
Generally the best approach is to register in the state of operation. Also be aware you will pay income taxes to CO regardless of where you set up the LLC because an LLC is a passthrough entity and you are a CO resident.
You need to retain a business/tax attorney that can advise you on the legal and tax ramifications of not only where to set up the LLC but also state sales and income tax nexus.
Generally the best approach is to register in the state of operation. Also be aware you will pay income taxes to CO regardless of where you set up the LLC because an LLC is a passthrough entity and you are a CO resident.
You need to retain a business/tax attorney that can advise you on the legal and tax ramifications of not only where to set up the LLC but also state sales and income tax nexus.
Q: We are a 22 year old software company that recently received a judgment from a customer for a large amount.
D. Mathew Blackburn's answer
The developer, even though he wrote the software, would not be able to sell it without a license. This assumes the S-Corp owns the software either as a contributed asset or as work for hire. The judgement holder would likely seek a writ of garnishment to seize the rights to the software then sue the developer for infringement. If the developer want the software he would need to buy it from the S-corp at fair market value. If it's distributed to him or sold for less than FMV it would be...
The developer, even though he wrote the software, would not be able to sell it without a license. This assumes the S-Corp owns the software either as a contributed asset or as work for hire. The judgement holder would likely seek a writ of garnishment to seize the rights to the software then sue the developer for infringement. If the developer want the software he would need to buy it from the S-corp at fair market value. If it's distributed to him or sold for less than FMV it would be...
Q: What forms do I need to send the IRS for my one and only part-time employee?
D. Mathew Blackburn's answer
You will need to file and remit tax for the 944 for withholding and SS, 940 for futa, uitr-1 for CO unemployment tax, and the CO withholding forms. Along with the w-2. You also have to file a notice of hiring with the CO department of labor.
You will need to file and remit tax for the 944 for withholding and SS, 940 for futa, uitr-1 for CO unemployment tax, and the CO withholding forms. Along with the w-2. You also have to file a notice of hiring with the CO department of labor.
Q: In Colorado, can you legally write up your own contract for your business, or must a lawyer provide said contract?
D. Mathew Blackburn's answer
You can absolutely draft your own contracts for your business without an attorney. It's not a good idea but you can do it. What is illegal, unauthorized practice of law, is to advise others on the legalities of contracts.
Regarding enforceability of the contracts you write is an entirely different issue. You're going to do the best you can and you're taking your chances that you're just as good as or better than someone who studied law for three years, passed the bar exam, and then...
You can absolutely draft your own contracts for your business without an attorney. It's not a good idea but you can do it. What is illegal, unauthorized practice of law, is to advise others on the legalities of contracts.
Regarding enforceability of the contracts you write is an entirely different issue. You're going to do the best you can and you're taking your chances that you're just as good as or better than someone who studied law for three years, passed the bar exam, and then...
Q: Is it illegal to unknowingly send an advertisement for homeowners insurance to a minor in Colorado?
D. Mathew Blackburn's answer
No, that woman's an idiot.
Even if it were illegal it would be prosecuted by the county attorney for a criminal act, or more likely the Dept. of Regulatory Agencies (DORA) for a regulatory violation. She has no private right of action to sue you for mistaken advertisement.
The question should be what are you putting your kid's name on that it's ending up on this list.
No, that woman's an idiot.
Even if it were illegal it would be prosecuted by the county attorney for a criminal act, or more likely the Dept. of Regulatory Agencies (DORA) for a regulatory violation. She has no private right of action to sue you for mistaken advertisement.
The question should be what are you putting your kid's name on that it's ending up on this list.
Q: Registered business name in Oct. 2017 with no EIN yet. Are we required to file even though we are not in business yet?
D. Mathew Blackburn's answer
Partnerships must file a Form 1065 each year regardless of income or loss. If you don't have an EIN yet you can simply write "Applied For" on the EIN block. You should get an EIN as soon as possible.
Partnerships must file a Form 1065 each year regardless of income or loss. If you don't have an EIN yet you can simply write "Applied For" on the EIN block. You should get an EIN as soon as possible.
Q: With the new tax bill, is it true I can only write off $10,000 of my property taxes now? What if I paid more than that?
D. Mathew Blackburn's answer
Yes the new tax laws limit the itemized deduction of sales tax or income tax, and property tax to $10,000. If you paid more than that amount the remainder of the amounts paid will simply not be allowed as a deduction.
Also, be aware that if you pre-paid 2018 property taxes so that you could deduct them in 2017, since there's no limit, your prepayment may not be allowed if the tax was not assessed. The IRS has already stated that they will be challenging prepayments where the tax was an...
Yes the new tax laws limit the itemized deduction of sales tax or income tax, and property tax to $10,000. If you paid more than that amount the remainder of the amounts paid will simply not be allowed as a deduction.
Also, be aware that if you pre-paid 2018 property taxes so that you could deduct them in 2017, since there's no limit, your prepayment may not be allowed if the tax was not assessed. The IRS has already stated that they will be challenging prepayments where the tax was an...
Q: Retirement annuity payout
D. Mathew Blackburn's answer
It depends. You'll need to hire an expert to determine tax realization and recognition depending on how the annuity was originally purchased, whether with pre / post tax dollars.
It depends. You'll need to hire an expert to determine tax realization and recognition depending on how the annuity was originally purchased, whether with pre / post tax dollars.
Q: I work for a small biz as an employee and was sued personally (small claims) for a mistake the biz made. What do I do?
1 Answer
| Asked
in
Business Law, Civil Litigation and Employment Law
for
Colorado
on
Answered on Dec 12, 2017
Answered on Dec 12, 2017
D. Mathew Blackburn's answer
Hire an attorney, A company policy is not the law and they can sue you and the company. You'll have to respond to the complaint and defend yourself at trial if necessary.
Hire an attorney, A company policy is not the law and they can sue you and the company. You'll have to respond to the complaint and defend yourself at trial if necessary.
Q: Can I use the standard meal allowance method to calculate M&IE deductions when traveling internationally for business?
D. Mathew Blackburn's answer
Yes, just make sure you use the international tables not the domestic.
INternational: https://aoprals.state.gov/content.asp?content_id=184&menu_id=78
Domestic: https://www.gsa.gov/travel/plan-book/per-diem-rates
Publication 463: https://www.irs.gov/publications/p463
Yes, just make sure you use the international tables not the domestic.
INternational: https://aoprals.state.gov/content.asp?content_id=184&menu_id=78
Domestic: https://www.gsa.gov/travel/plan-book/per-diem-rates
Publication 463: https://www.irs.gov/publications/p463
Q: Hi, I foolishly paid a fee for a loan consultant service when starting up a business; help me not pay?
D. Mathew Blackburn's answer
It's going to depend on the contract and whether they followed state funding laws whether you can get out of the obligation or get any money back. Let me know if you'd like to setup a consult and we can discuss costs and options.
It's going to depend on the contract and whether they followed state funding laws whether you can get out of the obligation or get any money back. Let me know if you'd like to setup a consult and we can discuss costs and options.
Q: Can my leasing office do such things?
1 Answer
| Asked
in
Business Formation and Landlord - Tenant
for
Colorado
on
Answered on Nov 14, 2017
Answered on Nov 14, 2017
D. Mathew Blackburn's answer
This is a landlord/tenant issue and you posted it in business formation.
You'll get a faster answer if you repost in Landlord/Tenant.
Thanks
This is a landlord/tenant issue and you posted it in business formation.
You'll get a faster answer if you repost in Landlord/Tenant.
Thanks
Q: I inherited a farm for which I have income to report my share of the proceeds from the sale of livestock and coop dist
D. Mathew Blackburn's answer
If you're not actively participating in the business then no you are not subject to SE tax. Also farms have alternative SE calculations that may come into play. I would suggest hiring a professional to help with this. The Schedule F looks simple enough but there are numerous traps for the unwary.
If you're not actively participating in the business then no you are not subject to SE tax. Also farms have alternative SE calculations that may come into play. I would suggest hiring a professional to help with this. The Schedule F looks simple enough but there are numerous traps for the unwary.
Q: We moved from NM to CO w/ two LLCs. We have to dissolve the LLCs in NM, correct? Just Articles of Dissolution needed?
D. Mathew Blackburn's answer
Not quite, to avoid tax issues it's often better to create the new LLC in Colorado and contribute your interests in the NM LLC to the CO LLC then dissolve. Remember that if you dissolve a company you are taxed on the FMV of the assets reduced by your basis. It's going to depend on your basis, FMV, and other factors which approach is best.
Not quite, to avoid tax issues it's often better to create the new LLC in Colorado and contribute your interests in the NM LLC to the CO LLC then dissolve. Remember that if you dissolve a company you are taxed on the FMV of the assets reduced by your basis. It's going to depend on your basis, FMV, and other factors which approach is best.
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