income taxes affected by leasing
a friend of mine leased two acres in nov. and has been told by her accountant that she must file an estimated tax or face severe penalties. I would like to know what I must do to abide by the law.
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Replies to This Discussion
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Permalink Reply by Kathy Morgan on
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Excellent article. Also look at the following link if you want to "run some numbers" on your own. But hurry, if you do need to make that estimated paymeny you only have 2 days left.
http://haynesvilleshale.ning.com/forum/topics/2117179:Topic:94340
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Permalink Reply by R on
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Here is a situation...a friend's dad's estate signed a lease and received several hundred thousand dollars in bonus money. The kids or heirs then split the cash. My friend never received the check from the oil company. Instead, his portion came from a check from the estate. How will taxes apply in the situation?
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Permalink Reply by Kathy Morgan on
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The income will be reported to the kids/heirs on a K1 which should be issued to them by the estate after the estate return is completed. The estate should receive the 1099Misc from the oil company and then they report it on their return and pass it on down to the heirs via K1. The estate return doesn't have to be done until 15 March, so the heirs need to hold up on their personal returns until they get the K1. The tax rate is the same for the heirs coming via K1 or 1099Misc.
Kathy
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Permalink Reply by Kathy Morgan on
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Not a CPA, but an Enrolled Agent with the IRS. Kind of the same thing but for taxes, not accounting. I've been doing taxes for many years with H&R Block and do everything from the simple ones to the most complicated.
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so its safe to say the amount of taxes wont change just because the estate received the check and then cut checks to the kids...right? still sounds like each kid will still be taxed at 41%
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Permalink Reply by Kathy Morgan on
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Not necessarily 41%. Depending on how much the persons normal tax rate would be. The 41% figure is adding together the states highest rate of 6% and the federal highest rate of 35%. But if we are talking about large amounts of money (i.e. in excess of $357K) then yes 41%. See this link to another thread for some more details:
http://www.gohaynesvilleshale.com/forum/topic/listForContributor?us...
Kathy
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should he be concerned with the penalty associated with not filing an estimated return?is he ok since he has not received a K1 from the estate?
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Permalink Reply by Kathy Morgan on
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Read the link below in another thread, it basically explains how the penalty thing works. Everyones case is specific so I can't say right off hand. But I can tell you that the fact he hasn't yet gotten the K1 will not keep him from being penalized since as far as the IRS is concerned he owed the taxes when he received the check. There are several exceptions to the penalty for a one time lump sum like this and they are explained below.
http://haynesvilleshale.ning.com/forum/topics/2117179:Topic:94340
Kathy
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Permalink Reply by Keith Mauck (Site Publisher) on
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