Three member partnership, LLC, one member gets "frozen" out...no k-1/W2 (nothing) received for 2022. Help

[ChristiTheGreat]

Summing it up: read my subject line + my HB is the partner frozen out, they stopped paying him, locked him out, etc. He was the managing partner with 33.34% ownership. The only thing he was guilty of was taking a dying company and make it an extremely profitable one in three years. So, frozen out. No return calls, no answered texts or emails.

My questions are: I have no idea how to enter the info for my HB K-1s, nor W2. How do I best input and file these things? I have become a quick study for tax and accounting purposes. I do well, but this has me stumped. I have no idea what to file, calculate, estimate, etc. 

Not looking for legal advice here. Solely what forms do I file, outside of the extension (already filed), and the statement of account which I'm watching to see when/if the IRS posts it for the 2022 year. 

Thanks to anyone who helps here! Is it wrong to want to reach out and hug you?!

[Mike9241]

if this is an S-Corp and he was paid wages during the year but failed to get a w-2, first you need to use the iRS website to see if a w-2 was filed https://www.irs.gov/individuals/get-transcript . You want to see if there is a wage transcript. an LLC operating as an S_corp can pay wages to its members. An LLC operating as a partnership may not.   

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let's say it's an S-Corp and HB got paid wages but no transcript. then contact the IRS at 

800-829-1040 for assistance. You must provide name, address (including ZIP code), phone number, social security number, and dates of employment. You must also provide your employer’s or payer’s name, address (including ZIP code), and phone number. The IRS will contact your employer or payer and request the missing form. The IRS will also send you a Form 4852. If you don’t receive the missing form in
sufficient time to file your income tax return timely, you may use the Form 4852 that the IRS sent you to file with your return. With form 4852 you reconstruct the wages HB got paid as best you can. Turbotax has this in at least some versions

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if the LLC extended its return it has until 9/15/2023 to issue the k-1. if one isn't received within a week thereafter there is no easy resolution.  I would suggest you report nothing for the K-1 and as a safeguard file form 8082 with your return. For this you should seek professional advice. Besides the question of HB having K-1 Income/loss there is a question of how to handle whatever tax basis he has in the LLC.  for an S-corp HB may also need to file form 7203 and include any required K-3  reporting which is not possible without the k-1/k-3. 

[ChristiTheGreat]

I am so grateful for your help here! 

He was issued a w2 where he received wages, and also the profits from this partnership were split 3 ways from there on k1s. To further complicate, he has a SEP that is  ET, (a publicly traded account), that also passes k1s on to their shareholders.  has 1099-Ds, 1099-Divs, 1099-Gs, 1099-Ints. And, lastly, regular 1099s.I have them all...except those darned partnership k1s.  And it is, as you pointed out, impossible to calculate or estimate anything (other than his net take home) without them. 

Thanks for your help here. Please allow me to recap for accuracy:

*log in to IRS website to get wage transcript. If its there, great.

If not:

*call IRS and report non-receipt of w2 & k1s. Be prepared with exact employment facts when I call. ie: dates of employment, addresses of employer/employee, etc.

* IRS will send me a form 4852, which I will use if I don't receive the darned k1s and/or w2s in time to file.

*The form 4852 is our best estimate of w2 wages earned and taxes paid. 

*Wait until Sept 22/23, if still no k1s received, dont file the k1s and include a form 8082 with my return for safeguarding ourselves. 

*This situation will require the help of a lawyer and a CPA to weigh the obligations with the risk in such a sticky situation. Both to protect us, and to ensure the remaining partners' actions don't also become our burden.

*Possibly, we will need a form 7203. There is a lot of grey area, here. Several things to consider, none of them simple.

Do I have that all correct? 

I have more questions, so please bear with me...

I already filed (with the state) his resignation from LLC. Paid the fee. Have the certificate in hand.

a) Is there any form I need to file with the IRS that states the same? 

Had an atty send the remaining partner a demand letter for the w2 & k1s. Also copies of the business records. Weeks now, no response.

a) Do I need to have a 2nd demand sent? (Maybe, paper trail?)

b) If yes, do you have any suggestions on different/imperative wording to be included?

c) Is there a way we can request the tax returns/statement of account that the business filed each year he was a partner? 

d) Are we entitled/authorized to get this? How?

One of the partners had taxes filed by 2 firms, one is now out of business and the other we were never made privy to the name of, so actually no clue who 2nd firm is/was.

e) So, would the IRS have access and give us a copy?

If not, then we are liable for it all, regardless, yes? Hm. Ok.

Random slew of questions to follow.....

*What happens if we never receive it and then don't file the k1s?

*What happens if the other partners didn't and don't file the business taxes at all?

*How would we go about doing it ourselves just to ensure they were at least filed?

*Where would we get the numbers for this to take place?

*Are there any forms you know of to support this?

Thanks again to any answers that post. I have been glued to my laptop for an unmentionable amount of weeks trying to clean this up on my own. There could not be a more grateful recipient of your help. There just couldn't be. Thank you 

[ChristiTheGreat]

and still patiently waiting...a year later 🙂

[KristinaK]

You summarized the plan of action well. Have you completed any of those items?

There is nothing to file with the IRS except for indicating that the Schedule K-1 was final for that year (if that was the case). 

A second demand letter is probably a good idea. I do not have a wording suggestion since it falls outside the tax advice but is rather a legal advice matter. 

Yes, you can request a transcript of the business tax return. Here is how to do that. 

Yes, the partner who was a member of the partnership during any part of the tax period can request the transcript. See page 2, column 2 under Partnerships here. 

As for your "random slew of questions", I'd say you have a good plan right now, follow it through and see how far you get. If you end up with no transcripts and no other information, you can use estimated numbers to report the income. It's not going to be easy to come up with those numbers, but a partner can probably request all the bank and credit card statements for the year, and recreate the financials to base their numbers on.