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I'd enter this on the balance sheet in the Other Asset section with the caption "Asset Not Yet In Service". Then in 2022, make a journal entry to debit the fixed asset account, credit the Other Asset to remove it, and put it on the depreciation schedule.

Our house has a big ole pear tree planted when the house was built (as was common back then - neighborhood is peppered with pear, apple, and peach trees in back yards). I have since planted two dwarf apple trees and a second dwarf pear tree (big tree is definitely showing its age and won't last forever - 70 years is a long time for a fruit tree). Also had a peach but the rabbits girdled it one winter (they got through my not-sturdy-enough fencing) and it died. Keep meaning to replace it, the question is where to put it 'cuz the original tree's spot isn't as good due to some changes a neighbor made. We get about 300# of pears from the one big tree and give them away by the bushel in September. We can only eat, and I can only can, so many, after which it's give away or throw away. The dwarf apple trees keep us in fresh, cooking, and sauce apples until....... about now. I have just enough left from last fall to make one more cake, and then there won't be more until September/October. The dwarf pear is a relatively new tree, and this is the first year we have pears on it. Need to thin them out, so it won't over-tax a growing plant. Another advantage of the dwarf trees is that they only get to about 8' tall. Yes, you can prune standard trees to that height, but you need to be a lot more aggressive and on top of them, and prime pruning season is late Feb/early Mar and for some unknown reason that time frame tends to be a tad bit busy around here!

https://www.businessinsider.com/photo-irs-why-refund-checks-delayed-paper-unprocessed-tax-returns-2022-6 can you imagine - this is 1 office in a building of the IRS x how many centers - I wonder if this was the neatest one? I posted this for my clients that are waiting... for their 2021's to be done and their 2020's and amends and retention credits and D

That's what tax preparation feels like...

Interesting situation. Even if it goes thru probate, isn't an executor appointed and doesn't someone end up inheriting the stock?

Just looked it up. 3 years, 3 months and 15 days from the end of the calendar year (April 15th of the fourth year). After that it is lost. In your client's case, only 2019 and later will be added to their SS record. I learned something new today, I assumed you would get that credit as long as you filed the returns before you filed for SS benefits. Thanks for the post. Tom Longview, TX

Another useful thing: A taxpayer can go to irs.gov and request a transcript be mailed to him. Very easy process, and I don't mind doing it for them while they read and approve entries, because let's be honest, they have trouble with everything, or we wouldn't need a transcript, and I need the correct document and year(s). They get the transcript by USPS in a few days. This is a good solution for me. Won't work well if they've moved, as one of the entries is mailing address on last filed return. irs.gov Get Your Tax Record Alternative to Requesting a Transcript Online

Must be a fun work environment for the employees. I assume the firm will be holding some team building exercises, potentially behind bars.

Not quite. Rather, it's because the answers actively HIDE until you give up and ask. Then they pop out at you, snickering, as if they had been there the whole time.

Sometimes I think I post on here just to bring stuff to my own attention.

I have run into this several times before and I just debit the normal fixed asset account and enter it on the depreciation schedule when the asset goes into service. Works just fine for me.

1120S filed for full year. 2 K-1’s issued, one to deceased for the period 1/1-DOD, 2nd to estate for the rest of the year.

So she can reach the fruit on the bottom branches..... Tom Longview, TX

I agree with Lion. You have no idea if this taxpayer would benefit from becoming an S-Corp. Most likely not if business and personal account is intermingled.

It sounds more like a hobby than a business. Why would you want to draw attention to it by filing an S-election now, hoping to make it retroactive? Why does the company want to be an S-corporation? It's going to cost them a bundle to have you do their past bookkeeping, payroll, financial statements, personal returns, etc. I hope you have a huge retainer. Can they afford you? Can they afford all the P&I? If they came to me and insisted on a much-too-late S-election, I'd send them elsewhere! If they came to me to make a fresh start, I'd work with them to treat their casual hobby/business like a real business. I would not rewrite their history. Depending on their income and long-term plans (do they want to take in a new shareholder, for instance?) I might suggest an S-election for 2023, after I've seen them make the changes I'd require. If you have time to redo 2022, you might make a late election for 2022.

I have not used Lacerte, but from my understanding, you will be losing a lot of bells and whistles. But getting away from Intuit can't be a bad thing. ATX user since 2000. Tom Longview, TX

I would explore letting the old corporation die and forming a new one. Why incur all those penalties for an inactive corporation. This would mean a liquidation of the old corp, so the question becomes, what assets are in the corp?

that means you, too, @BulldogTom and @Abby Normal, despite the short jokes.

I haven't done business returns for a while but why wouldn't the truck be on the BS as an asset? Depreciation or expensing of the asset begins when placed in service but it is still an asset currently, just not yet depreciable. I should think.

Ouch....This is one that could take up most of your summer and fall. Are you sure the corp was operating from 2012 until date of death? If so, I think you have a bigger issue than the depreciation schedules. Do you have income statements for all those years? If not, the books need to be produced (can you get bank statements for the years in question?). It may be that you can work out a deal with the IRS, but if it is a CA Corp, I don't think you are going to get out of all of the minimum corp franchise fees for all those years, and CA penalties. If the corp was operating and did not file, there is a big mess to fix. And the Corp has to be collapsed with the CA SOS to stop the fees from continuing to accumulate. Good luck my friend. I hope the kids have the resources to pay for the clean up of the mess their folks left them. Tom Longview, TX

I thought maybe they were making butter, or ice cream, and the sheep was doing the churning for them.

There are two options. The default method is to prorate based on the number of days of ownership. You can also make a section 1377 election to close the books on date of death and allocate per the actual time period of ownership. You need to determine which method will result in the least amount of tax. If the S Corp has assets which will be liquidated (especially real estate) the liquidation of assets and dissolution of the Corp need to be coordinated in the same tax period of the shareholder. Otherwise you might end up with a gain in one year and loss from stock in the next year.

UPDATE: Issue resolved. Taxpayer got her refund yesterday. No notice or letter from IRS as to why the delay, just sent the money to her account. Tom Longview, TX

I've heard from one of my professional groups that the IRS is considering a mid-year mileage adjustment. That will be so much fun breaking out mileage (that clients pull out of the air anyway) into the before rate and the after rate. I use MileIQ, so I have the my dates, and urge my clients to use it or a similar app or notes on their calendar (paper or electronic) or a paper log, but we all know which ones will not follow our directions.

We put in a succulent garden with various sedum, daisies, yarrow and Beekeeper Caryopteris along the driveway, and it's doing very well.

Catherine having dwarf trees makes me snicker.

"IR-2022-109, May 25, 2022 WASHINGTON – The Internal Revenue Service made an important enhancement to the “Where’s My Refund?” online tool this week, introducing a new feature that allows taxpayers to check the status of their current tax year and two previous years’ refunds. Taxpayers can select any of the three most recent tax years to check their refund status. They’ll need their Social Security number or ITIN, filing status and expected refund amount from the original filed tax return for the tax year they’re checking. Previously, “Where’s My Refund?” only displayed the status of the most recently filed tax return within the past two tax years. Information available to those calling the refund hotline will be limited to the 2021 tax return." Something actually useful.

I was deposed by IRS investigators in a criminal case. The investigators found a copy of my software on a seized computer and asked what my relationship was with the (now in the care of the government via incarceration). Once I explained the connection, I was thanked and left alone. The person was convicted of fraudulent return as they were filing for their clients (recent immigrants) and capturing their refunds, which has been improperly inflated via EITC. The convicted sent me threatening messages, even though I had no information for or against their case, but which the prosecutor likely found "helpful". The OP is a good reminder to research electronic record keeping regulations, and to try to ensure your actions do not give blanket search and seizure rights to the IRS. Not only for your client's protection, but simply to protect your ability to do daily business. As I have likely posted many times, not being able to provide PRINTED records, or simply acting in a way to show your record keeping is electronic, may (definitely in the past, and possibly with current regs unless they have been revised) give the tax agencies any time warrant-less search rights, and requires proactive notification to the IRS if there is any chance required data is unavailable.

I don't see why not if they pass the residency tests and never used it as a rental.

Who exactly is going to claim the deduction? The estate cannot claim the deduction, because it can only deduct donations that come out of income and then only if the will specifies. The "family" is how many people? Do any of them even itemize? This query may be all sound and fury that ends up signifying nothing.

I too have had ATX for 20 some years. I actually tried out Drake and didn't like it. ATX is a good software for a small business. I like that I input from a screen that looks like the form. But I started out old school filing in the blanks on a tax return by pencil. So I feel comfortable using the forms and not relying on input prompts. I haven't had any complaints (since that little issue in 2012.....) (2012?) (The older users will know.....)

And, a lot of high school kids listened to their friends and filed in the IRS portal for EIP3, which counts as a tax return. The kids get their free $1,400, but their parents' returns get rejected due to their dependent already filing a "return."

You stated that the funds were gone from the checking account. If cash was credited, where is the debit? It should be an asset, right? I'm not clear how the asset could be on a depreciation schedule only. What software is being used? Of course the depreciation is an expense debit and crediting the asset. I must be missing something here as it seems basic accounting, you know, T squares (I'm old school ).

It looks like a rubber buoy converted to a punching ... err, butting bag.

It's a slow moving train wreck headed downhill.

I refrained from making any comments about holding real estate in an S- Corp.

I believe that taking some cash out and creating boot would allow that amount of PAL to be utilized, creating a tax-free aspect to the boot. That would involve more planning though, and they also have different rates.

They carryforward and attach to the property(ies) received in exchange. It is because the property was exchanged in a nonrecognition transaction, not disposed of in a fully taxable transaction. It's under sec 469, sorry don't have the exact reference. It's the same section that says the PALs can't be used in other nonrecognition transactions such as 351 and 721 transfers and when a passive activity property is sold as an installment sale (PAL allowed as gain is recognized in that case).

If you would like to continue this as an extension of the topic, please do so via PMs.

Just for that, @Abby Normaland @BulldogTomyou two don't get any slices of the apple-walnut cake that I just made this morning. That'll learn you!

As distasteful as wide net casting collection is, like many things, there are two sides. Low collection rate or not, it makes some business sense to farm out collections for whatever fee they get for assignment, rather than taking a zero. The IRS is a business too... as are all tax agencies. (such as how many are looking at forced taxes, such as retirement deductions, as a profit generator with several companies offering turn key "solutions"). If not liable, and the letter is not backed by a court order, it could be a valid action to ignore it. In some ways, no different than the number of email and mail "junk/fake/fraud invoices" most receive on a regular basis. I try to remember to fall back on not volunteering anything to anyone. I just listened to a VM stating it was a courtesy call before receiving a registered collection letter tomorrow... I bet there is no letter arriving tomorrow.

The remaindermen need to contact their lawyer. But here are some articles about your topic: https://wernerlawca.com/who-owns-property-life-estate/#:~:text=While a life tenant cannot,over the role of remainderman. https://burnerlaw.com/who-owns-the-property-when-there-is-a-life-estate/ https://www.fendrickmorganlaw.com/a-life-estate-deed/ https://www.bowmanlawfirm.net/blog/selling-property-life-estate

You can also get a transcript mailed via the IRS automated phone system.

My guts says it's 100% taxable.

I wouldn't have left ATX except for ongoing problems with my state Business Entity Returns. I find Drake more reliable, with much better support. There is definitely is a learning curve because Drake is not Form based. Drake's efiling process is much quicker and more reliable. Drake does small frequent program updates which only take 1 or 2 minutes. Drake definitely releases forms and state returns much sooner than ATX. The hardest thing for me to get used to was Drake has very busy input sheets, which can result in overlooking a check box etc. Even now after 3 years, it takes me a bit longer to do a return in Drake. However that's offset by fewer problems and better support.

Now here's something you don't read about every day! "Agents from the Internal Revenue Service’s Criminal Investigation division raided the Houston headquarters of tax consulting firm AlliantGroup, seizing computer servers Friday, May 20, and prompting the firm to give employees the day off Monday until they were able to return Tuesday morning. The nature of the investigation is unknown, but is thought to be related to the firm’s work in securing tax credits and other incentives for clients, some of which have been challenged by the IRS, leading to lawsuits after the IRS denied the claims and clients refused to pay the firm, according to the Going Concern blog. Even though employees were allowed to return on Tuesday, IRS agents returned to the Galleria building where the firm is based and continued to search other floors Tuesday"

Interesting question for a tax lawyer. If you think they qualify, would they be able to take the entire $500K exclusion on each sale? Or should they get only a combined $500K exclusion on the two sales? Both may run into the problem that the exclusion is not allowed for any sale if the exclusion was taken on a sale within the previous two years. Of course, they could have made a single sale to a third party, who then sold the two units separately. Since they didn't, I don't know the answer.

I would guess that because it was W2 income rather than SE income and it was not your brother's responsibility to report it to the SSA. Tom Longview, TX