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I dealt with this years ago with a (non-church) non-profit. Real estate rental is not subject to UBIT unless it is debt-financed. If the church owns the property free and clear of any debt, then no UBIT.

Danrvan is correct, the value of the gift is no longer included in the estate except under certain circumstances. (Under the old rules it was--I've been doing this too long!) So there are two things to consider. First is who pays the IRS? The decedent had the money and chose to give it to people instead of paying the taxes on it. The executor is responsible for paying the decedent's taxes but since there was nothing in the estate to pay with, it might make sense to ask a tax attorney. However, since you said the amount due isn't all that much, it might be cheaper for the heirs just to pay it, which they may have to do anyway. A gift tax return must be filed if any one person got more than $15k. No, paying the decedent's taxes doesn't lower the amount of the gift because the donees are assuming responsibility for the decedent's taxes whether they pay from her money or their own. Medicaid in most if not all states has a five-year look-back period. Any money gifted in that time period can be clawed back from whomever received it. I was using an average nursing home stay at $12k a month, with the decedent paying $2k and Medicaid the rest. Say she was in a really low cost home, say, $5k a month (does such a place exist?), she paid $2k, so the donees are responsible for $3k a month. Unless she had a lot of Soc Sec and pension to contribute, they will likely owe more than a few hundred to Medicaid.

I'm dreaming of a real live April vacation next year. I wonder if tax season will be extended again.

Dream......................... Vacation....................

I usually carryforward unless there is a substantial amount of money available or it's doubtful there will future profits generated to be offset, especially since prior to 2018 the 1st $ 50,000 was taxed at the lower 15 % rate.

I'll send Eric another note.

This partly a legal issue and partly a tax issue. I would want something definitive from the Attorney in writing.

Exactly the same thing I have been seeing for about a week now!

It sounds like H and W meet the requirements for the full exclusion - they both lived there two of the last five years, and W owned tow of the last five years. However, I agree that an attorney needs to be involved to determine portion owned by estate of B, and how the property basis and proceeds have to be treated. Was this considered a gift to B at the time he was put on the deed? Is the estate gifting the property back to W ? Too many questions unanswered.

Good article that explains it very well. Thanks, Judy.

First several paragraphs in this link explain it well and includes an example: https://www.journalofaccountancy.com/issues/2017/jul/tax-planning-opportunities-final-tax-return.html

I will have to check about who received how much but know that the money was distributed early in 2020, well before she died. Good point about gift tax returns but I did not realize about gifts within 3 years of death are estate assets. Again, nothing was ever mentioned to me until after death. So far as I know, all bills were paid, including mine, except for the attorney (no bill received as yet) and taxes. The attorney told the executor not to pay the credit card bill and I don't know of any others. As this is now getting more involved and taking more time, it may be time to send another engagement letter to address these issues. My original letter does state that IRS representation is a separate matter. I will mention that and see where it goes. This is a problem with new clients which I did not solicit. I was hoping to quietly muddle along with my steady regulars who have been 'trained' to contact me first not after money issues arise. All previous clients that have died have had either no complications with taxes or I have been trustee or executor or fully informed. Retirement continues to appeal...

Jerry W is absolutely correct. No money is to be distributed from the estate until all the bills are paid. If the beneficiaries took the cash before the creditors, they are indeed liable for the bills. Don't even think OIC, the law is pretty clear. In this case, it may be that the money was distributed before the taxpayer died? If so, were gift tax returns filed? Gifts made within three years of death are included in the estate, so the heirs can't claim it only has $1k. Its bank account may only have $1k, but the rest is sitting in their bank accounts.

I will look at this but my recommendation to the executor was for the family to pay up. They got the money. The executor has mentioned that the sibling recipients just may have to cough up the money. I noted again that the balance due is not that great, about $2100 or so. Whatever the cost of trying to finagle a delay or compromise, etc., the money is still owed, these folks had the use of it for over a year. Had there been planning, withholdings would have been appropriate and the shares would have been less by that much.

Thanks for the replies. I have been paid for the deceased's tax return prep and have just been asked about how to now proceed. As they are good friends and fellow church members, I won't be charging for a few words of advice on how to proceed but thank you for watching out for my welfare. They did pay all outstanding bills except IRS as they didn't know how much it would be. Surprise and shock were the reactions. I really don't care about the attorney, however. 'All the money' included gross proceeds from stock of $9800 but she also took a total distribution from an annuity for $15,000, and total distribution from IRA of $40,600 the sum of which and a bit more her SS max taxable. And of course any withholdings were at 10% at most for the 22% bracket. Did anyone consult me for tax ramifications before this took place? Ummm, no, they just listened to someone at the assisted living home who advised them to get her income down to whatever amount it would take to qualify. (In my unsolicited opinion, this scam to spend down to get onto the taxpayer dime while distributing funds to relatives is terrible. It may be legal but I think it is horribly unfair to the rest of us. Down from soapbox.) It's sad that she got a clean report from her last cancer check up about a month before she died of a ruptured intestine, perhaps from all the chemo she endured over the years. I am guessing that the stock was not distributed to save the recipients from cap gains, don't know. My inclination is to tell them the OIC will cost ??? How much??? so not worth it and that they should be prepared to pay. The executor did acknowledge that the kids got the money so are sort of prepared to cough it up. They all have kids in college so perhaps thought Grandma was doing a good thing for them. On the other hand, none of the children lost their jobs during COVID. So I have a message and thanks again for the replies on a summer day. Now go outside and play!

Exactly, where did the proceeds from the sale of the stock go?

Disengage unless very profitable and paid in advance. Especially if this area of practice is not your norm. Your post shows the heirs are not cooperative, and that the estate is upside down already.

Where'd all the money go? Follow the money. Did the "kids" take the money before paying all the bills? If they won't pay the IRS, do you really think they'll pay you? Huge retainer or disengage!

IMO the costs to engage someone to prepare (and follow through) an OIC far outweigh the amount of remaining tax due. The other options should be pursued.

Yesterday I decided to learn more about the new CTC, advance, repayment etc. I ended up more confused than when I began. The advance phases out after AGI of $150k MSJ, $112k HOH, and &75k all others. The phase out is $50 for every $1k over. I didn't do the math to see where it ends. The normal $2k credit begins to phase out at $400k MFS and $200k everyone else. Repayment has a couple of safe harbors but I couldn't figure out how they intertwine--something like no repayment for AGI $120k, $100k, $80k, and full forgiveness up to $2k if IRS claimed the advance on too many kids for AGIs less than $60k, $50k, $40k. I might have the above all mixed up, but notice how every calculation has a different AGI starting/ending point? Who came up with this confusing/complex/no rhyme or reason perplexity??? I think we're all going to have to do something we hate to do--blindly rely on the software. Or maybe we should all demand that any politician who wants our vote have to submit the answer to the CTC for, say, a couple with three kids making $190k, and show proof of work done by hand!

I have had what i think is the same problem a couple of times. I get a text page that says something like error - unable to to log in at this time. Then there is a button to try again. Sometimes that works, sometimes I need to go all the way out and come back to the page. Nuisance, but I always get in eventually.

This week I am having trouble logging in. My success rate is about 50 %. Instead of the normal website log in page, I keep getting a basic text like page, which i have seen before over the years ?

I always felt that membership on the Ways and Means Committee of the House of Representatives should be conditioned on passing the EA exam. Tom Sparks, NV

RE: NYS + EIC (not unemployment). This addresses Carolbeck's post. I had the same thing happen. NYS changed EIC and I thought I was wrong until I read HVKen's post and reviewed the instructions. NYS is allowing the use of 2019 income but you had to enter a Special Code on IT-201 Item G. It's Code P3. See Form IT-215 Instructions page 2, left hand side, just above "Worksheet A."

She can't "opt out" because when she went to the web site, she "doesn't qualify for child tax credit." I'm not even making this up.

Frankly, even 222 from tax pros isn't nearly the issue that breaches from places like LinkedIn and many, many, many other sources are responsible for (including banks, retailers, and financial institutions). Yes, preparers need to take extreme levels of care - and the low number of instances underscores that the vast majority are being very careful indeed. Rather than getting all hot under the collar, I'd recommend that we all review our data security protocols, and make sure our cyberinsurance is up to date!

oh we've tried the ol' reboot.