HomeMy WebLinkAbout1774EXHIBIT "B"
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January 12, 1981
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Mr. Kenneth M. Float, Jr.
Vice President
Southeast Banks Trust Company, N.A.
Post Office Box 1540
Fort Pierce, Florida 33454
Re: Estate of Perry Carlton and Projected I~et Operating
Losses - Fiscal Year March 31
Dear Ken:
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If the estate were to~pay the approved legal and administrative expenses
and cut off its operations Coday, its Ioss for this fiscal year would
approximate $145,000.00. The estate is earning approximately $700.00
per day or $21,000.00 per month and naturally the loss will be reduced
each day these earninbs accrue.
We believe that the loss will qualify as business loss which may be
carried back as a net opera~ing loss. Zf the Internal Revenue Service
should rule that attorneys' fees are not business-expenses for an estate
the loss would then be non-business in nature and could not be carried
back but could be distributed to the heirs as excess deductions at the
termination of the estate and they could deduct them against their •
personal taxes. ~
The estate could elect to carry this loss forward and distribute~it to the
beneficiaries or it caz carry the loss back to the fiscal year 1978 and
claim a refund of taxes approximating $83,000.00 or approximating 57% of
the amount ultimately carried back. (The carry-back could be_a lesser
amount because of interest earned after January 1 and until March 31.)
If the Court wishes to close out the estate immediately it might be better
to elect to carry the l~sses forward and distribute thez~ to the heirs
father than carry them back to get a refund of prior years taxes. I assucie
that it will take approximatety 90 days for the refund to be made if a
claim for prior years taxes is filed and the claim cannot be filed until
the tax return for the current fiscal year is filed. If the estate is
closed out completely a final return can be filed immediately, along with
the claim for refund of_prior years taxes. If it is kept open past the
end of the fiscal year, March 31, a claim ~could then be filed and the
estate could be kept open to collect the refund and distribute it.
It is possible that the losses distributed to the beneficiaries when the
estate is closed out would save them as much incame tax currently (for
the year 1981) as could be recovered by filing a claim for refund. Ho~-
ever l doubt that the i:~dividual beneficiary's average tax rate would be
as high as that of the esta~e.
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