Booklet 656 Form 433-b

Form 433-B

Booklet 656 form 433-B is needed for those business owners that have businesses that are any other entity than sole proprietorships. This form is used to determine the minimum offer you can make the IRS when attempting an offer in compromise, that is unless you’re able to provide evidence that would lead the IRS to think otherwise.

Completing the form

Section 1: In setting your minimum offer, Form 433-B will first seek some basic data regarding the entity, like its employer identification number and frequency of tax deposits. This form asks for the identity of all partners, officers, LLC members, and major shareholders associated with the business.

Section 2: Next, the form asks for business asset details. This includes the company’s banking accounts, investment accounts, and notes receivable. Additionally it requests facts on the business’s real estate, vehicles, and equipment. However, in reporting their worth, the irs permits you to exclude your equity in any income producing assets.

Section 3: In section 3 you are to provide information regarding your business income, such as average gross monthly income (supported by corroborating documents).

Section Four is where you will give the details of your business expenses. This would be details such as, your average gross monthly expenses of the more recent period 6 — 12 months (all supported and verified). And, if you do include a profit and loss report for the period, you can give an average amount here.

When calculating an offer

There are two ways of calculating the offer amount, this depends on whether you plan to satisfy payment of the offer within a period of 5 months or beyond a 5-month period. If you arrange to pay the offer in full in 5 months, the formula for repayment is as shown below.

[ 48 x Business income in excess of expenses] Total available assets

If you do need an amount of time extending beyond 5 months, you will then use the formula as it appears below.

[60 x Business income in excess of expenses] Total assets available

As a minimum contribution amount you must exceed zero, regardless.

Section 6

In section 6, you can expect to give details like whether your business has filed bankruptcy before, and whether your business has any other affiliations that might owe money to your business. In this section, you will also be asked to disclose information on whether you have sold any assets at a discount in these past ten years.

See more of our offers in compromise guide at:
Huddleston Tax
Accountants and Tax Preparers in Des Moines
Accountants and Tax Preparers in Edmonds

Burien CPAAbout Burien CPA
Burien CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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  • Huddleston Tax CPAs / Huddleston Tax CPAs – Burien
    Certified Public Accountants Focused on Small Business
    14900 Interurban Avenue S, Suite 271 / Tukwila, WA 98168
    206-229-7169

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve: Tukwila, SeaTac, Renton. We have a few meeting locations. Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.