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About David

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    ATXaholics Anonymous
  • Birthday June 15

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  1. HELOC Interest

    In my reading and research of the 2018 tax law change regarding mortgage interest I keep reading that HELOCS will no longer be deductible. I also see that home equity indebtedness will no longer be deductible. However, other information says HELOCS used for improving a taxpayer's house are deductible. But these are various author's interpretations of the new tax law. Which is it? I don't see anything in the actual bill that makes this clear. The bill just refers to "home equity indebtedness". Does the term "home equity indebtedness" mean HELOCS not used to improve a house? Therefore, HELOCS that are used for home improvements are considered acquisition debt and included in the $750,000 limit? Or does the term "home equity indebtedness" mean HELOCS regardless of the use? Thanks for clarifying this.
  2. Good point, Judy. In order for this to be reported correctly, the amount paid by the TP has to be deposited to the LLC's bank account and reported as a gain on disposal. I'm sure there is a way to allocate the gain 100% to the other LLC member, isn't there? Thanks for your help.
  3. Thanks, Judy. So the S Corp would pick up the asset at zero basis? And the distribution is made at zero value to the LLC member who is transferring the asset to his S Corp? I know the TP wants to make the other LLC member whole by paying him something. However, isn't the other member made whole in that he was able to take 50% of the 179 deduction and won't have to pay a gain when the vehicle is sold at a later date? Thanks for your help with this.
  4. Thanks everyone for your help with this. There is no debt for the vehicle. The LLC is reporting as a partnership. I thought assets could be transferred out of an LLC with no deemed taxable event. Is the issue that it is a transfer from a 2 member LLC into a 1 shareholder S Corp owned by one of the LLC members? The TP who wants to transfer the vehicle to his S Corp is willing to pay the other LLC member for half the value of the food truck. However, since the LLC owns the vehicle, the payment would have to be to the LLC and not the LLC member wouldn't it? I understand that the cleanest way to report this is for the S Corp to purchase the vehicle. However, I thought there was a way to transfer the vehicle and not have a taxable event for either LLC member. Yes, I am planning to give the TP options which will include the S Corp leasing the vehicle from the LLC. Thanks for giving options. If there are other options for this type of situation I would appreciate any input. Thanks.
  5. TP has a restaurant in a two member LLC. He also owns other restaurants in S Corps where he is the only shareholder. The LLC purchased a food truck in 2015 and deducted sec 179 for the full value. Therefore, the truck is fully depreciated. The TP wants to transfer the food truck from the LLC to one of his S Corps that has catering activities. I can't seem to find any cites that address how this transaction should be reported and the tax implications of the transfer. What is the best way to handle this so the other LLC member is made whole on this situation? Thanks.
  6. Partners' equipment contributions

    Yes. My question now wasn't asking the same question I had in July. I was Okay with the help you, Jack and others gave me regarding transferring assets at the LLC member's basis and booking the difference between FMV vs member's basis as non-depreciable assets on the LLC's books so that the member's capital accounts could be properly recorded. My question now is what have any of you done in this situation when neither of the LLC members wants to go to the trouble of giving the FMV for the huge amount of assets transferred into the LLC? If the FMV is about the same as the NBV, then there shouldn't be a problem. But if it isn't approximately the same, then each member isn't getting the proper amount of capital credited to them. Sorry to cause any confusion.
  7. Partners' equipment contributions

    Thanks, Abby Normal for the link. That supports the treatment I want to do. However, since the LLC members don't want to assign the FMV to all of the assets, I'm wondering if it is a problem just to transfer the assets at NBV and continue the depreciation. Has anyone dealt with this situation and found that it really didn't matter? Thanks.
  8. Partners' equipment contributions

    They are and the depreciation is continued. However, the basis of the assets to the partnership is supposed to be the FMV at the date of contribution.
  9. I have 2 clients who used to have separate Sch C businesses and decided to form an LLC and go into business together. They transferred all of their equipment into the LLC. There is a huge number of items. I have the depreciation schedules from each of their prior year Sch C businesses so I have the net book values. Since there are so many assets, they don't want to go to the trouble of assigning FMV to each of the assets transferred in. Before I try to convince them to give me the FMV of each asset I want to know if there is a problem if I don't assign additional capital to each member based on the difference between FMV and NBV? I know that when the LLC sells the equipment, the gain will be greater to the LLC, which will be allocated 50-50 to each member anyway. Maybe the difference isn't material between that method vs.each member reporting the difference between FMV and NBV as gain on their individual tax return and the LLC reporting gain based on the difference between selling price less current FMV? Has anyone dealt with this issue before? How did you handle it? Thanks.
  10. Trac Lease

    Thanks everyone for your help with this.
  11. Trac Lease

    Does anyone have a cite regarding trac leasing of a vehicle? The only thing I can find are private letter rulings, which can't be used as a cite or to support tax treatment of a trac lease. My client, a S Corp single shareholder, is being told by colleagues that by doing a trac lease they are able to write off the complete cost of their SUVs if they use them at least 50% for business. I would think that if the IRS allows operating lease treatment for a vehicle that is being leased under a trac leasing arrangement, that only the business use % of the rental payments would be deductible and not the total rent payments. Has anyone dealt with trac leasing and have cites to support the operating lease treatment for the lessee? Thanks.
  12. That's what I would prefer to do. Thanks for your help.