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Do you know that for sure? She gets a $250,000 exclusion off the top from the sale of the house while he pays on 100% of the gain from his extra share of the investments. She got her share of the assets as negotiated and related basis, it is now a done deal. Some pre-divorce tax planning might have resulted in a better tax outcome for her. They could have wrote a 121(d)(3)(B) exclusion into the settlement (and that might have been more to his advantage than hers), but to late to buy that ticket since the train has left the station.

In that case it is not a gift. One of the elements of gifting is intent. This is obviously not a transfer made out of affection, gratitude....etc. A gift must be a unilateral transfer with no strings attached, meaning there is no action required on the part of the donee. In this case there is a condition that the property is willed back to the donor by the donee.

I just noticed that the Permanent File form has a field for Driver's License Number, on the Data tab, so you can enter it there and create a link to the Main Info field for ID Number. And, if you want to enter the issue date and expiration date, you can use the Date of Birth and Date of Death fields on the Permanent File Data tab, and link those as well. Fortunately, ATX doesn't link anything on the Permanent File form to any other forms. How to create links: https://support.cch.com/oss/sfs/kb/solution/000176488

Nah. Send 'em a link to Direct Pay and tell 'em to make sure they pick EXTENSION payment. Or (securely) send 'em a coupon to mail in with a check.

And, that person who lost his license and got a new one without telling you. Thank goodness, I ask each year, so I found out. CT makes you hand type in the license number each year. I don't know if Mr. Normal's link will work if a client has a CT return. I'm going to try something similar in my software to check it out, though!

https://answerconnect.cch.com/document/arp283494a0307b681000befa001b78be8c78070/federal/irc/explanation/accountable-and-nonaccountable-plans-in-general

I do several Alabama returns each year. Your new client is horribly confused about a number of things, including differences between Federal and Alabama taxation of ministers. Part of the problem, especially with smaller churches, is that no one in their church is knowledgeable about issuing W-2s, 1099s, housing allowance, etc. Larger churches who have CPA members generally don't have that problem.

If no issues were present, I would never revert back to an old OS. Welcome the new OS and your computer and clients' data will be more secured. I have been using windows 11 for a couple (or more years) and no issues whatsoever. I remember when some people refused to efile or move from windows 95 to XP.

I put everyone on extension whose returns are not 100% ready and just waiting for signatures as of the beginning of April. Then, if we finish, no harm no foul. If the clients don't get me the information, no harm no foul - and no racing on the last day to get extensions filed. If later we find someone should send in money, I send them the Direct Pay (& state equivalent) link, or a paper coupon to print and then to mail in with a check. But that's also on the clients getting me enough information.

I don't know for sure that it wouldn't be challenged, but I would not advise the client to do this. As Marilyn said, I wouldn't want to touch this.

"Appreciated property" is defined as “any property if the fair market value of such property on the day it was transferred to the decedent by gift exceeds its adjusted basis.”

Take a nap until then! Or work on someone else's stuff.

I've generally found external search engines to work FAR better than the IRS search box. Look up "2022 instructions Form 8606" (or anything) and anything 2022-specific will be somewhere on page 15 of the results. If you're lucky.

Abby, thank you for your usual response. Code # is 62(a)(2)

The latest statistics show the number of Win 10 users has actually increased a bit to over 70 % of all Windows OS systems. Apparently, there are now a number of refurbished Win 10 systems being sold due to the increased number of dissatisfied Win 11 users.

All zeros if you use bulk extensions. Most of my clients don't make any payments with their extensions. I always inform them of the penalties and interest if they do end up owing. For the handful the do make payments, you have to file manually.

I'm hoping! The dad did mention his son depositing the scholarship check, because the check was in the student's name only, and then dealing with the college to send them 2 cashier's checks (1 for each semester) in a certain way per the college. Son will go online to get the 1098-T and bursar's report when they return from their trip.

Sounds like it would be on 1098T then and not your problem.

From the college's website: External Scholarships So you have been awarded an outside scholarship by a church, civic organization, your high school, business, private donor, foundation or any number of external agencies—Congratulations! Billions of dollars are earned by college students every year across the country. This page will provide a step by step guide on how to notify the Tennessee Technological University (TTU) Office of Financial Aid about your outside/external/private scholarship. Federal regulations require that you notify the University regarding all externally funded (not awarded by TN Tech) scholarships, and we want to make sure all federal regulations are followed. How to Submit External Scholarships to Tennessee Tech Please be aware that you are required to notify the Financial Aid Office at Tennessee Tech whether or not the award is paid to you directly by a donor or through the university. You are responsible for ensuring that your Tennessee Tech Financial Aid reflects all scholarship funds that you receive. This is important to ensure that no one inadvertently violates federal regulations regarding total eligibility for other forms of financial aid. When you receive notification of any award from a donor other than Tennessee Tech, please immediately notify the Tennessee Tech Financial Aid Office. If you, the student, receive a scholarship check from a private entity: Please submit the scholarship check to the Tennessee Tech Financial Aid Office immediately upon receipt by the donor. Checks should be submitted no later than August 1 for the fall term, December 15 for the spring term, and April 15 for the summer term in order for them to be processed by the first Fee Payment Deadline. Checks submitted after those dates may not be applied in time to assist you with bill payment. Make sure the scholarship check has your name and Tennessee Tech ID (your T#) listed on the Memo at the bottom of the check. If you go by a nickname or your middle name, be sure to provide your legal first name. Check to see whether the check is written just to Tennessee Tech, or to both Tennessee Tech and you. If your name is included in the "Pay to the Order of" line, you will need to endorse the check by signing the back of it. Make a copy of your award letter or any information included with the scholarship check (such as a check stub). We will need a copy of this information, but you should also keep a copy for your records. Then, remit to the Tennessee Tech Financial Aid Office.

I know, I started with prizes & awards and kiddie tax. Fund is labeled as a scholarship, and essays were required; committee judged the essays and awarded 3 scholarships. But, I could name my company Dollars & Sense Scholarship... The good news, if it's a scholarship, is that parents did not claim any education credit. But they also do not have Form 1098-T. Student is retrieving it electronically from the bursar's office. Turns out he doesn't know his password, and they're on vacation. So when they go home. That means I'll worry and obsess over what this $5,000 is, where to report it, for another week! Thank you, everyone.

It may be written as a "buy-out" but is still merely a dividing of marital assets where the dividing of cash is either not exactly equal and is used to balance out the other asset values being unequal, or it is for some other reasoning so that both parties will agree to settle.

Don't forget about adding back the depreciation. I, for one, wouldn't touch this. If you owe, you owe! I have had several sales of rental properties that didn't turn out so badly.

I don't think that tracing would come into play. The code is clear on what the inherited basis of this rental would be under this client's scenario. There is nothing to be gained by this transaction. It would cost the client money in terms of transfer taxes and legal fees to gift to the father, and then more in legal and probate fees to settle the estate for the solely owned rental to pass back to the son...all to end up with the virtually the same basis as before. The code section this falls under is IRC sec 1014(e). It requires that the donee survive for at least one year after the transfer and limits tax-free transfers to a terminally ill person and the step-up. IRS also ruled that this applies to property in a joint revocable trust funded with assets that were held by the grantors as tenants by the entireties. Some history: 2001 - EGTRRA repealed sec 1014, and a carryover basis position was implemented under IRC sec 1022. This applied to decedents passing after December 31, 2009. Sec 1022 treated basis of property received from a decedent as if a gift with basis equal to the lesser of the decedent’s adjusted basis of the fair market value as of the date of death. 2010 - TRA reinstated the estate tax and fair market value basis at death provisions, and repealed the IRC Section 1022 carryover basis for decedents passing after 2009.

IRS could invoke the Step Transaction Doctrine. Tax Advisor has a nice article on it - https://www.thetaxadviser.com/issues/2021/may/step-transaction-doctrine.html If you don't like links (like me) here is a brief overview. The IRS may apply the step-transaction doctrine, a rule of substance over form, in a variety of taxpayer circumstances to deny tax benefits derived from a series of transactions that should more properly be treated as a single transaction. The courts have developed three tests to analyze whether the step-transaction doctrine applies to a series of transactions: the end-result test, the interdependence test, and the binding-commitment test. Under the end-result test, if the separate transactions were component parts of a single transaction intended from the outset to produce the ultimate result, the step-transaction doctrine would apply. Tom Longview, TX

They don't come to us before. Before the divorce. Before dividing assets. Before dividing children. Even my own son left all his tax return copies that I uploaded to my portal for him to give his lawyer, so his lawyer saw nothing about their partnership, nothing about the tax returns before his ex quit working, nothing about all the monies they took out of his Roth to run the partnership and to live off while the ex's TIRA kept growing, nothing. Sorry, tired and cranky today!

^^ This! Your client's basis is now the basis she and former spouse had as a joint couple, and there is no step-up. She is now selling as sole owner so the exclusion is only the $250K, assuming she meets the requirements for the full exclusion she is allowed.

I have a new client. Not sure why I decided to take on this one. So far everything out of theor mouths has been questionable. But he has a W2 from a church (in Alabama) and claims that Alabama does not tax clergy. The w2 does not list state wages. I cannot find where clergy would be exempt from AL income tax. Can anybody confirm? (the spouse is a "spiritual leader" that deducts $2000 depreciation on her Sch C each year in lieu of a clergy allowance)()