My question involves business law in the state of: Missouri
I want to apologize in advance--I have many questions about an LLC my spouse was/is involved with. We have a lawyer and are pursuing legal action, but I want to be certain we are heading in the right direction!
There are lots of odd/unique facts to this situation. I'll start with what I hope are relatively simple questions.
Background:
This is about a 3-member LLC, begun as a husband/wife business in 2008, adding a brother as property holdings increased. "Dirk" drew up the operating agreement, listing himself as the "Managing Member. This was filed at the beginning of 2013. As a licensed RE agent, Dirk provided day to day management of the LLC rental properties and investigated potential investment properties. All purchases were made by the couple, "Julie" and "Dominick." Dirk provided $0 capital or properties.
Near the end of 2013, Dirk called a meeting so he could leave the LLC. He'd realized his debt was huge and suggested they call everything even with him taking 50% of the proceeds of a flip and two additional properties (he OWED money--this was a bold request.) His terms were loosely agreed upon, I don't believe detailed minutes were taken however. Two weeks later, Dom told Julie he was divorcing her. In no time, Dirk said he hadn't wanted to leave the LLC, and that he was willing to sue both partners to get his share. He even threatened Julie with eviction from her LLC deeded home and claimed the many thousands he owed the couple AND the LLC, was all salary.
Most of my questions are about Dirk, as he walked away with nearly 1 million in property and unpaid loans by being a 3rd party respondent on his partners' divorce decree. I believe there's problems with fraud, fiduciary duties, tax evasion and I-don't-know-what criminal elements.
Questions:
1. In looking at the books, Dirk charged daily meals to the business, usually lunches, some fast food, but mostly $20-$30, and some $50-$60+ lunches. It's possible he discussed business at some of these, but he's provided no documentation. Only debit and credit card charge statements show the expenses. He may have had an independent contractor with him to assist with repairs on a unit that he included on these lunches.
His daily travel was within a limited portion of a metro area, probably never more than 60 miles from his residence, never overnight.
Are these allowable expenses under IRS guidelines for 2013? (I never took these kind of expenditures with my previous business because I believed they were not allowable.) How about if he ate with the contractor? If he took another property manager out to lunch? If he took his family to dinner?
2. The LLC agreed to purchase a truck to hold/transport maintenance supplies. Dirk made the agreed purchase, but registered it in HIS name while the LLC paid the insurance for 2013. Dirk took over the insurance after that since the LLC was going to split in 2014 with the anticipated divorce.
Dirk later disposed of the vehicle without providing any records. I know this is a problem, I'm not sure how much of one.
3. Is it allowable to charge all fuel expenses to the business as he drives this vehicle? No mileage was recorded to my knowledge.
Any helpful thoughts or suggestions are appreciated. There's so much more, I'll continue to try and break it down.
Thanks!
I want to apologize in advance--I have many questions about an LLC my spouse was/is involved with. We have a lawyer and are pursuing legal action, but I want to be certain we are heading in the right direction!
There are lots of odd/unique facts to this situation. I'll start with what I hope are relatively simple questions.
Background:
This is about a 3-member LLC, begun as a husband/wife business in 2008, adding a brother as property holdings increased. "Dirk" drew up the operating agreement, listing himself as the "Managing Member. This was filed at the beginning of 2013. As a licensed RE agent, Dirk provided day to day management of the LLC rental properties and investigated potential investment properties. All purchases were made by the couple, "Julie" and "Dominick." Dirk provided $0 capital or properties.
Near the end of 2013, Dirk called a meeting so he could leave the LLC. He'd realized his debt was huge and suggested they call everything even with him taking 50% of the proceeds of a flip and two additional properties (he OWED money--this was a bold request.) His terms were loosely agreed upon, I don't believe detailed minutes were taken however. Two weeks later, Dom told Julie he was divorcing her. In no time, Dirk said he hadn't wanted to leave the LLC, and that he was willing to sue both partners to get his share. He even threatened Julie with eviction from her LLC deeded home and claimed the many thousands he owed the couple AND the LLC, was all salary.
Most of my questions are about Dirk, as he walked away with nearly 1 million in property and unpaid loans by being a 3rd party respondent on his partners' divorce decree. I believe there's problems with fraud, fiduciary duties, tax evasion and I-don't-know-what criminal elements.
Questions:
1. In looking at the books, Dirk charged daily meals to the business, usually lunches, some fast food, but mostly $20-$30, and some $50-$60+ lunches. It's possible he discussed business at some of these, but he's provided no documentation. Only debit and credit card charge statements show the expenses. He may have had an independent contractor with him to assist with repairs on a unit that he included on these lunches.
His daily travel was within a limited portion of a metro area, probably never more than 60 miles from his residence, never overnight.
Are these allowable expenses under IRS guidelines for 2013? (I never took these kind of expenditures with my previous business because I believed they were not allowable.) How about if he ate with the contractor? If he took another property manager out to lunch? If he took his family to dinner?
2. The LLC agreed to purchase a truck to hold/transport maintenance supplies. Dirk made the agreed purchase, but registered it in HIS name while the LLC paid the insurance for 2013. Dirk took over the insurance after that since the LLC was going to split in 2014 with the anticipated divorce.
Dirk later disposed of the vehicle without providing any records. I know this is a problem, I'm not sure how much of one.
3. Is it allowable to charge all fuel expenses to the business as he drives this vehicle? No mileage was recorded to my knowledge.
Any helpful thoughts or suggestions are appreciated. There's so much more, I'll continue to try and break it down.
Thanks!
LLC Partner Deducting Daily Lunches and Possible Fraud
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