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This is the way it should go. Good for you, Deb. And them. Trying to prove a negative (no, you can't do that because a, b, c) is one of the hardest parts of our jobs, in my opinion. I won a hobby skirmish yesterday with a potential new client who had five and six digit losses for years in a photography endeavor. Well, me and a good client handout won it. "I have receipts for all of this." "Yes, Sir, I know you do. It seems like what you lack here is a profit motive..." After the usual back and forth, I told him to go home, read this, and discuss with your wife [who has a large tolerance for losses and a nice salary in a good job] and see if you agree. He came back with his wife and they both said, "Yes, you are right, we can't be taking these losses, you're hired." I didn't know if it was them talking or the wine per diem for a minute there.

Cohabitating and sharing expenses is not the same as rental activity that someone engages in as an income-producing activity for profit. We'd help you with the input, but instead we are trying to keep you from making a mistake.

When he sends you that email, please let the rest of us in on this secret.

Back in the 80s it was widely circulated in FDNY (I think by the union) that we could deduct "destroyed meals." The thinking was if you had a fire call in the middle of the meal and returned in too long a time the meal would be inedible. I don't know if that would pass muster though. Can a police officer deduct a half finished donut (no pun intended), or a nurse deduct half a salad from the commissary, I don't think so. One particular experience I had in a not so pleasant neighborhood, was when we had a fire call, one of the guys forgot to close the apparatus door upon leaving. When we returned, our shoes were gone, the kitchen TV was gone, and a tray of lasagna was gone. I would think that would be a deduction.

I got a call yesterday from a client. Went like this: Client: Hey, I heard there's a new law that allows you to deduct everything you buy. Me: Everything? Client: Yeah, I got some emails that said they have passed some new law that nobody knows about. Me: Send me one of those emails. Client: This was some time ago, I probably can't find the email. Me: Oh, OK, let me know if you find anything on this. The kicker for this exchange is what the guy does for a living. He's an engineer in a really big power plant....

THANK YOU... WHERE IS THE DONATION BUTON.... THIS SITE IS SO USEFUL AND YES I AM SCREAMING.

Should I charge my wife rent for living in my house?

Hmm my college kid home for summer, I will charge him rent and get to deduct part of my house and depreciation, sweet. If they break up does the girlfriend get to stay there and share his bedroom anymore? Is there a lease? Is there a profit motive?

Thank you. I am glad to see that great minds think alike.

1128 will not be necessary. Your initial return will establish the year end. Make sure you put the dates of the initial year on the return.

I disagree. The business activity starts when the business operations commences that will generate its operating revenue. For example, if its a service or consulting business, the operations begins when services start being provided. For a retailer, business begins when the doors open to customers regardless whether or not a sale is made in its first days. I open a tax practice on Feb 1 and meet with my first client on that day and begin working on a return. Even if the return isn't finished until the 10th and I don't get paid until the 20th, I still was open and operating on the 1st of Feb.

This is in now way a rental situation. Even Stevie Wonder can see this one. Trying to skew the rules to reduce tax will not fly if ever looked at by the IRS.

Actually they both were OK with my way of doing it. Especially when I explain the rules. Both want It done right and the first one that had asked me about it has been coming back for years. I just thought that maybe I had missed something and wanted a second opinion

Jill, I think that most of us are looking at this as not that he is charging her rent, but that they are sharing expenses. If he had said I own the house, so you pay the electric and the cable bill as your share of the expenses, would you consider that as charging her rent? Basically, it seems to me that he is just saying you pay your part of the expenses by giving me a check, and I will write all of the checks to pay the bills since everything is in my name. But I agree with Pacun - you are closer to the situation than any of us, and if your feeling is that it is really a landlord/tenant situation then by all means report the income. But I think if I did that I would report it on line 21, and only deduct the expenses he can normally deduct on Schedule A.

If you are a firefighter or a tower controller in airport and you are over 50 years old, you don't pay the penalty. I think they are called "security personnel". See ILLMAS posting regarding "what my barber say". If you are 55 years old and you quit your job or they fired you, then you don't pay the penalty. 55 years old AND you separate from your employer.

Just please note it is different IF they are called on-duty "for the duration" of an emergency. For example, a nurse client of mine was called in, in advance of a big snowstorm (not today's!) to be working/available for three days. On her "off" shifts they made a hotel room available for sleeping, bathing, etc. And gave the nurses so called in a meals allowance. Had they not been given a meals allowance, I can see the cost of those meals - where they were stuck due to employer mandates and weather - as being possibly added to a 2106. That is a hugely different situation from dinner break on your regular shift, though.

Facts and circumstances matter, and Lion was on track with that. If someone is renting out part of a duplex or a room(s) and has access and use of common areas, then that is a rental situation. The girlfriend moving in and sharing the bedroom and all the rooms and contributing for groceries and other cost of running the household, well they are just living together and I wouldn't view that as him renting part of the house to her. If that is the case, then I agree with Jack, they are living together and no way that is a rental situation. Jill O, yes, most here use the ATX program, and our members probably know why I asked the question. We frequently have members of the public come on and ask for free advice, and we won't answer those, so I wanted to make sure you weren't asking for a "friend."

You have trained them well.

Is she renting a room in his house, half his house, what? Or, is she his girlfriend who moved in with him and is sharing expenses? I'm sure there's a joke in there someplace about personal use, but I won't go there.

I file less than 10 entities. All s-corps but one are on extension. One partnership isn't coming back and I'm really happy about that. Really, really happy.

Lisa Ihm is a good source for 1099-C information, and the preceding 1099-A: http://www.lisaihm.com/Contact_Us.html

This is a question for Rita! She might hug me for this!

Yes but your confirmation helps me. You and I are in total agreement and I did includen the dependent son's income in to figure the credit and it is causing them to have to pay back. But they are cool with this and are in the process of taking him off their insurance.

Were they "open for business"? If not, organizational costs and start-up costs to be amortized, right?

Deb: Needless to say, you are right, but you will not be doing those returns in the future. Send them a note next year, "Call me when you need me" Because the preparer that is giving them the "Nurse's Meals" is also giving the "Fireman's and Policeman's Meal's" deductions as well. Not withstanding the fake $14k Sch C so you can claim the full EITC.. Rich

One year Pi day was on a Thursday and our pastor at the time, in appreciation for our choir, brought several pies to rehearsal and made a wonderful poster of thanks. Best Pi day ever! We did have to wait until after rehearsal to eat, though. Tough to sing with food mouth (singers know what I mean).

At $135,000 I would take a hard look at. I see two issues, first would the corporation need to file amended returns if the tax is paid at the corp level. Secondly if the shareholders claim the refund is there an assignment of income issue. I believe you are off the hook on the first issue. Per Reg 1.446-1(c)(ii) "under an accrual method, income is to be included for the taxable year when all the events have occurred that fix the right to receive the income and the amount of the income can be determined with reasonable accuracy". The second issue opens a can of worms tried by case law where reference is given to Reg § 1.6012-2 Corporations required to make returns of income; which states "A corporation is not in existence after it ceases business and dissolves, retaining no assets, whether or not under State law it may thereafter be treated as continuing as a corporation for certain limited purposes connected with winding up its affairs, such as for the purpose of suing and being sued. If the corporation has valuable claims for which it will bring suit during this period, it has retained assets and therefore continues in existence." There are a number of cases you can look at. "SIGURD N. HERSLOFF, 46 TC 545". In this case, it was determined that an asset award due to a dissolved corp. was not taxable to the corp. but to the surviving share holders. The opinion reads: "Considering anew the issue in this case, we are of the opinion that since both dissolved corporations had ceased business, were without assets, were not being operated by the newly appointed trustees, the dissolved corporations must be regarded as fully liquidated and no longer in existence for tax purposes. Accordingly, we hold that the Commissioner erred as was alleged by petitioners in their assignment of error previously set forth herein." Here are a couple more cases you might look at: Beauty Acquisition Corp. v. Commissioner, TC Memo 1995-87 is a case where the IRS failed to prove "the corporation has valuable claims for which it will bring suit during this period". Therefore the income was not taxable to the corp. JAMES PORO, 39 TC 641 where a lawsuit asserting a claim of the corporation was started several years after distribution of all corporate assets and was filed in the name of trustees in dissolution of the corporation, the Tax Court held that the claim was asserted on behalf of the shareholders, rather than the corporation. Thus, the corporation was not subject to tax on the collection of the claim I think you have a strong case in favor of reporting the refund to the shareholder. I would discuss the regs and case law with him, and document that discussion. One thing that is certain is the corp. did not bring suit against any valuable claim per Reg § 1.6012-2.

Rita, When I is hungry...This is how I down my Per Diem.

Issue Number: IR-2017-61 Inside This Issue Winter Storm Extension: Many Businesses Have Extra Time to Request A Six-Month Extension WASHINGTON — The Internal Revenue Service today granted many businesses affected by this week’s severe winter storm additional time to request a six-month extension to file their 2016 federal income tax returns. The IRS is providing this relief to victims and tax professionals affected by this week’s storm (known as Winter Storm Stella) that hit portions of the Northeast and Mid-Atlantic. Business taxpayers who are unable to file their tax return by today’s due date (March 15, 2017) can request an automatic extension by filing Form 7004, available on IRS.gov, on or before March 20, 2017. Form 7004 provides a six-month extension for returns filed by partnerships (Forms 1065 and 1065B) and S corporations (Forms 1120S). Eligible taxpayers taking advantage of this relief should write “Winter Storm Stella” on their Form 7004 extension request (if filing Form 7004 by paper). As always, the fastest and easiest way to get an extension is to file this form electronically. The IRS will continue to monitor conditions and provide additional relief if circumstances warrant.

If it came from a joint return, I think it's 50/50 unless they agree to a different split. Or, unless you can trace the original funds to a different ratio. I would not get involved in the decision. I would ask them how they want it split -- explaining that it will be 50/50 if they cannot agree. Good luck. Are you really trying to prepare both returns when you already can see at least one conflict of interest? Make sure you have each one sign an agreement where you disclose your potential conflict. I'd send one or both elsewhere; I don't have time in March to deal with divorce issues.

you can see what the message is on your computer. look under e-file tab for display message. You don't have to call and wait forever.

But married couples can "split" gifts so that if mom and dad give their child $20,000 it counts as $10,000 from each of them rather than as being over $14,000 from one of them. If they choose to make that election.

10% Penalty Exception • Qualified public safety employees may take distributions from a benefit plan after separating from service at age 50 – Without incurring additional 10% tax (IRC § 72(t)(10)) COPIED FROM ILLMAS LINK ON ANOTHER POST.

Rfassett was correct that Form 1128 is not required. The initial year will be governed by its first filing. From the 1128 instructions under "Exceptions" - Do not file Form 1128 in the following circumstances: Corporations - A corporation adopting its first tax year.

1099-A is treated like a sales document. The sales price is the amount of the forgiven debt. Basis is calculated in the normal manner. This is NOT a cancellation of debt and Form 982 IS NOT APPROPRIATE. FMV may be listed on the form, but serves no purpose. If it is for the clients primary residence and there is a gain, the exemption may apply. If a loss, nothing else to be done. If the form is for a rental property, you treat it like you are selling it to the bank for the amount of the forgiven debt. FMV is only on the form for decoration. In the case of a rental property, with depreciation recapture, there may be a taxable gain. Cancellation of debt is an entirely separate unrelated transaction with different processes and rules. This only happens when Form 1099-C is issued.

I've had only one, and it was years ago. But, I see these questions more and more on message boards, so it must be getting more common. So, I'm trying to pay attention!

I am checking the box or filling out the other required forms and I have noticed that if you had two months without insurance, you don't pay the penalty but efile will read "accepted with message". Or if you have someone who is paying the penalty, then you will get that. If you ignore the whole health insurance question, then the IRS doesn't if you didn't have health insurance the whole year. On the other hand, you are saying, I didn't have health insurance but I qualify for an exception or I am paying the penalty, the IRS knows and suggest that you get insurance. To mitigate your frustration, this is what the code means: "On your return there is at least one person who didn't have insurance for at least one month by the fact that you claimed an exception or you paid the penalty, so please go to www.obamacare.com to get insurance".

And if you really hate my answer directly above and still insist that you are correct and the rest of us are wrong... And if you say that boyfriend isn't engaged in this rental for profit and still insist on reporting this, then I'd suggest that you look at Pub 527 for Residential Rentals under the heading "Not Rented for Profit" where it instructs how to report these kind of rental activities. Hint - these don't go on Sch E and have nothing to do with vacation home rules, but I still think BF is NOT "renting" anything! Link to the Pub 527 BTW, "guru" is assigned by the forum software based on the number of posts by members and has nothing to do with rating whether those answers are good or bad.

It's late and I'm tired so I did NOT go through all your numbers, even in my head. But in general, as long as you make taxable income the source of payments, you can take the ed credits. Who gets them and refundable or not is in the details that I'm too tired to parse out.

I think if open for business and had no sale this would be amortized but could it it be written off under the start up rules as long as they were open for business?

Dan, thank you so much. I will take time to read each of those cases soon. One other thing that's bothering me now after reading what you wrote about those cases is that the attorney advised the stockholder that it was not necessary to go through with a formal dissolution, to simply not pay the franchise tax to the Sec of State and let the corporation's certificate be not in good standing. I may need to check with the attorney on this, but if I recall, I think he told the stockholder that the corporation is considered out of existence after several years of not being in good standing, might have been 3 years. I have never liked that advice and told my client that at the time.

Actually, I have had 3 clients, with former residences turned into rentals, where the debt was forgiven and they weren't bankrupt, but they were insolvent. At the time of the debt forgiveness, all 3 were renting. I filled out the 982, no questions from the IRS.

I can't look away and stop laughing....I'm done for the day!

Bursar's Office printout of charges and payments (with dates) for the year.

It's not a simple return. You must have all the information to support insolvency. There is a lot of liability on the line for just marking the box and sending in. Only time it might be considered simple if a bankruptcy is involved.

I'm gonna just tap out at the weigh in and have my wine per diem.

Sorry, this does sound like a mess! The nondependent son could be covered under parent's plan up to age 26 even though he was eligible for an employer's plan, and you are correct that this does mean that he wasn't eligible to receive the PTC on his insurance through a Marketplace. Since you say that he isn't a dependent, is working, and is eligible for his own insurance, I'll assume for purposes of preparing the 8962 that this son is NOT part of the tax family, that his MAGI is not included in the household income. Next, you are also correct that the 1095-A amounts must be between the parents and the nondependent son under the special situation #4 reason described in the 8962 instructions. I do think you have to use a corrected amount for the SLCSP, and I don't know how to get that for someone in CA. If you are preparing this son's return, maybe try to work out how best to allocate to minimize the tax impact of their errors. You must be consistent in applying the allocation across all amounts for that month or months, and the percentage agreed on can be changed for other months. I don't know how you will explain that you are using a different amount than is shown for the SLCSP amounts before allocating. I haven't had that situation. Would you attach a statement of explanation? Lastly, for the dependent son that worked part-time, if he is required to file a return (filing for other than to recover withholding) you will have to include his MAGI on the 8962 because it sounds like he is part of the tax household. If parents do have to include his income, it may further reduce the amount of PTC they are finally allowed!! You are right, it is a mess. Sorry, I don't think I helped you, only confirmed that you are on the right track.

Every time i have had occasion to file a 982 for insolvency, I have done it with a return AND the IRS has later requested information in support of the insolvency (basically a balance sheet that shows more liabilities than assets.)

And Kiplinger is cutting you off!!!!!!! After 48 more last issues.

Your subject's funnier than mine (by the way, I like your Dr. Seuss quote very much), but regarding estimated tax I once inherited a new bank president as a client. I'd done his predecessor(a smart, reasonable man)'s return and he recommended me. The first year everything went swimmingly 'cause even though he made scads of dough he paid heavy estimates. Second year, same income, but, he had decided to forego the estimates (told me this a month before the deadline) and just go with the bank's withholdings. Highly P.O.ed at me and my projected high tax due, he asked "Why?" Told him "Well, see; if you make so much money then you're gonna have to pay so much tax and you did and you did not pay your estimates like you did last year. You still have all that paid-for rent property." He said "Well, so what? I've got banker friends who make the same as I do and they pay nothing; why should I?" I reply "Each case is different - your friends may or may not have things you do or do not have which can either help or hurt you." To no avail; he -- the town's leading financial wizard, advisor, analyst -- decamped and went off to, supposedly, greener and tax-free pastures. It's an odd thing; I've noticed over the years that the more money people make (usually starting around $100K) and the ego expands, the less tax they expect to pay -- as if success will or should provide an escape unavailable to mere mortals.