September 10, 2015
I just picked up a couple of large downtown Chicago Developers as a clients last month. They have several commercial properties downtown, medical facilities in southern states, and apartment buildings in Manhattan. The reason that they came to me was that they knew something was wrong. They just didn’t know what it was.
Being a developer tax accountant in Chicago Illinois is difficult because it is generally challenging to keep the entities separate. Normally you will have money in one entity that is needed by another. So you will have contra accounts that mirror each other in the individual entities. In other words you will have a Due To on one set of books, and a Due From on the other. And if they do not mirror each other exactly, you could have difficulties if the returns come under examination.
Another challenging portion of being a developer tax accountant tax preparation Chicago Illinois is the equity side of the accounting. If it is incorrect then the client may have difficulties deducting losses and borrowing for their next project. On a partnership tax return, the equity must match exactly at the bottom of the ending balance sheet on the partner accounts, on the ending balance of the M-2, and in total on the ending balances of the partner capital accounts on the K-1’s.
This is a matter of what we call basis. In very general terms, basis is what you paid for something. An example would be that if you paid $5 for a share of stock and the company goes bankrupt, you cannot deduct $7 on the investment. You can only deduct up to what you paid for the stock in the first place. If the basis on the returns is wrong, then the developer may not be able to deduct a reasonable loss coming off of individual properties.
The client’s ability to borrow additional funds in order to start or finish a project is also a matter of equity. The Loan to Value ratios required by lenders have increased substantially in recent years. With the current melt-down of the banking industry, lenders are watching equity very carefully.
If you are having problems with your developer tax accountant in Chicago Illinois or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
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Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.
September 10, 2015