TAX CHALLENGE: Corporate Acquisition via Layered Equity Stakes – Incorrect 1099s
Chester founded a software development company in 2003. Through the years, he invested funds as needed to grow the business.
Chester’s company thrived and was eventually bought out by a much larger public company, resulting in quite a nice profit for Chester. When he received his 1099s for the tax year during which the buyout occurred, the numbers just didn’t seem correct – his tax liability was much higher than expected.
Chester came to us for an ASAP review and assistance since the deadline for tax remittance was looming large and soon.
OUR SOLUTION: Determine the Correct Numbers and File Accordingly
After a series of meetings with Chester, our detailed analysis proved the amounts on the 1099s were incorrect. The layering of his equity investment over time had not been properly computed by the bank issuing the 1099s. We advised Chester on the correct computations, supplying him with documentation that made his case. Chester took this information to the issuing bank. Although his case was made successfully, the institution was not able (or willing) to correct the forms within the time period required to enable Chester to avoid paying penalties and interest on his tax liability. Supported by our multiple detailed analyses to confirm the facts, we filed Chester’s tax return using the correct figures.
RESULT:
Our fast response and the confirmable corrected information saved Chester over $100,000 in tax payments. No blowback occurred from filing the return contrary to the 1099s.
