Questions Answered by D. Mathew Blackburn

Q: A local bookkeeper prepared our taxes this year. She made mistakes and we want to know what legal actions we can take.

1 Answer | Asked in Tax Law for Colorado on
Answered on Aug 3, 2018
D. Mathew Blackburn's answer
The costs of pursuing legal action for negligence, fraud, etc... are rarely worth the time and costs. You would have to file in the county where you signed the service agreement, or where the BK's place of business is. Filing fee will probably be more than you paid for the return.

If you paid by credit card you can request a chargeback.

I would move on and hire a competent preparer next year.

Let everyone know this person doesn't know how to do returns, just don't...

Q: Question on Retail Lease

3 Answers | Asked in Business Law, Contracts, Real Estate Law and Landlord - Tenant for Colorado on
Answered on Jul 14, 2018
D. Mathew Blackburn's answer
File a lawsuit. If you have a contract and the other party refuses to honor the contract you take them to court and ask a judge to either make them do what they said they would do or to give you damages.

Q: Are life insurance and jointly-held property considered part of the deceased's estate, and thus subject to taxes?

1 Answer | Asked in Tax Law for Colorado on
Answered on Jul 5, 2018
D. Mathew Blackburn's answer
Usually not, but can't be sure until I've seen the docs.

Q: Are there any Colorado penalties for withdrawing from a 401a account early and when does the IRS assess it's 10% penalty

1 Answer | Asked in Tax Law for Colorado on
Answered on Jul 3, 2018
D. Mathew Blackburn's answer
There's no state level penalty, but you can generally exclude income as taxable to CO if you wait. Colorado FYI Publication 25 https://www.colorado.gov/pacific/sites/default/files/Income25.pdf

The federal penalty is imposed on your F1040 so you'll incur it when you file your return.

Exceptions to the additional 10% tax apply for early distributions that are:

Made to a beneficiary or estate on account of the IRA owner's death

Made because you're totally and...

Q: Today I received a Letter from the city of Lansing, Income tax ordinance, section 99,

1 Answer | Asked in Tax Law for Colorado on
Answered on Jun 16, 2018
D. Mathew Blackburn's answer
If you believe the notices are in error you would need to respond and provide evidence that the assessment is incorrect.

Q: What should I do if I made an honest mistake on my income tax return?

1 Answer | Asked in Tax Law for Colorado on
Answered on May 18, 2018
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.

Q: trustee kept my distribution (stole) but sent me a k-1 do I have to pay tax

1 Answer | Asked in Tax Law for Colorado on
Answered on Apr 28, 2018
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.

Q: I'm a designer. I hired a contractor. He built kitchen cabinets and hired a finisher to finish them.

1 Answer | Asked in Business Law for Colorado on
Answered on Apr 28, 2018
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.

Q: Purchasing an existing company, trying to figure out where to incorporate for best tax advantages.

1 Answer | Asked in Business Law and Tax Law for Colorado on
Answered on Mar 24, 2018
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.

Q: We are a 22 year old software company that recently received a judgment from a customer for a large amount.

1 Answer | Asked in Business Law for Colorado on
Answered on Mar 14, 2018
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...

Q: What forms do I need to send the IRS for my one and only part-time employee?

1 Answer | Asked in Tax Law for Colorado on
Answered on Jan 27, 2018
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.

Q: In Colorado, can you legally write up your own contract for your business, or must a lawyer provide said contract?

1 Answer | Asked in Business Law for Colorado on
Answered on Jan 22, 2018
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...

Q: Is it illegal to unknowingly send an advertisement for homeowners insurance to a minor in Colorado?

1 Answer | Asked in Business Law and Insurance Defense for Colorado on
Answered on Jan 15, 2018
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.

Q: Registered business name in Oct. 2017 with no EIN yet. Are we required to file even though we are not in business yet?

1 Answer | Asked in Business Formation for Colorado on
Answered on Jan 4, 2018
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.

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?

2 Answers | Asked in Tax Law for Colorado on
Answered on Jan 4, 2018
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...

Q: I'm running an advertisement for my company and I'm not certain it's legal, I need some feedback on it-

1 Answer | Asked in Business Law for Colorado on
Answered on Dec 27, 2017
D. Mathew Blackburn's answer
You should consult an attorney who can advise you on your situation.

Q: Retirement annuity payout

1 Answer | Asked in Tax Law for Colorado on
Answered on Dec 13, 2017
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.

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
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.

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