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This is a great reminder that many should be filing, even if no requirement. We have been doing so for quite some time for our disabled daughter, for this very reason (sets the clock). She does a small amount of paid work for me each year, so her income is <$500. Once she is no longer subject to means testing, she will hopefully have assets and income which will trigger required filing, so we want to prevent look back issues once her first "major" return gets filed.

Thanks Judy. That was my thinking too. I'll advise the client so and probably file. She was advised by the broker rep that she may have to file and pay some tax.

I would look at Form 8995-A, Schedule D.

In determining gross income for the filing requirement, gains but not losses are used in that determination. It is not the proceeds, but the gain that is taken into consideration. That being said, even when the basis is reported to IRS and no gain exists, the AUR will be using the sale side only and this new client may receive a CP2000 in about 18 months. You should explain the filing requirement to the client, and personally I'd advise this client to file a return to avoid the notice. Even without an extension, there shouldn't be any penalties assessed since no tax is due and the client doesn't actually have a filing requirement. If penalties are assessed, those should be easily explained and abatement requested. Filing also establishes the statute of limitations date in the event that you are missing some piece of income from this new the client. What about a state filing requirement?

Wisconsin changed their law for 2023 and in now allowing the $3000 deduction; the same as Federal.

It goes on the 1040, Other Income.......

For my farmer friends., I have a farmer who received a 1099 patr with entry in box 7 and 8 being the same number as in box 1. I put box 1 on sch f but where do I put box 7 and 8 in atx or form 8995?

Is there a link to this recording?

Another twist on this. Adult. Gross proceeds over the limit but no taxable income. Code C reported so should a return be filed? And it's a new client, there was no extension filed. So it will be late. No tax due. But Gross proceeds $250,000. Basis same, matured CD inside a brokerage account.

https://brasstax.com/products/form-3115-line-by-line-correcting-depreciation/

In need some help with filling in form 3115. Willing to pay someone to help guide me Thanks Gene

Sara has a great view. Still, there is something to be said about all remembering advice from anyone is really only as good as the E&O backing said advice. ESPECIALLY in accounting and tax practicing, since the odds of a mistake being caught are actually slim, many are fine pushing limits/living in the grey, some don't mind being wrong and asking for forgiveness, and so on. Add in the advice only being able to be as good as the information being fed, and there are often errors and misunderstandings. Oh, don't forget, someone called someone, and the someone who picked up the phone gave advice, so it must be true.

Yeah, it's a complicated area of tax law that I'm sitting here wondering if I ever screwed one of these up.

Thank you. I'm glad the article was from the tax advisor and not the IRS.

If you read the article, there is an interplay between the step up in basis and the passive loss allowed ,otherwise there would be a doubling of tax benefits.

https://www.thetaxadviser.com/issues/2017/jan/carryovers-death-spouse.html Death is treated like a sale of the property and therefore triggers the allowance of the passive losses. However, the amount of carryover that can be deducted must be reduced by the excess of the basis of the property in the hands of the transferee (the heir) over the decedent's adjusted basis in the property just before death. In other words, the amount of loss equal to the step-up in basis at death is not allowed to the decedent or to anyone else because the heirs receive that tax benefit from the step-up in basis. If the decedent's PAL carryover is less than the step-up in basis, none of the carryover is allowed on the final return.

High-income elderly couple rented out a residence when they were younger. During the time they rented, they accumulated $215,000 in losses they were unable to take because of high income. Never sold the property, but instead moved into the home that they formerly rented. They have been carrying the impounded losses on 8582 ever since. 1. Can they take advantage of the $215,000 without renting other property at a profit? (I don't think so). 2. If they die (they are in their 80s) and leave the property to their beneficiaries, can the impounded losses be taken when the estate sells the property, or does the $215,000 die with them? Thank you in advance...

totally agree!

That's why everybody was got off guard. ATX didn't prepare the software. I believe they are working on an update as we chat. Other sanctuary states might follow suit next year or in the years to come.

ITiN = Not eligible to work, so why not like there be any earned income credit possible?

I don't like the practice of criticizing other professionals because it's not, well, very professional. When a client brings me a return prepared by someone else, I never say "that person messed up," but maybe something like "s/he did this differently than I do" or the code changed that year or whatever. We never know if the prior person had all the docs the client brings us, or if the client answered questions the same way. I respect letters after names, like EA and CPA, because I know how hard it is to earn them. And all of us, letters or not, make mistakes. Think of McDonald's commercials. They never even mention competitors (unlike their competitors) but just highlights how wonderful their own offerings are. I disagree and have only been there maybe once in five years because it was the only quick place around, but that doesn't mean they don't know how to cook.

Praise Freyr!

Praise God!

Depending on the overall amounts, even 2k could well be within the "I see it, but the client is not going to pay me to track it down and is fine with it" number. Especially if the effect is internal only (wrong expense account for instance).

I, personally, chase interest on short period CDs. It is fun and adds spendable cash to our meager retirement income. My tax and accounting business pays for itself and purchases the CDs. Win, win!