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You can't file it on paper. Efiling it is not like filing a 1040. Be careful about what you are getting yourself into. As much as I am astounded by the fees charged by pension folks, they got that stuff down. If your client is trying to save a buck, make sure you KNOW what you are getting yourself into.

For Catherine...Science and the mystery of POOF.

Yes, that is one line of thinking, but there is another that says it shouldn't be reported on the 4797 including the instructions to that form itself and Pub 544 that both say this: When is inventory not held for sale in the ordinary course of business? Also, I think it should be subject to S.E. tax because code sec 1402(a) defines net earnings from self-employment, and 1402(a)(3) says "(3) there shall be excluded any gain or loss… (C) from the sale, exchange, involuntary conversion, or other disposition of property if such property is neither (i) stock in trade or other property of a kind which would properly be includible in inventory if on hand at the close of the taxable year, nor (ii) property held primarily for sale to customers in the ordinary course of the trade or business.”

I always have attached an 8594, or if that isn't available, a schedule that shows the breakdown of the sale and also a statement describing where each of the items are reported on the return. In this case, I would report the sale of the inventory as part of revenues on the Sch C, again with a schedule detailing what is included, and ending inventory would be reported as zero. In this way, there is no double reporting as Abby Normal pointed out.

Another thing he needs to check on, especially if he constructs a separate building, is how his local city/county treats a business in a residential neighborhood. They may have restrictions, prohibitions (especially if it is a place where clients come), boundaries & setback regulations, rules on signage, type of construction requirements to conform to neighborhood zoning, or separate taxes which need to be paid. He will need a building permit, etc. and may need to get a waiver from the local authorities. Everything is added to basis when construction is done, so may come into play on depreciation schedule. An office-in-home is just that. An office IN the home. I know in my community for a real estate broker, for instance, any home office MUST have a separate entrance for clients.

That rule where the rental is less than the greater of 14 days or 10% of days rented is supposed to apply only to rentals of a personal dwelling unit (second residence or vacation home), and in this case the timeshare wouldn't qualify as a second residence because the fact pattern says that the taxpayer wasn't able to use it at all last year.

What happened to the rules about rentals that lasted fewer than 10 days? Do those not apply to a timeshare? Or did they go poof while I wasn't looking?

Since beginning inventory is already on the Sch C, wouldn't you need an other income amount on the Sch C to zero out the ending inventory since you're putting that cost on the 4797? Otherwise you've deducted the same inventory twice.

Catherine, THANK YOU. what I thought but my partner had me confused!! Terry

Sound like there might have been involuntary conversion but I think you will need evidence that he was forced into the transaction. Was there a buy/sale agreement? Was a lawyer involved?

I did ask for the trust document up front, months ago. She has tried and continues, but with skeleton staff and not returning phone calls (like many businesses) it will be a long time coming. It took many months for KPMG LLP in AZ to copy hubby on trust tax returns. In the meantime, the preparer who brought me these clients has long ago filed personal returns for H&W plus mother. I filed the S-Corp returns. But, continue to email back and forth re the trust.

I'm choosing 3 estimated payments in ATX so the 7/15 is doubled up. And if the 2nd qtr payment date is wrong, just manually edit it.

IRS recent update now says dates are 7/15 first quarter, 7/15 second quarter, 9/15 and 1/15/21.

I make it a firm rule that I do not even touch any new trust returns, UNLESS I have a copy of the trust document. Without it, you have no idea how to deal with the items that need to go on the trust return, including who the beneficiaries are. Her former bank who was handling the return and investments would surely have this. Have her get it.

You might be thinking of your client receiving a check that could have w/h, and as Randall said, it's on client to make up the difference or pay tax on the w/h. But, he gets the w/h on his tax return. Just tell your client to do a trustee-to-trustee transfer to avoid any w/h.

I'm working on one now that the wife of a trustee (the only trustee?) moved from a bank that was handling the investments and return -- investments to H/W broker and return to me. Trustee is an artist but wife is a writer and deals with their finances and paperwork; CT residents. Beneficiary is H's 90-something mother out in MI, but the prior fiduciary company is in AZ. Wife thinks trust was started by husband of Beneficiary, who would be her father-in-law, but he died long before wife married husband (second marriage). I have three years of returns and NO state return. Wife is a pretty good researcher, but has found no state returns and no trust document. Her best guess is this is a MI trust. This all came to me through the preparer for their personal returns, so that preparer now has mom's personal return -- and again NO state. (Preparer does not prepare trusts or any returns other than personal.) Mom's personal return would obviously be MI (although, not obvious, because she has a second home in another state). But, the story there from the other preparer is her personal filing requirement is higher than her personal income in whatever states she's looking at. In addition, the prior preparer of the trust checked Simple Return but used Exemption for a Complex Trust. Probably some other fun things; I just opened it up today. I'll get through the federal the best I can and then figure out next steps.

Well, somebody knows something. How do they know about breaking the lease and repaying the lessor? They know who the lessor is. Who is sending you an email and how do they know what the income/expenses are? I wouldn't do it if details of expenses were not furnished. If any "improvement" was made to the land, it needs to be depreciated. Somebody knows what it was because they paid for it. If "they" (whoever they are) stop paying the rent, believe me they will be contacted by the lessor who probably will produce a copy of the lease. They know who the management company is. They get a check, so they know the name of the issuer and the bank account it is drawn on. You would be surprised how much you can find out about these things on the internet. A copy of the will should be filed in the court of the county in which the original owner died, no matter how long ago. If it was a testamentary trust, that info about location of the farm is in it. And ownership of the farm would be recorded at the county for real estate tax purposes. Somebody is paying them. Somebody is paying to do the tax return. Who? I don't buy the theory that "nobody knows anything." This is the sort of stuff I would love to get into and it looks like everybody now has the time to do it. It doesn't seem like you have enough information to sign off on this and I would certainly convey that to whoever the current trustee is.

The employer cannot hold the participant's vested portion of the 401K. It belongs to the participant and they are allowed a tax free rollover to their IRA of those funds. The 401K plan rules cannot stop this from happening. Tom Modesto, CA

I'd inform them that a state return could be required if the residency state requires it but since they aren't giving you that information you can file it without a state return. Is there taxable income on the federal level? I would 100% not file a state return unless given instructions to do so. As for old trusts, I do a 1041 which includes a farm income. Every year I get an email stating how much income they receive that is net all expenses supposedly. The original owner died, the beneficiary died, her beneficiary died and now it's a great grand daughter receiving the funds. Nobody knows where the farm is exactly located (they know the county I think), nobody has a copy of the lease and nobody is 100% sure how to get hold of the managing firm and the check they receive doesn't have contact information. The estate attorney who knew all that died well over a decade ago and nobody seems all that interested in figuring these things out. The attorney who has been dealing with it just says nobody is willing to pay him to investigate it. Last thing I heard was that an improvement was made to the land and if they break the lease they have to repay the leaser who paid for it and nobody knows when that period ends or how much it is.

If you net it out, which is not proper, it won't match the the 1099. Do the Sch E. It won't take long with just a few entries and you can charge the client for it.

Thank you, y'all! I had no idea what I was getting into with this check issued. What a rat's nest. But, I'll get it unraveled. I have FIRST sent an email for client to forward to accountant. He just might have it, and he very well MAY have issued this information to client. God Bless y'all on this Easter Day and always!