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The 1120S owner should've listened to us when we told him to put himself on payroll.

Liquidating distribution for stock should have been reported on 1099-DIV. Was K-1 generated from a computer program? He could ask if that program generated the basis calculation. Otherwise, if he has all K-1s, recalculation basis starting from the beginning based on what he invested and adjustments for each year's activity shown on his K-1s

Mileage allowance can't be used for a car that isn't owned by the taxpayer. I'd follow the rules laid out for employer-provided car where only the value of personal use is included in compensation, not the full value of the automobile. This means that the only expense that would be deductible would be the portion of expenses paid by the taxpayer that relates to the business use. I think the only deduction here is a percentage of the gas cost.

All of the years. Start from the beginning; it's cumulative. Not just the income side of it; deductions, 179, distributions, etc all factor in too, and all in a specific order. Here's a worksheet: http://www.thetaxbook.com/updates/TheTaxBook/Client Tax Tools/S_Corporation_Shareholders_Adjusted_Basis_Worksheet.pdf

His basis went up this year by the amount of income on the K1. If you enter it in ATX it will show basis increasing. Does the K1 show any distributions? When you say 'pay stub' was it a payroll check or just a regular check? If the corporation bought his stock (dumb move) then this is a capital gain, whether they did a 1099DIV or not. Recreate the basis as Judy suggested. Too many lazy (or ignorant) preparers have not tracked basis. I wish the IRS would just create a form for it to force everyone to comply.

Net earnings from self-employment for 2019 divided by 12 x 2.5, plus retirement plans plus SEHI is what I've done. If they want to discard the health insurance because it's not group, then let them do that.

It has been my understanding that applying for this special $10K EIDL does not prohibit applying for the PPP. As a matter of fact, the assumption is that the employer will apply for the PPP and the $10K EIDL advance will just be deducted from the amount ultimately approved in the PPP. But I could be mistaken. My next comment is not mistaken: The 3-day window for the EIDL was either a come-on, an impossible administrative standard, or is subject to a few hidden definitions & conditions which were kept carefully hidden behind the curtain. The lack of clarity, coupled with what many applicants are now viewing as essentially another broken promise, is not creating any confidence. If it turns out that the "up to $10K" actually results in a pittance of $1K per employee, I think many very small mom & pop operators will simply regard it as a very bad joke played on them by cynical, disinterested bureaucrats and politicians. Nothing more than a blast of hot air designed to grab a few headlines. In other words, business as usual in government.

IRS just issued notice 2020-66 which extends the RSED for 2016 returns from 4/15/2020 to 7/15/2020

"If you don't usually file a tax return, submit your information here to get the Economic Impact Payment If you receive veterans disability compensation, a pension, or survivor benefits from the Department of Veterans Affairs, or your income level does not require you to file a tax return, then you need to submit information to the IRS to receive an Economic Impact Payment. Complete this free online form so that the IRS can identify you and your dependents, and receive valid direct deposit and address information about you. This information allows the IRS to calculate your eligibility and send you the Economic Impact Payment. Do NOT continue here if: You receive Social Security, Railroad Retirement, or SSDI benefits. The IRS will automatically send you an Economic Impact Payment. You have already filed a 2019 federal income tax return. Your 2019 gross income exceeded $12,200 ($24,400 for a married couple) or other reasons require you to file a 2019 federal tax return. You were married at the end of 2019 and are not submitting information here with your spouse. You were not a U.S. citizen or U.S. permanent resident in 2019." https://www.freefilefillableforms.com/#/fd/EconomicImpactPayment

ILLMAS: I can say those words here. I would NOT be able to say them to a client. If I think of a polite-sounding way to say, "I told you so," I would. But, luckily my S-corp employee/shareholders DO take salaries, quite a lot of salary, in fact. So, their grumbles were about not being able to use the amounts over $100,000 in the calculations. And, they are all smart enough to realize that's a good problem to have, so tiny grumbles!

He had to have stock in an S-corp. What is his basis? if none then yes taxable on schedule D. But you can offset the amount of check by his basis. If you have his K-1's from beginning you can reconstruct his basis.

Ask them how they received the stock ?

You can download a fillable 941 PDF from IRS.GOV.

MD doesn't require a state trust return unless there's taxable income. They don't want the bother of processing a return for no money, but I think I'd file MA returns going forward and let sleeping dogs lie.

Self-rental of home office is fine as long as the rental shows a profit. Losses on self-rental are suspended as passive, but profits are not passive income, so if you have no other passive income, those losses are suspended until you sell the house.

I work with rental properties all the time. I have to agree with Catherine. The floor replacement is a repair to return the floor to usable condition. if the original floor were a vinyl floor and replaced with a hardwood, then the difference would be capitalized as an improvement. No 179 deductions are permitted with rental property. De-minimis the water heater as suggestion. Take the bonus depreciation on the fridge.

>>>>>>It is the ex, who is the Non-Custodial parent that needs the 8332 to rightfully claim the dependents. However, with or without an 8332, if both parents are trying to claim, it comes down to who files first. <<<<<<<< I think what Max is saying here is who files first or gets to the tax office first generally gets the refund first. Doesn't insinuate the case is over and the person who has/had the right to claim the dependency just loses. I have personally seen this many times. In response, I would tell my client exactly that if he/she had the right to claim the dependent, then paper file the return. The IRS would determine who had the right to the dependency. I would also tell me client if they prevail over the spouse, then the IRS would require the spouse to repay the funds received from improperly claiming the dependent which could/would open up very ill feelings between the parents. To me it all depends on the level of refund to be obtained. Sometimes it is best to just let sleeping dogs lie. Now add EITC to this and another can of worms will be opened.

In another thread, Possi mentioned filing an extension showing a $2 balance due that would be deducted from the checking account to get the account on file with the IRS. I don't know if that will work but it might be worth a try.

Grandmabee is correct. The way this actually works is that it is all accounted for and reconciled on that year's return even though the excess is paid back (or refund received) in the following year. The adjustment becomes part of the calculation for the deduction on Sch A or for SEHI. Here's how it works: the total gross premiums for that tax year are reduced by the actual PTC that is allowed as calculated on the return. not the amount of advance PTC that was claimed during the year. What that means is that if there was an excess claimed throughout the year, the premiums paid by the taxpayer out-of-pocket should have been higher, meaning that the Sch A medical deduction or SEHI are that much higher. If the return shows that the taxpayer could have utilized more APTC that results in an additional refund, then his out-of-pocket for premiums should have been lower during the year, and therefore the Sch A medical or SEHI would be that much lower. The tax program should be doing this automatically for you, but you should check to make sure this is how ATX is handling it. My program does do this automatically, but I no longer use ATX. If that isn't clear, here is an example: Total gross premiums for year: $12,000 APTC utilized throughout year: $7,000 Taxpyr prems pd during year: $5,000 If the amount of APTC used was the exact correct amount, then the taxpayer has a deduction of $5,000 for Sch A or SEHI purposes. If the taxpayer should have only used $4,000 of credit during the year causing a $3,000 payback, then the share of premiums he should have paid during the year should have been $8,000, and that amount would go to Sch A or to SEH I even though the $3,000 payback occurs in the next tax year. If the taxpayer was entitled to use $9,000 of credit and therefore has an additional refund of $2,000 on his return, that additional $2,000 effectively reduces the $5,000 of premiums paid down to $3,000, and only the $3000 is allowed as a deduction on Sch A or for SEHI.

Some college websites have the housing costs plus the % of housing costs to use for off-campus students.

Here you go https://www.savingforcollege.com/article/using-your-529-plan-to-pay-for-room-and-board Note the second paragraph "and for students who live off campus with their parents or other relatives." So I recommend contacting the college at issue and asking for this information and perhaps they will have the cite.

I was typing when Lynn responded. Just received IR-2020-66. According to the notice, "for 2016 tax returns, the normal April 15 deadline to claim a refund has also been extended to July 15, 2020.: Also, according to this notice, 2nd quarter estimated tax payments due on 06/15 have also been moved to July 15. But, don't forget to check with the states. Tax software folks are going to have a lot of fun with all these changes.. Grace

Check the status via the tracking. I had to do the same the day before the budget shut down, and someone still accepted the piece even though the office was closed. It sat for a month or two before processed, but it was there.

If regular home office is substantially more than simplified, it's well worth claiming because it saves SE tax and income tax. Paying tax on the depreciation later (if the house even sells for a gain) is a small price to pay for that. But I do use simplified on some, for various reasons.

They have proof of mailing, so they should be fine to get the refund. When... now that's another story. BUT the IRS does pay really good interest!

The first of me being the bad guy has occurred. "What do you mean I cannot use the retention credit and get a forgiven PPP? I am grateful they asked first. I "Carnac" many will get into trouble later, such as getting a PPP, going through forgiveness, then having issues when caught trying to also claim the retention credit.

Here is a link I found which does mention expenses for room and board for a student living at home. I believe you have to get from the school their budgeted amount for your records to use this option. I did one last year that was similar. https://www.savingforcollege.com/article/using-your-529-plan-to-pay-for-room-and-board

Most people when referring to a "new roof" are talking about the roof covering and not the roof structure. Whether the roof is a repair, or improvement might depend on the type of roof covering and whether it is replaced with something different, or better. Asphalt shingle, tar and gravel, shake/wood shingle, foam covering, slate, spanish tiles.

This is off-topic, but some of you may find welcomed relief from the cares of the virus and the pressure placed on us by stilted reading of the CARES act and other mind-bending storms of the day. Many of us attended Rita's gathering a couple years ago - I was very happy to meet many of you in person. In her area of the country there is a unique natural phenomenon. Probably very familiar to Rita, but for the rest of us? So unique there isn't any more of it anywhere in the world. Crab Orchard Stone. So-named from the small village which in days past grew several groves of crabapple trees. The stone is multi-colored sandstone - predominantly rose-colored, but with gorgeous streaks of blue and other colors. It is found in layers of limerock/sandstone in a small area near the town. And not found anywhere else on earth. Several houses in the area are built with this, compiling cut stone upon stone. Sandstone is so gritty it can be broken in two with your bare hands. But this stone can be shaved into very thin siding for houses as well as simply stacked one upon another. Houses that use this siding showcase streaks of colors - not vivid but quite pastel. In spite of being easily broken, this sandstone is geologically indestructible. Nothing erodes it - not rain, not wind, not acid, nor any pollutants. The houses built with this look just as beautiful as when first built. Even the huge limestone caves are formed because rain will erode limestone and leave the sandstone intact. There are more limestone caves in Kentucky, Tennessee, and North Alabama than the rest of the world combined. Crab Orchard Stone was discovered about 100 years ago, and commercial mining began in 1926-27. It was sent all over the world, but nowhere can it be seen in greater abundance than a 30-mile radius of the town. By 1961 it was felt that the availability of the stone was becoming depleted. One of the mines still exists, but the stone is now harder to find, and harder to reach, thus the mining process is not as economic as in days gone by. The small town of Crab Orchard is easily seen from I-40, stretching narrowly for about a mile parallel to the interstate. Next time you're in Tennessee and travel from Knoxville to Nashville, you can't miss it in daylight. And now you will know what it is known for.

Thanx, Edsel. I have a couple TN clients, so I showed off my local knowledge, thanks to you.

Thank you. Nice change to find TP who kept all the records to verify #'s.

I would bonus both the hot water tank and the refrid. I also would depreciate the floor under 27.5. I do not/cannot take 179 on residential rentals.

I don't believe there is any review process of 2019 returns. As I read section 6428(f)(3)(A), the payments are to be issued ASAP; if your 2019 return has not been filed at the time the payment is calculated, then your payment will be based on your 2018 return.

So, you REALLY think that the IRS will be checking and comparing for the rest of 2020? In December, most systems are down for testing and maintenance. According to the information posted here, if I don't file for 2019, but in 2018 I reported $175K, I will get a check for 600. A week later (let's say) I file for 2019 and I made only $140K, I will get a second check for $600. Let's say that this emergency last ONLY 2 months and the economy goes back to normal, why will the IRS have to bother sending a check in December... six months after the emergency? If I am not mistaken, that's the interpretation of the instructors but reality might be a bit different. I do believe the IRS will run a report this month. If 2019 has been filed, they will get a check based on the income reported on that return (or not get a check). If 2019 was not reported, then they system will check 2018 and will send a check accordingly. If someone has not filed for both years, they will get their check when they file their 2020 return.

Give it a couple of minutes and someone will disagree.

I relied on Section 6428(e)(1). Tony Nitti of RubinBrown taught a two-hour webinar to 5,000 tax preparers this afternoon and stated the following:  Basic Structure: Adds new Section 6428 to the Code  Section 6428(a): Individuals are entitled to a refundable credit on their 2020 tax return. (See Section 6428(b) for refundable status).  But in many cases, the taxpayer will receive an “advance payment” against the credit in the coming months. This advance payment is NOT taxable.  When the taxpayer files their 2020 tax return, the advance payment will be “trued up” with the credit; but only in a taxpayer friendly direction.  If the advance payment is LESS than the “actual credit” the taxpayer is entitled to the full credit on the 2020 return, less the advance payment; i.e., the taxpayer will receive the extra benefit.  If the advance payment is MORE than the “actual credit” the taxpayer is entitled to on the 2020 tax return, however, there is no mechanism for the taxpayer to either:  Report the excess advance payment as income, or  Repay the excess advance payment as is required with the premium tax credit.  What happens in 2020?  When a taxpayer files their 2020 return, a refundable credit will be computed using the same metrics and thresholds as the advance payment.  Section 6428(e)(1): the credit is reduced –but not below zero –by the advance payments received by the taxpayer.  Section 6428(e)(2): If an advance payment was made to a joint return and in 2020 they are no longer joint, half of the advance payment is treated as having been made to each spouse.