Ask a CPA

We’re happy to respond online to questions of general interest, so please enter your question below under “Leave a Reply”.  Of course, please do not take information we publish as professional advice for your specific circumstances (see our Terms of Use).

Because we’re responding in a public forum, our answers will focus on the most common cases.  This page continues the Q&A dialog which started on our website in 2005.  Please check the Ask A CPA page on the web site there for additional issues that were there posted prior to September, 2011.

If you’re considering engaging a Certified Public Accountant for professional assistance with your finances, please contact us!

12 Replies to “Ask a CPA”

  1. We sold our business in 2014. It was a landscape business registered as a LLC-Partnership with spouse. Our 2014 Partnership return sows income from form 4797 of about $30,000. Our capital gains is about $70,000. The LLC was in Oregon and the business income was from Oregon. We relocated to North Carolina three years age. Are the taxes paid to Oregon or North Carolina? Thank you.

    1. Hi, Dave! Thanks for writing in.

      We’re happy to respond online to questions of general interest, but please do not take information we publish as professional advice for your specific circumstances. See our main website’s terms of use which also apply to our responses here.

      In general, cross-state income of different types such as you outline will result in you needed to file in both states. In our recent experience, the states have become increasingly aggressive in asserting their right to tax you, too.

      Because the rules can be complex, we recommend that you contact a tax professional near you for assistance. Most accountants have access to multi-state tax software, and they can ask questions to make sure that your income is appropriately categorized and recorded.

  2. I would like to start a new nonprofit and 501 c 3. It is a small religious nonprofit with estimated income of less than 10,000.00 a year (990-N). Would it be ok to start it this late in the year?

    Thank you,
    RK

    1. Hi, RK. Thanks you for writing in (and our apologies for the delay… the site didn’t send us a note letting us know that you’d left a comment).

      Without knowing the specifics of your situation, we do not know why should not start up the nonprofit whenever you want. There can be a delay in the IRS 501c3 approval process, which can leave you with a dilemma when it comes time to file taxes for 2015. If you have not received the approval letter, then you should file as a corporation. But, most approval letters are retroactive which would mean you would then need to amend the filing.

      In general, if you are waiting for an approval letter you might want to wait until the filing deadline day in the hopes that the 501c3 status letter will arrive. Or, you may be able to pick your year end that extends your filing deadline until after the non-profit determination is made.

      Overall, we believe that people should do what they are called to do. They can keep an eye out to make sure that they conform to the tax law requirements, but they should not make business, personal, or religious decisions based on the tax code!

  3. I’d like to know if there is any issue with the following scenario:

    I own an S-Corp. LLC and we lease our production space in a town adjacent to my personal residence. Can my LLC pay for the installation of solar panels on the roof of my personal residence? The LLC would be allocated 100% of the benefit (future solar tax credits) so there would be a benefit to the business. Would the install of the solar panels be a legitimate business expense for the business?

    1. The short answer is a LLC probably cannot absorb the expense of installing solar panels on the residence of its owner. There may be details we don’t understand in the scenario you outlined, but the installation of solar panels at the residence of the LLC’s owner doesn’t appear to have a commercial rationale. The installation would have to have a business purpose for the LLC for it to qualify as a deductible expense.

  4. Hello

    I have a quick question. I inherited around 150K from overseas and if transfer that money to my US bank account, do i need to pay tax? I’m not a citizen but have a greencard and a SSN…and my dad was not a US citizen, so there is no SSN or any registration IRS can look up. I do Have a SSN and greencard though

    I live in TX – no state income tax

    Thank you

    1. Thank you for writing in with your question. We are happy to give general advice through our website. Of course, for a professional opinion for your specific situation, we recommend that you engage an accounting professional near you.

      In general money you receive from a foreign person as a gift or bequest is excluded from your US income. It’s not taxed. HOWEVER, you may need to file a Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts (https://www.irs.gov/uac/about-form-3520)

      More information is available on the IRS website at https://www.irs.gov/businesses/gifts-from-foreign-person .

  5. Hello,

    I am receiving General assistance and am in process of receiving SSI/SSDI retro payment. It may be as much as 50K. What is the best way to invest the bulk of these funds while I live on the monthly allotment?

    I live in California, have no other taxable income and haven’t had to pay taxes in 5 years.

    Thank you.

    1. Hi, Barbara.

      I am sorry that you’re going through troubles and need SSI/SSDI, and I hope you are able to take care of yourself.

      Accountants do not give investment advice. We talk about taxes and general financial information, but we do not recommend specific ways for people to invest. That profession is an investment advisor.

      But, more importantly, I would suggest first talking to your social worker or whoever helped you through the SSI or GA application process and check with them about the rules on the types of investments you can have without endangering your eligibility for ongoing government assistance. I know that some programs prohibit recipients from having even one cent in a savings account.

      I believe that your options may be limited, but really don’t know for sure. And, I worry that most financial advisors will not be aware of the limitations imposed by the GA and SSI rules.

      So, I suggest learning from your GA/SSI advisors what you’re allowed to do. And, you might also ask them what other clients in your situation have done with their retroactive payments.

      Good luck!

  6. Hello gentlemen,

    As Online Sales Manager for an Oregon non-profit, I have received messages from Amazon (where we sell a majority of our inventory) regarding their intention to begin charging sales tax for any sales made to customers in Washington State. This is probably a boilerplate letter to every marketplace seller on Amazon. Since there are only 4+ states that do not charge sales tax, a majority of Amazon’s third-party sellers (and certainly those using FBA and Amazon remote warehouses to dropship) WILL have to begin collecting and paying sales tax if they do not already do so. The exception appears to be 1) sellers located in and doing business solely out of a state without a sales tax and 2) sellers with no nexus in states to which they are selling (for example: if we were to sell an item which is shipped from Oregon to a buyer in Washington State. We do not have any operations, employees, or licenses to operate outside of Oregon. Therefore it seems to me that anyone ordering from us is making a purchase in Oregon, which does not require collection or rendering of sales tax. Amazon is going to begin collecting sales tax from sellers who sell and ship to Washington State. Amazon itself has been rendering sales tax to states that require it (by virtue of the location of their warehouses and offices) since March of 2017. We’d really like to know where we stand, in case we have to deal with Amazon or anyone else. What is your “take” on someone in our situation? Thanks!

    1. Thank you for writing in with your question. We are happy to give general advice here. Of course, for a professional opinion for your specific situation, we recommend that you engage an accounting professional near you.

      In general, states have become more aggressive in collecting sales taxes from online retailers. Many states have targeted Amazon and have reached agreements with Amazon to charge sales taxes on purchases on the site. It sounds like it’s easier for Amazon to assume you owe sales tax without checking the details.

      The CPA partner I spoke with about your situation suggested that you to talk to someone familiar with the details of Washington State’s sales tax. That person should also review your agreement with Amazon. It could be that you’re acting as a supplier to Amazon who is selling the product. Amazon does have a presence in Washington and would be subject to their sales tax.

      Or, your arrangement with Amazon could be one which validates your out-of-state status and Washington may not be entitled to tax.

      We just are not familiar enough with Washington law or with Amazon’s reseller agreements to be able to give a definite answer without doing some research.

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