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Chad Dennis Hansen

Chad Hansen’s Answers

19 total


  • We were audited without knowledge or notice given and assessment made by Revenue department with falsified info.

    We we were given a call today and told we owed taxes for a business that was closed 3 years ago. Someone had submitted fraudulent invoices almost 4 months after business closed that we had revived taxes but never paid them. They started a audit ...

    Chad’s Answer

    Tough to follow the facts here -- would need more information on these "fraudulent invoices" and how they resulted in tax liability. Is this by chance related to unpaid employment taxes?

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  • Can a partner walk away from business and start another business of same type and take customers?

    taking customers from original business left business with considerable amount of debit handled all paperwork, other partner was in the field wanted field partner to buy out without first accessing business partner refused field partner reque...

    Chad’s Answer

    Good answer above -- if you don't have an operating agreement or partnership agreement, then your relationship will be governed by state statute -- you will need to seek advice from an attorney in Indiana regarding the duties of a member/partner in Indiana (assuming that is where your entity is).

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  • We made a business to our son-in-law (now ex) in July 2009. Nothing has been paid toward it. How do we call it in?

    Here is a copy of the letter from him: On 7-09 Michael and Kerry Marks borrowed $25,000 for start-up funding of Soup du jour On 10-09 we borrowed an additional $4,000 for payroll of the restaurant On 5-10 we borrowed and additional $15,00...

    Chad’s Answer

    You are going to need to begin collection action against your former son-in-law, obtain a judgment, and then collect on the judgment. I'm in West Chester -- contact me if you are interested in moving forward.

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  • IRS Audit on a Sold Business

    We had a C Corporation which we sold in 2009. The IRS wants to audit the corporation for tax year 2008. They contacted us. We explained we have given all paperwork to the new owner. It was an entity sale and the new owner took responsibility of al...

    Chad’s Answer

    Depends on the type of tax -- if we are talking about unpaid employment taxes, then a former owner could be deemed a "responsible party" and have personal liability (trust fund -- civil penalty), regardless of the current ownership. If we are talking corporate income tax, then the IRS would need a different theory to recover from a prior owner -- claiming you were an "alter ego" of the corporation, there was a fraudulent transfer of assets, or you held the assets that could have been used to pay tax in constructive trust for the IRS. Those are difficult theories for the IRS to prevail on - they are very fact sensitive.
    As far as dealing with the IRS now, you could provide them with a copy of the stock purchase agreement for starters. But, if these are employment taxes, that may do little if anything to slow down the IRS pursuing you and other former owners. If this is an employment tax issue, you need to get on it as quickly as possible, and you need competent help in doing so.

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  • What are the tax implications of 'paying back' an initial LLC investment?

    Three friends have started an LLC but as yet have no operating agreement. Two put up (say) $100K each seed money, the other provided $50K in tools and sweat. The seed money, plus new income, is covering current expenses. They are not yet paying th...

    Chad’s Answer

    Assuming this LLC is taxed as a partnership, the initial investment created "basis" for each partner equal to their contribution. If the partnership had losses in early years, these losses would have decreased each partner's basis -- acting as a return of that investment (loss is taken against the partner's other ordinary income). When the LLC begins to sustain, the LLC's income is allocated to the partners -- increasing their basis. When that income is distributed, the partner's basis is decreased.
    That said, the only way a "return of the initial investment" would be ordinary income in a partnership is if the partners were allocated losses to the extent of their initial investment and had no basis to absorb the distribution (which presumably would be from borrowing proceeds, as income would have increased basis again). In other words, a distribution is only taxable if it exceeds the amount of cumulative unreturned investment the partner has in the partnership/LLC.

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  • I have an LLC formed in the state of TN and I would like to operate in the state of IN under a DBA, what steps do I need to take

    What steps do I need to take. I am sure I can register this online but I thought I would ask a professional first. Thanks

    Chad’s Answer

    You simply file an Application for Certificate of Authority of a Foreign Limited Liability Company with the Indiana Secretary of State. The form can be found on the Secretary of State's site at: http://www.in.gov/sos/business/2426.htm under "Foreign Limited Liability Companies." If you want to use another name for the dba, then you will also need to file a Certificate of Assumed Business Name, also found on the Secretary of State's website under "Names." There are filing fees associated with both forms.

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  • Forming an LLC and want to leave additional room for future investors

    I am forming an LLC with 5 other people and want to keep 30 percent available for future investors do I, form and split evenly with the 5 members and when we add a new member for investment modify the agreement? or Do we keep 30 percent open?

    Chad’s Answer

    • Selected as best answer

    Reserving the 30% can be done by simply having a separate class of units -- that way you can issue units in the 30% class without diluting the 70% units. You need to find someone in your area that has expertise with LLCs and partnership tax.

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  • I petitioned the US tax court over a ruling on "real estate pro" status. What legal format should I use to reply to respon brief

    My petition deals with passive activity rules, the lack of an election to group all activities, and real estate professional status for 05 and 06. This is a small case, w/relaxed formal rules, but I am wondering if I should follow legal formats or...

    Chad’s Answer

    First, I have seen a bunch of these cases where the rentals were primarily 7 days or less and the IRS was pushing the wrong issue. I throw that out just in case that fits your fact pattern. Second, the IRS typically ignores the exceptions to the passive activity rules in the Treasury Regulations -- make sure you understand those rules. Finally, your chances to prevail are much better with counsel.

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  • I owe 30,000 in IRS tax debt for 2009 and I live off of social security disability . I have no assets except a 1998 minivan.

    What r my options with the IRS? Would it be detrimental to me if I got a job and no longer qualified for disability with social security ?

    Chad’s Answer

    You may be able to file an offer-in-compromise with the IRS to compromise your tax liability, or at least have it put in uncollectible status. I would recommend that you find an accountant or tax lawyer in your area to assist you. I do not recommend the companies that often advertise that they can settle your debt for pennies on the dollar.

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  • How do I take my name off an LLC?

    My brother and I own a business together. I have decided to go my own way and he will be keeping the company. How do I take my name off the LLC so I am no longer liable for anything the business does. We do not have cars, loans or anything of that...

    Chad’s Answer

    It may be as simple as assigning your interest in the LLC to your brother. If you and your brother are the only owners and if you are currently taxed as a partnership, then your departure will terminate the partnership and your brother will be left with a single-member LLC that by default will be taxed as a sole proprietorship.

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