A past client recently called wanting me to meet their spouse and do some year-end planning. The spouse works for their parents in their business and owns 10% of the business.
But this is the parents show. They make all the business decisions and decide how all the money gets spent. Some large personal expenditures were hinted at. They probably were recorded as distributions but who has the tax liability for the distributions if profits are strictly outlined. The distributions would impact basis.
My past client knows how I like to work, with goals outlined and then a detail plan on how to get there. They believe that this is a far better approach, then wishful thinking and no planning whatsoever.
The current CPA does not meet with the client or do any year end planning with clients. But, the parents were still outraged at the idea of even considering switching CPA’s, I hadn’t even had the opportunity to offend them yet…
So there will be no business planning. But the spouse has a significant 2017 liability from the business that is vexing my past client; since it is now their debt as well. So we started a dialog about setting up a separate business for the spouse. The parents can hire the spouse as an outside contractor, the spouse will get real compensation and the ability to attract other business and grow their business and have control, where there is none under the parents.
So a meeting has been set. I will meet with the past client and spouse. We will discuss an IRS payment plan for the liability, check on withholding levels and see if an estimated payment plan is warranted or affordable. I will see if there is any interest in a separate business, or find out if there are plans and goals in mind. Then we will move forward if possible.