| Offer In Compromise - shares/assets in small corporation? |
|
|
|
|
|
mpmusicny
New Poster
Cash: $ 0.45
Posts: 2
Joined: 28 Apr 2005
|
| Offer In Compromise - shares/assets in small corporation? |
 |
|
I am at present preparing an offer in compromise to resolve outstanding personal Federal tax tax debts. I am at the point of compiling my list of assets for form 433-a "Collection Information statement for Wage Earners and Self-employed individuals". Here's my question. Though i am now operating as self-employed, i have in the past done the same work as an employee of a small C corporation of which I own 94 % of the shares. There is no money left in the corporation, and it no longer does any business, but it owns the assets which I still use in my work as self-employed. Clearly these cannot be judged as personal assets, and under any circumstances I think they would be viewed as essential to me carrying on my business.
Having spent the afternoon studying the IRS guidelines for an OIC (boy was that a scintillating read...) it seems that according to these guidelines I would be expected to have the corporation's assets appraised and use that figure factored by my stake in the corporation as an amount to be entered under section 13 "investments". Absent any further information, the guidelines suggest that this amount can be included in any assessment of assets that could be potentially liquidated to pay off the debt. There seems no explicit mechanism in the application process for my dilemma - i am using tools owned by the corporation, of which i am the major stockholder. Yes, i could liquidate them for x dollars, but that would render me, as an individual, incapable of carrying on earning a living ( I am a composer, by the way, and all the tools are music or sound related equipment). If these tools were owned by me as an individual, the policy is more clear, that they should not be treated as assets that could be liquidated. I could of course proceed with my offer and include an explanation statement as to why i think my excess net worth should be reduced by the amount of the necessary assets, but i am attempting to get everything as watertight as possible from the get go - that seems like an obvious excuse for someone to reject my offer.
Any help gratefully accepted in advance...
|
Thu Apr 28, 2005 8:59 pm |
|
|
BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
|
Have you considered purchasing the assets from the corporation? You'd have to do this for a fair value, but it seems like it would clear matters up a bit... I may be missing an important point here, though.
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
|
|
Fri Apr 29, 2005 3:32 pm |
|
|
mpmusicny
New Poster
Cash: $ 0.45
Posts: 2
Joined: 28 Apr 2005
|
hi Jim,
Thanks very much for taking the time to reply. I guess the first problem that comes to mind with regard to that is that i have little money  i could, i suppose, set up monthly payments to the corporation, but my plan had been at some point soon to wind up the corporation (at which point the assets would be legally distributed amongst the shareholders, primarily me) and i would not want any ongoing financial arrangements to hinder that. I can't do that yet, as the IRS and the state have still to sign off on a final tax balance there also. Perhaps i should contact someone at the IRS prior to my filing the OIC?
thanks again,
malcolm
|
|
Fri Apr 29, 2005 5:29 pm |
|
|
|
