Leaderboard

I always print the worksheets (in ATX) for the lines on Sch D that show what's what and whose on Capital Loss carryovers and attach them to my copy and client copy. I don't print the crap worksheets like we've all seen that I can only assume are a way to justify fees by weight or something, but this information is important to have, just like depreciation schedules. I know some think it gives you a chance to save a client from leaving if they call to ask for information because you didn't provide it. Nah, they're gone. I don't want to spend time sending these things later. I have other things to do. Like TV and food.

Thanks for the laugh Rita, this is also a true story. When Timmy was in grade school the teacher ask him to solve a problem on the board, what is 2 + 2=?, Timmy went up there and wrote 4, the teacher said correct. All of a sudden a little girl named Mary raised her hand, the teacher called on her, what is it Mary, the correct answer is 2, the teacher baffled said, how is 2 + 2 = 2? Mary responded by saying, my mother said to only believe half of what boys say. Well Tim now as an adult came to see me this week, he had his own assessment on a couple of IRS billed he had received and somehow he was trying to convince me left and right that the IRS made a mistake and he did not personally (trust fund penalties for a couple of years) owe any money because it was the corporation who should owe the money. I still think Mary was right.

Now that you mention it... A DIYer came in recently for me to review her 2016 return because she has no idea what was wrong with it, and IRS sent her a refund she did not expect in May. She did not receive any correspondence explaining what was adjusted. She filled out the online PDF forms for 2016. 100,000 wages, 47,000 ordinary dividends, 60,000 Sch C loss, 95,000 long term capital gain from sale of fully depreciated commercial building and equipment, 38,000 Sch E loss (yes, there it was on line 17), SS benefits. I'm probably forgetting something, but you get the ideas: 1) Don't DIY. 2) If you're going to DIY (please don't), at least spring for software. 3) Hello?? (Did you really DIY?) She figured her liability was 23,000 or so. She said IRS sent her a refund of 11,000ish. With the passive loss disallowed and AMT, her liability was about 46,000. If she hires me to amend this mess, and she should, it will be a Merry Christmas indeed, no need to tell me to charge accordingly. I'm absolutely stunned at this one. More at IRS than her.

I tried to access through the online portal, but the system didn't like my username. (I've only used it for the last 8 or 10 years.) I called the number, and after several holds the IRS rep told me that there was a "problem" with my file and she had to pass it up for resolution. I'm supposed to get a E-mail with directions on how to proceed in 2 or 3 days. (This was a week ago.) She wouldn't even tell me what the "problem" was. I'm beginning to think that they don't like me. (The feeling's mutual.) Any ideas as to what might be causing this?

Catherine, when owners of a joint account sustains a loss, it still must be track because 1/2 of a joint loss is attributable to each, and that amount that is attributable to the deceased IS lost in the year's subsequent to the year of death. Basically, each person only gets their share of a loss. In the case of the question posed, if the husband predeceases the wife, the joint return in the year of his death will be the final year that the loss carryover can be used since the property that generated the loss was titled solely in the husband's name.

No, that is not correct. It must be tracked by whose loss it is, even on a joint return. On a joint return in the year of death, any loss belonging solely to the decedent can still be used if filing a joint return for that year, but the loss dies with the decdent and can't be used by the surviving spouse in future years. This article from The Tax Advisor is good and covers the losses in the 3rd paragraph and then farther down discusses each type of loss carryover under separate bold headings also. https://www.thetaxadviser.com/issues/2017/jan/carryovers-death-spouse.html

Senate approved early this morning (1 AM). House voting today after technical corrections. Expected to pass. President has indicated he will sign before Christmas. You fought the good fight on this on Jack, but it is happening. As soon as Corker and Rubio signed on, it was going to be a done deal. I made 4 calls last night to clients who will be affected. I will continue to review my clients situations and make pro-active calls to those that I think will be most affected under the new law. The rest I will discuss when I sit down with them to prepare their 2017 returns. Tom Modesto, CA

" this was IS a forum for the discussion of income taxes. That should include present tax law as well as proposed tax law." ^^ That is correct. It's understandable that some members may want to discuss this act's potential impact, and the title is perfectly clear so that anyone wishing to avoid discussions of pending legislation may easily do so. In all likelihood the legislation will pass and if that is the case, some of us will be doing more last minute tax planning to advise our clients on some of these changes. For those that have some time and don't mind the early effort, I don't think it hurts to get a start on understanding its complexities and effects so that we aren't starting from scratch days from now since we are so close to year end as it is.

The $3k limit on capital loss carryovers began in the 1970s. It has never been adjusted for inflation. In today's dollars, it would be worth a heck of a lot more than that. When it began, only rich people would have losses of that magnitude; in today's market you can lose that much in a week or day. If investing in Bitcoin, in an hour. Judy is correct that the loss belongs to the taxpayer and the spouse is not entitled to half. It expires when the taxpayer does. On the other hand, I agree that the IRS would never be able to figure that one out.

You'd think they could at least give you a fax number for the person you spoke with, who might then have a clue what the paperwork is all about!

Cch put,out a nice analysis today.

This topic just comes in a perfect time, a client sent me a copy of a notice they received today, according to the notice, they have an X amount of credit because they have not received their Form 944. I called the IRS right away, come to find out I do not appear as a third-party designee on any filed payroll tax forms for 2016 , this doesn't bother me, a simple POA could fix this, what bothers me, is that my client has never filed a 944, their payroll is significant, plus they have over 10 years of filing 941/940's and the agent could not help me over phone and recommend I put everything I told her in writing and to mail it in.

Yes, as I have been saying for several years, the IRS is definitely showing signs of systemic stress due to reduced staffing and budget.

They were afraid (and rightfully so) that repealing the mandate would throw the insurance markets into turmoil, so they are giving everyone a year to plan for it.

Roberts, I wondered if someone would bring up community property issues or divorce, and those are a whole 'nother ballgame. I rarely have to deal with community property issues, so I would defer to others here that handle that on a more regular basis. As far as this topic or tracking the losses over years, those are rules are covered in reg sec 1.1212-1(c) if you want to take a look at the examples included there. Also pertaining specifically to this topic is a private letter ruling (PLR) 8510053, and the Rev Rul 74-175 cited in the article I posted. For anyone that doesn't want to bother clicking the links, from the article I provided above, it says "Rev. Rul. 74-175 provides that capital loss carryovers expire upon a taxpayer's death and cannot be used on the estate's income tax return. The decedent cannot transfer a capital loss carryover to the estate because the decedent and estate are separate tax entities. A taxpayer's capital loss carryovers also cannot be transferred to the surviving spouse."

Yes, while they were hashing it out the past few months, I didn't pay much attention. But once the joint committee approved and Corker & Rubio got on board, it was highly probable. Senate has passed it, House will re-vote today. President will sign. It's time to review it and discuss it. I received a summary from Parker after the joint committee approved it and skimmed thru it, the first time I gave it any attention.

Someone will jump in here to tell me if I am wrong. The capital loss belongs to the husband, if the property was in his name. If the husband passes away, the capital loss is gone. You might want to research if they did commingle the property and created a joint loss, if the wife "owns" any of the capital loss, in case she survives her husband.

Whether it passes or not, I'm being inundated with calls and questions. I answer them with what is current law and what is proposed as of today. I already gave heads up to my business clients that use entertainment a lot, so that they would at least be aware of the possibility of a change as of 1/1/18. I was not aware of that proposed change until this weekend. If it does not pass, no harm done.

Well, first of all it wasnt an assumption. It was a question based on the information that has been provided (mostly by the media) so far as the proposed tax changes. Last I checked this was a forum for the discussion of income taxes. That should include present tax law as well as proposed tax law. If you have better things to do then why did you bother to grace me with your brilliant reply?

We are all going to be looking for all the new rules. That $500 credit is going to be one of the things we are going to have to look up the rules for. Tom Modesto, CA

Ahh I missed that. Thanks for the reply! Jack, as usual, you are extremely helpful

Their is a new $ 500 credit available for dependents who no longer qualify for the CTC. Also the old 10%/15%/25% brackets are now 10%/12%/22%. The results vary client by client.

I think we're all getting confused about when taxes are imposed and the due date. For property taxes, if you already have the bill the taxes have been imposed. You can pay them anytime you want up to the due date. In our state RE tax bills are sent out July 1. You can pay them all at once or half by July 31 and half by Jan 31. In FL, RE tax bills are sent out in November and are due by the end of March. In both cases, the taxes have been imposed. I am definitely going to pay my RE bill due in Jan by the end of the year. After all, I could have paid it all in July if I was so inclined. As for ES payments, the IRS uses quarters and as far as I know so do the states. The taxpayer self-assesses his or her tax liability and typically pays it quarterly. Some people make one payment in April so they don't have to remember it three more times. Some go away for the winter and make their forth-quarter payment in December so it doesn't get forgotten. The payment is due by the end of the quarter, but that doesn't mean it has to be paid the last day. It can be paid anytime during the quarter. Think about it: If someone makes their 3rd quarter ES on Sept 16, it's applied to the 4th quarter. Although the tax is self-imposed, I would say it is due anytime during the quarter. I am making my final state ES payment in Dec, two whole weeks before the due date.