Leaderboard

Here is a link to the Fact Sheet dated 4/20/18: https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act If you don't click on links, here is the text: New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act FS-2018-9, April 2018 The Tax Cuts and Jobs Act, signed Dec. 22, 2017, changed some laws regarding depreciation deductions. Businesses can immediately expense more under the new law A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. The new law also expands the definition of section 179 property to allow the taxpayer to elect to include the following improvements made to nonresidential real property after the date when the property was first placed in service: Qualified improvement property, which means any improvement to a building’s interior. Improvements do not qualify if they are attributable to: the enlargement of the building, any elevator or escalator or the internal structural framework of the building. Roofs, HVAC, fire protection systems, alarm systems and security systems. These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017. Temporary 100 percent expensing for certain business assets (firstyear bonus depreciation) The new law increases the bonus depreciation percentage from 50 percent to 100 percent for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. The bonus depreciation percentage for qualified property that a taxpayer acquired before Sept. 28, 2017, and placed in service before Jan. 1, 2018, remains at 50 percent. Special rules apply for longer production period property and certain aircraft. The definition of property eligible for 100 percent bonus depreciation was expanded to include used qualified property acquired and placed in service after Sept. 27, 2017, if all the following factors apply: The taxpayer didn’t use the property at any time before acquiring it. The taxpayer didn’t acquire the property from a related party. The taxpayer didn’t acquire the property from a component member of a controlled group of corporations. The taxpayer’s basis of the used property is not figured in whole or in part by reference to the adjusted basis of the property in the hands of the seller or transferor. The taxpayer’s basis of the used property is not figured under the provision for deciding basis of property acquired from a decedent. Also, the cost of the used qualified property eligible for bonus depreciation doesn’t include any carryover basis of the property, for example in a like-kind exchange or involuntary conversion. The new law added qualified film, television and live theatrical productions as types of qualified property that are eligible for 100 percent bonus depreciation. This provision applies to property acquired and placed in service after Sept. 27, 2017. Under the new law, certain types of property are not eligible for bonus depreciation. One such exclusion from qualified property is for property primarily used in the trade or business of the furnishing or sale of: Electrical energy, water or sewage disposal services, Gas or steam through a local distribution system or Transportation of gas or steam by pipeline. This exclusion applies if the rates for the furnishing or sale have to be approved by a federal, state or local government agency, a public service or public utility commission, or an electric cooperative. The new law also adds an exclusion for any property used in a trade or business that has floor-plan financing. Floor-plan financing is secured by motor vehicle inventory that a business sells or leases to retail customers. Changes to depreciation limitations on luxury automobiles and personal use property The new law changed depreciation limits for passenger vehicles placed in service after Dec. 31, 2017. If the taxpayer doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is: $10,000 for the first year, $16,000 for the second year, $9,600 for the third year, and $5,760 for each later taxable year in the recovery period. If a taxpayer claims 100 percent bonus depreciation, the greatest allowable depreciation deduction is: $18,000 for the first year, $16,000 for the second year, $9,600 for the third year, and $5,760 for each later taxable year in the recovery period. The new law also removes computer or peripheral equipment from the definition of listed property. This change applies to property placed in service after Dec. 31, 2017. Changes to treatment of certain farm property The new law shortens the recovery period for machinery and equipment used in a farming business from seven to five years. This excludes grain bins, cotton ginning assets, fences or other land improvements. The original use of the property must occur after Dec. 31, 2017. This recovery period is effective for property placed in service after Dec. 31, 2017. Also, property used in a farming business and placed in service after Dec. 31, 2017, is not required to use the 150 percent declining balance method. However, if the property is 15-year or 20-year property, the taxpayer should continue to use the 150 percent declining balance method. Applicable recovery period for real property The new law keeps the general recovery periods of 39 years for nonresidential real property and 27.5 years for residential rental property. But, the new law changes the alternative depreciation system recovery period for residential rental property from 40 years to 30 years. Qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property are no longer separately defined and given a special 15-year recovery period under the new law. These changes affect property placed in service after Dec. 31, 2017. Under the new law, a real property trade or business electing out of the interest deduction limit must use the alternative depreciation system to depreciate any of its nonresidential real property, residential rental property, and qualified improvement property. This change applies to taxable years beginning after Dec. 31, 2017. Use of alternative depreciation system for farming businesses Farming businesses that elect out of the interest deduction limit must use the alternative depreciation system to depreciate any property with a recovery period of 10 years or more, such as single purpose agricultural or horticultural structures, trees or vines bearing fruit or nuts, farm buildings and certain land improvements. This provision applies to taxable years beginning after Dec. 31, 2017. Page Last Reviewed or Updated: 20-Apr-2018

Back at work now to work on the backlog. I celebrated by sleeping, sleeping, playing video games, sleeping some more, and eating real food in between. No more gummy bears and chocolates for lunch and dinner!

Remember, too, that the charity is not supposed to state a value of the goods donated. It is the donor's job to do that.

KY appears to be going to a flat 5% tax rate (instead of brackets). In addition, sales tax has been added to 17 prior exempt items, and cigarette tax nearly doubled, which most wonks have calculated will raise income for the state. Interestingly, one of my customers wanted to argue how I "bought the kool-aid of the liberals" because I too see it as an actual tax raise (overall) on all but the very highest earners. I foolishly tried to explain taxation NEVER goes down as government has a cost, and the cost never goes down, so taxes or debt (income) has to go up... Most reports show the result as a tax hike on all but the top 5% of KY earners. I found a few who claim it will reduce KY's income, but those are the ones I do not believe...

You guys are the best. It is not my problem and my client knows that. I haven't been asked to solve it nor will I offer to. Not unless I'm hired. She called because her stepdad received a paper check at his address with the wrong name on it (not "in care of") and the preparer was rather rude to her. He said "I've done your parent's taxes for 25 years and never had a problem until now. Just cash the damn check and give him the money. It's not like it's income to you." She was offended. So was I. That's not how I do business. I've known the family for a very long time, long enough that I went to the Mom's funeral last year. There may be snakes but not the stepdad. And not the daughter. One of the reasons I follow this board is to see what you all see in your offices. It's always helped me to read about some crazy thing you've never had happen. I learn from that. From you. For me - this was one of those things. Take a break but don't go away. I appreciate all of you.

And you're searching because....... Consider the source and carry on!

had exact same situation - gave them "corrected" forms and a detailed letter explaining that we made a mistake and would take the lifetime credit now. Included all the other bunk they asked for as well. IRS accepted and made changes that I proposed. Taxpayer owed a little money but not as much as first assessed. Everything was good.

I never even noticed this option til about the last couple weeks.

I'm still waking up at ungodly hours. I'm so jealous. And it's torture trying to get through one return now.

If mom died in 2017, they would have filed a joint return this year. Why were they in any way attempting to generate a check in the name of the daughter? None of this makes any sense - sorry. I agree that the Authorization check box needs to be for multiple years. Limiting it to one calendar year is idiotic IMO and just adds to the burden.

I use the 1040X and write worksheet across the top usually - works

You have to report what actually happened, lawyer be damned. Did the lawyer provide you the final accounting for the estate?

I hope you told them that wouldn't make them any safer... unless you were doing paper and pencil returns.

I usually elect out of bonus and just use 179 because MD does not allow bonus but does allow some 179.

Instead of a shady relative or careless preparer, it could actually be an IRS error. I've seen several in the cases of decedents. In the last couple of weeks a widower came in with a refund check made out to his deceased spouse. I told him to call the IRS, which told him it was the preparer's error. Um, the return is clearly marked with the correct spouse's date of death, and since the return was efiled I doubt the computer mixed up the names. Maybe these returns have to be handled by real people, who no longer seem to have adequate training. If a joint return was filed, the surviving spouse does not need a 1310. If there was one, then I'd be suspicious. In that case, maybe the preparer never did this before and not only filed one but filled it out wrong. It definitely requires a SS#, though, and one would think IRS matches name and number with the SSA just like they do with any return before accepting it. Best thing to do is for the client to call IRS and see what happened and how it can be corrected.

I’ve also had to correct a loss carry forward and just kept a detailed note in the file. Never came up.

My client was new to me when it happened. He had over $200k in losses, even after my adjustment. He had been doing it himself and double-hit a figure on year, sending the losses in to 6 figures. I don't recall the exact numbers, but mine was sure not to lift an eyebrow. It reduced his losses which were still unimaginable. That was about 8 years ago. Never a mention from the IRS.

I ran the numbers (via a shortcut), and am positive the change doesn't affect anything on the 2016 return other than the carryforward. Nothing would ever come of this if the 2016 or 2017 return were audited, aside from validating the year-over-year mismatch. I didn't think of attaching a statement to the 2017 return, but that's certainly a valid suggestion.

That happened to me, exactly as you said. I didn't amend anything and never heard from anyone about the change. For what it's worth... It just didn't make sense to back up the truck when it didn't matter. Kind of like "Whose line is it, anyway" where the points don't matter.

The point was made, and I agree with it completely, if you're going to allow an override, the math still needs to work. Don't allow the override if your formula can't accommodate an override. I managed to pick up on the fact that there was a line up top above the Sch A and use that, I hope exclusively, but I'm not even sure what I ate yesterday.

I may be suffering post tax season short term memory loss, but I don't seem to recall that apologizing is part of the ATX Playbook ?

Catherine is right. Once a return comes under audit, you can not submit an amended return. What you can do is submit the corrected forms with an explanation.

So yesterday afternoon I called @Possi to see if they survived, and they were DRINKING AND HAVING MASSAGES. Wait, what? I thought I was your best friend, not Cynthia. I see how it is. Then I went home, had five little candy bars, and whoever named them "Fun Size" clearly did not understand fun. Then I hiked around the farm smiling and enjoying the sun, thankful for a good season. Discovered a new baby calf, which is always like Christmas morning to me. Thanks to all of y'all for everything you do for me. And everybody please stick around because I need you all year.

My assistant and I went for a doubles massage. My neighbor brought us a little bottle of champagne, so we had some bubbly before going. This gal, Cynthia, has become like a daughter to me. With no job and no plans for a career, I took her under my wing last year. She was even better this year. I'm helping her study for her EA (even though I have no plans for my own) so she can plan her future in taxes. Personally, this has been the most peaceful, joy-filled, and productive tax season in my life. Thank you for all your assistance, all your laughs, and for being my extended office. This is my safe place, right here. What a difference this site makes in my business and my spirit. Saturday, I begin HORSEBACK RIDING LESSONS. Yes, 62 this month, and I'm finally able to fulfill a dream of mine. I am going to a Christian camp so that if I fall off the horse and "wake up dead," they know how to pray me UP! AMEN? I'm a very blessed woman! Thanks, and God Bless y'all.