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Why not kill (no pun intended) two birds with one stone Is this our friend Rita’s business?

And just think, they won't have to shred the tax documents.

Happy to see ATX had a decent showing. I've been using the program for many years, back to the days of Parsons Technology, and it has treated me well. That's not to say there isn't the occasional hiccup, but overall I'm very pleased with the product.

There are a couple ways to report the liquidation. but the answer is the same. Assume the basis was $94,000 on 12/31/16. Add to that the reported 2017 gain of $211.971= $305,951 basis before liquidation. Assume the $258,000 reported in box 16d is the liquidating distribution. Loss = 258,000 - 305,951 = (47,971). As understand it, your client owns 1\5 of the shares which were inherited. However the closing statement you mentioned seems to report only your client's share. I am curious as to who the closing statement shows as the seller?

Max, to be simpler and more clear about the warehouse sale: the form 4797 should show only the $211,971 in part one and Drake will use the label "from K-1". That is the entire net gain and is all that should be on that form. just that one figure. From there, that net gain figure will flow onto the Schedule D on line 11. The unrecaptured 1250 gain of $16,821 is the portion of that gain that has the potential to be carved out and taxed at 25% because of the depreciation method used for the warehouse, and it will show on line 19 of Sch D, the "Wks CG" worksheet, and the "Wks 1250" worksheet. That is all that should happen related to the warehouse. As I said in my post immediately above, you still also will have to report the liquidation of this client's shares of stock in the S corp too, and that will go directly on Schedule D. Hope that helps you.

No, that's not right. There are 2 separate things that happened. First, there is the sale of the warehouse by the S corp, AND second, there is the liquidation of this client's shares of stock in the S corp. FIRST, regarding the sale of the warehouse: The building was sold by the S corp and reported on the corp return. Your client's share of the NET gain flows onto his K-1. There are 2 items on the K-1 that are related to this sale and those 2 figures are what you need to enter into the software related to this gain. You don't enter proceeds or the building's basis because the S corp already did that. Just enter the 2 figures from the K-1 of $16,821 for the unrecaptured 1250 gain and the $211,971 for the 1231 gain. Don't enter the escrow figure either or worry about reconciling that; it is only informational. SECOND, you also have the liquidation of the shares of ownership in the S corp that should be a loss, and that is a capital loss that will be reported directly on Schedule D.

^^^ Yes! Exactly! grandmabee has it exactly correct. Tom Modesto, CA

I do think you need to give him a complete copy of the 2018 joint return. You can mask the SSN's. He was a client in 2018. Not her W-2's. IRS doesn't care about state court papers. BUT if she doesn't follow the state court doc's she could be trouble with the state court. You need to talk to her and get a copy of the state court papers, he may be not telling the entire truth, she should know. You can't take him on as a client for 2019 unless they file a joint return, conflict of interest. I would not even talk to him again. talk to the wife

Earned income includes SE income reduced by the deduction for 1/2 of SE tax. The gain or loss from sale of business assets does not factor in.