Tax issues in an LLC

pcg

Joined
Jul 16, 2013
Messages
3
Reaction score
0
We hired a CPA to prepare taxes for 2011 and 2012.
Ours is a start up business (building a preschool)and so
there was no revenue in 2011 and 2012. Our CPA while preparing the
returns realized losses (30K in 2011 and 150K in 2012).
I was the tax matters member for the LLC and I had signed both the returns.
I had not reviewed the returns since I am not familiar with partnership returns.

One of the members got our tax returns reviewed by another CPA and found several errors
in our tax returns.
This member is now blaming me for not reviewing the tax returns and is going even further
calling this a "fraud".
I immediately asked him to get the taxes amended by this CPA (who found errors).
We have amended both 2011 and 2012 returns.

But this member is still not satisfied and is threatening action against me. What kind of
actions can he take and how should I prepare for this?
This is also hurting our business since he doesn't want to do business with me any more.
 
Joined
May 6, 2013
Messages
11
Reaction score
0
It was the member's job to see if the tax returns are okay or not. He can do much but do have a word with your CPA you have hired now and ask him the consequences.HE can utmost blame you on deliberately making errors in tax returns but then he also would also be in trouble in that case.
 

Samir

VIP Member
Joined
Aug 15, 2013
Messages
378
Reaction score
39
Country
United States
Not a good situation to be in. :(

I think what's most important in a situation like this is to find out the truth. You need to have your own set of books prepared (if they don't already exist), so you know what the numbers should look like. Then, you need to sit down and compare these with both sets of returns and find out if there are any material errors. If there's nothing that big, your partner may just be looking for a way out.

And this may be easier said than done, because if both of you signed on the loan agreement, your partner has to pay off their amount since both your capital accounts should be fairly small at this point. Then you have to close this llc and open a new one (according to one accountant I know), and I bet the bank will require you to assume the entire risk of the loan.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top