GBurns

Aside from a "kickback" being unlawful, there is the issue of the fee being unreasonable and excessive. An unreasonable and/or excessive fee raises the issue of fiduciary breach. If you do a Google search on "excessive 104(k) fees" you will seek the many lawsuits etc that this has caused. The fee proposed would have to be excessive etc if there is enough "overage" to have any to "kickback". If I remember correctly the last similar case that I saw resulted in a criminal conviction.

Rutager Why not just ask him where he got his definition from before you start trying to find it ? That way you can tell him if it is applicable to this situation or not.

A cite depends on what you mean by company. To me a Schedule C implies a dba not incorporated or other entity but could also have no connection to the "company". A person never files an 1120S or 1120, only corporate entities do.

It is bpo not pbo. bpo = business process outsourcing/offshoring

Gary Why are you doing this rather than having it done by the Trustee/Schwab ?

I cannot imagine that the $$ difference offsets the loss of certification, audit and other representation, and errors & omission recovery etc etc. Paying 1/5th means nothing, it should be the $ cost and opportunity costs that are considered.

A side issue came to mind and I thought to ask about it. Isn't there a problem with a non for profit owning and controlling a for profit entity in such a close business relationship ?

In my experience physicians (including anethesiologists) were "historically" employees. It was not until the late 1970's that the trend started to outsource these functions. It still is a trend and not yet the norm as far as it seems. This is also suggested by the fact that there is this OP.

As Bird points out your scheme seems to serve no other purpose than tax avoidance. There is no economic substance and no business purpose for either the LLC or its members. As also pointed out there is the issue of employment status. If the LLC is setting the hours and working conditions etc the the members are employees. I would check the rules regarding Independent Contractor status. Receiving wages is not the sole determinant of employee status. It is ot being an employee of Company "A" that is the issue, it is being an employee of the LLC. And YES the DoL and the IRS does and can tell you with severe penalties that the so-called members are also employees of the LLC etc. So might your state regulators. Regardless of how fancy a structure might be, substance will always trump form. I have not looked it up, but your scheme seems very much like one of the schemes that was tried unsuccessfully in the Microsoft case.

Assuming that this is PHI under HIPAA etc. The insurer citing HIPAA is meaningless, without citing why and a solution. The solution is simply that the Plan Sponsor dictates that they must provide you with the required information because they have employed you as a service provider for their group health plan. The insurer then has you sign their standard Business Associate Agreement. Nothing new or unusual. It could be that the person you are in contact with is at too low a level to have a valid opinion which you should not have accepted anyhow. In a few cases where I have had difficulty or I just could not bother to explain, I simply had the state's Dept of Insurance cite their Unfair Business Practices (or similar) regulations.

The only things else that I could add are: I would go through all of 1.105 not just 1.105-11 http://benefitslink.com/boards/index.php?a...post&id=184 Do a Google search for samples of documents.

Who will be the employees of the LLC who will provide the labor and services required for Company "A" ? Who sets their hours and working conditions etc ? Who will be the employess of the LLC who will provide the services necessary to operate the LLC ? Who pays the expenses of the LLC ? Rent, telephone, licensing, bookkeeping, insurance etc ? Where are the expenses reported ? You said that the 1065 only has 2 entries. What happens in the LLC when either a member leaves or more are needed ? Being "heads up with eyes open" is irrelevant, if there is a miscalculation of employment status. IMHO these people very likely will be regarded as employees by regulators.

Does the separation agreement actually says split the 401(k) or does it say split the value or split an amount equal to the value ?

Isn't the value of the ESOP directly determined by the value of the company stock that it holds ? If that is so, How do you reduce the value of the ESOP without first reducing the value of the stock of the company ?

Don Just so that I can follow along, in case vebaguru finds the time to respond, What are these 'excerpts" that you mention and where was the reference made by vebaguru ? I thought that the sole purpose of the Sherwin-Williams link was to provide you with simplified definitions and explanations of the terms and issues that seem to be confusing you. Also, What did you cite that needs to be addressed ?

Aside from ethics, what cause you to be concerned ? What negative effect does a reduced evaluation have ?

This raises the question of what is the definition of "worthless" ? In the case of the ML sale, the illiquid securities were worth less than they were purchased for, but not worthless. I also wonder what do you do with a security if it is "worthless" under the IRC . Destroy them?? If it were a fixed asset, say a steamroller, there comes a time when the Depreciation Schedule says that it is written off. Is that the same as "worthless"? The fully depreciated steamroller still has value and cannot be just destroyed or given away. So what is the treatment of a security that has been marked to value of $0 ? Is that even allowed ?

In my opinion, it would be a great disservice to the reading community and to the OP to respond only to the question asked, and not expand as a responder sees fit. I can think of many many instances where the OP was either not clear or did not realize that they did not understand fully the issues surrounding their questions. I do not think that there are many posters who are accomplished writers or experts in every issue. Those limitations plus limitations of space etc means that it is very unlikely that any question posted (or response) is complete or even completely thought out, hence the opportunity to "add on" by a responder anything that a responder thinks might be missing or helpful. Responders are not professionals paid to give specific responses. Many like me are either trying to be helpful, trying to learn more, or both. For example, if someone posts " A client wants to allow disability insurance premiums to be pre-taxed under the cafeteria plan. Can he do this?" A simple question with could be responded to with a simple one word answer. But not adding on comments asking about the taxation of the benefits would, IMHO, be a great disservice. Aside from the above, in general since this is an open board, anyone is free to respond as they see fit. It is for the Forum Moderators to decide what is appropriate and what is not. In the same way, even though I cannot recall anyone else with your expressed attitude, I will defend your right to express your opinion. It is your opinion whether I agree or not is of no consequence.

How old are the children ? If minors, How would they be able to respond or apply for coverage ? Since the plan, apparently is fully insured, Isn't this a question for the carrier, first ?

Below Ground I apologize for apparently upsetting or annoying you by not giving a "direct answer" to your original post. I was only trying to help you. My assumption was, that like the vast majority of people, your experience with audits/examinations was limited, but that assumption is apparently wrong. In my experience most people complicate audits by arguing about broad issues, and even issues not under question, instead of keeping the focus narrow and specific. This is probably why taxpayers under audit are advised by many legal people, to not personally attend meetings when possible, never speak directly, but to let their representative do the talking etc. An audit should be treated no differently to a court appearance. Let the lawyer/representative do their job. All audits are by nature narrow, in that each item has specific applicable IRC, Treas Regs, procedures etc. Many issues might be covered but they are all narrow individual issues although some might be linked. They all have to be treated individually step by ste. But, I should have known that you knew all this and had the benefit of experience, which was why you wanted to expand the issue beyond what the auditor was thinking/saying and make the "Potential Problem" in your OP the issue instead. Again, I apologize.

Is an HSA used or offered along with this HDHP ? Is the HDHP executive only or is it all employees ?

A littlle old and somewhat simplistic, but still quite adequate: http://www.unclefed.com/TaxHelpArchives/20...L/p5980406.html http://edocket.access.gpo.gov/cfr_2004/apr...1.512(a)-5T.htm Also see IRS Pub 598 (I think).

I suggest that this client consider using a different successor trustee entirely. What will this successor trustee do, in the future, if one of the investments that are now acceptable, declines in value ? Periodically drop them? How many trustees might you end up with ? If it were me, I would reconsider using a trustee who cherry picks in this manner.

How can you either disagree or agree with the auditor if his rationale is not first known ? How can you either correct the auditor or correct you procedure if his rationale is not first known ? If the auditor is wrong, How can you what he/she is wrong about without knowing why first? In fact, How can you rationally respond to the situation if it is not first understood ? The auditor says use Box 5, but Why ? The auditor treats the issue differently than you do, again, Why ? You have stated what the auditor said, but you have not indicated that the auditor gave any reason, rationale or support for the position taken. How can you do anything with knowing those things ? Regardless of how any of us might have or would calculate anything would mean nothing to this auditor if his reasoning is coming from a different perspective right or wrong. And we do not know what that reasoning is.

Before it matters what you think, you should have a definitive statement from this auditor explaining what he/she thinks should be used and why. Anything else is irrelevant and futile.