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My mind is blown. Thank you for the information. This would explain why I've had corrected 1099's on this exact matter.

Dividends are only qualified if the underlying security is held for 61 days during the 121-day period surrounding the dividend date. Preparers of Form 1099-DIV are allowed to include dividends as qualified in Box 1b for which it is impractical to determine if the holding period has been met. The instructions for Form 1040 say that you must exclude any dividends reported in Box 1b if the security was not held for 61 days (see here). I suspect that very few people are diligent about doing so.

It sounds like they are qualified non personal use vehicles. Any vehicle that is “not likely to use more than a de minimus amount for personal purposes.” Because of its design. They are exempt from substantiation requirements but can only use actual expenses for a deduction.

Thank you. That's exactly my understanding as well. Fair rental days are the days actually rented. All other "personal use", falls under "personal". On Schedule E, you would enter those two figures when the rental was not for the entire 365 days.

Will we get interest? And a 1099INT? And a 1099MISC? Tom Longview, TX

Wow, so the realtor gets a 30 % commission?

There were strings. It was understood that Bob was "buying" the lot, so realtor could get HER commission. Bob is also an angel, and she would never abscond with the dough. She would mess up my highlights, but never abscond with the dough.

Ann paid $5,000 for a lot. Ann engaged Realtor and listed lot for sale for $10,000. Bob expressed interest in the lot. Since Bob is a dear friend of Ann's, Ann wanted to give Bob the lot. But Ann is, yes, in fact, an angel, and she also wanted the Realtor to make $3,000. So Ann gave Bob $10,000. (Ten thousand dollars.) Bob purchased the lot with the $10,000; and Realtor got $3,000 commission. Ann received $7,000. Ann then gave Bob the $7,000. (Seven thousand dollars.) So, of course, now Bob sells this lot, and if you thought that explanation was tedious, you should have heard Bob tell this (not her real name, and she's a hairdresser). Is Bob's basis $3,000? Because I think Bob's basis is $3,000.

I am late to the game here... but ATX does have an exception box. It is under Elections, Form 1120S and the very bottom. Just FYI.

The real question is whether this is really a business or just a hobby. https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business

My understanding is fair rental days is the number of days actually rented. Personal use days are a combination of the days you, any family members and any friends that didn't pay rental stayed there.

Just WOW, Catherine! I can imagine the time involved with this. Hope you charged and got paid well!

If they do or not, they definitely have a filing requirement in the new state since the business is now operating in the new state. From the sound of your OP, they operated in both states in 2022. Thus they have to file in both.

I picked up a client some years ago that had prepared his own returns in TT for years. He had an S-corp and three rental properties. Some years, the rentals were reported in the S-corp. Some years on the 1040. One property was a historic building and had carryover business credits. Oh, and he was a real estate professional too. It was approximately 15 years of screwed up returns. I prepared a disclosure with calculations showing for regular tax and AMT, what the NOLs, credit carryovers, etc. etc. what they should have been for each year and the correct figures for the year. And didn’t amend.

Sounds like the son knows more about taxes than you do. I'd give the info back to him with a suggestion that he employ his expertise and prepare the return himself.

But you still provided a service. They learned what to say and what not to reveal to the next accountant they interview.

Does the 30% commission count as a gift, too? From the Supreme Court ruling on gifts in Commissioner v. Duberstein:

I am sure the IRS will appeal this. It will be in court system forever.

Yeah, I don't know what planet these people are living on, correct.