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About David

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    ATXaholics Anonymous
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  1. TP's MFJ 1040 line 41 is negative $18 and taxable income on line 44 is 0. They are subject to the excess advance premium tax credit repayment on line 46 for $1,092, which is the only tax liability they have. They have a $249 FTC carry forward and a current year FTC of $267 for a total FTC of $516 on line 48. Form 1116 instructions and pub. 514 state that the FTC cannot be more than your total US tax liability (Form 1040, lines 44 and 46. So it appears that even though the foreign taxes paid weren't subject to regular taxes, the FTC can still be used to reduce the excess advance premium tax credit repayment on line 46. Form 1116 line 17 foreign source income shows $2,376, line 18 taxable income shows 0 and line 19 shows 1. The "1" on line 19 appears to be correct since the instructions say that if line 17 is greater than line 18, enter 1. In my research on this I read that the IRS has disallowed the FTC when the only tax liability was the excess advance premium tax credit repayment. It makes sense since the foreign taxes weren't subject to regular tax. However, the IRS publication and instructions seem to support taking the FTC even if the only tax liability is the excess advance premium tax credit repayment. Has anyone had this situation and found that the IRS disallowed the FTC for your client? I want to make sure my clients won't have any issue if they take the credit. Thanks.
  2. Judy, Thanks for your help on this. So my earlier statement that the Partner's capital is $400K and his basis is $100K is correct? I previously thought the capital attributed to the partner and the basis attributed to the partner had to be the same for contributed property. Thanks.
  3. Thanks, Judy. I guess I am confused by the basis vs. capital credited to the contributing partner. Everything I read says that the partner get basis for his basis in the property. Even the article you attached states this: So in your example does the partner have capital of $400K and basis of only $100K? Or does he have capital and basis of $400K? Thanks for your help.
  4. Ok, maybe my questions wasn't clear and didn't make sense. Let's try this. Based on my research it appears that the partner gets basis for the NBV of assets contributed and gets capital contribution amount for the FMV of assets contributed. Is this correct? So if a partner contributes property with a FMV of $400K and NBV of $100K how is this reported on the tax return, especially the balance sheet? Is it the following? Fixed assets at NBV and depreciation continues as was when in the partner's hands. The excess of FMV vs NBV is recorded as fixed assets but not depreciated. Or is this recorded as Other Assets? FMV of assets recorded as capital contribution. Therefore the balance sheet will be reported as follows: DR CR Fixed Assets (only $100K depreciated) $400K Partner Capital $400K The partner basis statement will show basis as $100K (not sure why the basis wouldn't be $400K). Thanks for clarifying this for me.
  5. Thanks, Judy.
  6. Since ProSeries doesn't include form 5500-EZ how do any of you file this form? Where is the best place to find it? Thanks for your help.
  7. Is the difference between FMV and net book value reported on the depreciation schedule or is it only recorded as a non-depreciable asset on the books? If the difference per asset is recorded on the depreciation schedule as non-depreciable, the amount will be considered as part of the gain/loss when the asset is sold. This doesn't seem correct to me. Am I off base here or is my understanding correct on how to actually handle this situation? Thanks for your help.
  8. A 50% member of a two member LLC agreed to sale his LLC interest to the remaining LLC member for release from debt liability. The date of the agreement is 4/3/17. I understand that a short year 1065 is due 7/15/17 and an extension should be filed by 7/17/17. All my research gives examples of more than two member partnerships/LLCs. Nothing seems to address what happens with the remaining sole LLC member. All information states that the partnership continues but in this case there is no partnership but a SMLLC. Therefore, after the short year 1065 is filed doesn't the remaining LLC member file a Sch C for the period 4/3/17 - 12/31/17? Thanks for your help.
  9. 2 taxpayers had schedule C businesses in 2016 and formed an LLC in November 2016. They both contributed equipment and other fixed assets to the LLC. I know that the partnership steps into the shoes of the partners as far as depreciating the assets. How is this reported on the asset entry worksheets? Do I use the partner's original purchase date, purchase price, accumulated depreciation, etc.? I don't see how depreciation would be continued without entering the original information. However, I'm not sure a purchase date can be entered that is prior to the LLC formation date. How have those of you who had this issue handled it? Thanks for your help.
  10. Thanks, Max. I see that in pub. 544 but does that qualify as ownership that meets the sec. 121 gain exclusion? Thanks.
  11. TPs leased their primary residence from 2010 until they purchased the house in 2013. They sold the house in 2014. I can't find any cites or information that says that the lease to own time period counts as qualified use for the gain exclusion. I want to make sure that the TPs don't qualify for the gain exclusion before making the assumption that the qualified use begins on the date they purchased the house. Thanks.
  12. Thanks. Is the lowest bronze plan premium for each child also considered in the calculation? I would think so even if they are covered by a government plan since they are counted in the household size. The links for the lowest bronze plan premium point to Colorado Health Connect. When I go to their site, the web page no longer exists. I found another site that gave the bronze plan premium for Colorado but it only asked the age of the head of the household and gave a $249 per month premium. It didn't ask how many family members. Is it reasonable that that would be the monthly premium for a family of 6? Thanks for your help.
  13. Parents don't have health insurance coverage but the 4 kids are covered by a government program. I am trying to determine if the TPs qualify for the affordability exemption. The instructions aren't clear (at least to me) whether the household size includes the kids or not since they are covered by a government health insurance program. The TPs AGI is $88K. If the household size is 6 for the affordability exemption calculation then the income is 275% above the poverty level. If the calculation should be based on a household size of 2 since the kids are already covered, then the income is well above the poverty level. It seems as though the affordabiltty calculation should be based on the household size of the number of people not covered when all other family members are covered by a government program. However, I don't see any clear instructions regarding this in any of the ACA material. Can anyone clarify this for me? Thanks.
  14. OK. Thanks for your help.
  15. Yes, the TP also had wages from employment before she started her LLC business. Judy, yes it appears all of the input is correct and complete. This is a H&W LLC and they both have enough basis to absorb the full sec 179 deduction. The LLC is their only business. So even though the TP wages on their 1040 and the profit from the business are more than the amount of the sec 179 deduction are they still limited to the profit from the business and that is why they aren't able to take the full sec 179 deduction? In other words, the first hurdle is the business profit and if the profit isn't enough to cover the sec 179 deduction the deduction is limited to the profit and it doesn't matter that the TP has W-2 wages. Is my understanding correct on this? Or should the W-2 wages also be considered when applying the sec 179 limitation? Thanks.