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In essence, schirallicpa simply asked if the taxpayer could deduct $4,000 since, if he doesn't, he will pay tax on $20,000 when he only got $16,000. He didn't say the client was hounding him to take a loss, or even if the client was the one wondering about it. I don't really see a reason to call the boat winner greedy here. It's a good question. Can he pay tax on $16,000 since that's what he got? Well, sounds kind of reasonable to me, especially if this all happened within one tax year. I understand the rationale for the question and don't see any reason to assume anybody is greedy because they want to reduce their tax liability if they can legally do so.

I would not assume that the amount shown on the 1099 is fmv. Per RIA CHECKPOINT: Even though fair market value of an item is usually considered the price that a willing seller and a willing buyer would agree to, the Tax Court has taken special factors into account in determining the fair marketvalue of awards and prizes. Where it is obvious that a prize winner may not be able to resell the prize for as much as the contest sponsor paid for it, resale value at the time of receipt, not cost, determines the amount of income.43 Value to the winner44 or cost to the payor45 may also be used as factors. 43McCoy, Lawrence W, (1962) 38 TC 84138 TC 841, acq 1963-2 CB 5.44Turner, Reginald, (1954) TC Memo 1954-38TC Memo 1954-38, PH TCM ¶54142, 13 CCH TCM 462.45Wade, Nathan, (1988) TC Memo 1988-118TC Memo 1988-118, PH TCM ¶88118, 55 CCH TCM 413.

And it was sold to the same marina that donated the thing to boot. Or to boat. I think the guy won $16,000 myself.

This isn't about 10, it's about what's happening to 7 & 8.

Hey, look at that; a keyboard with integral real-time printer! (Yes, my inner nerd is showing; I know.)

What you're seeing here is a tension between the marina (which wants a big tax write-off) and the taxpayer (who wants a smaller tax bill). Just because the marina put $20k on the 1099 doesn't mean that number is right. We see it all the time with foreclosures--bank puts some low number in the FMV box and shows a big amount of cancelled debt. We look it up and find the bank sold the property two weeks later for much more, so we adjust the FMV and are prepared to argue it. IRS even says that's legit. In your case you will put $20k on Line 21 and on the same line add -$4k "adjustment to true FMV. I had a client who won a car and the 1099 showed list price. She wanted a different car and the dealer gave her a lower trade-in value, even though the first car never left the lot (and therefore never depreciated). I used the lower value as explained above and never heard from IRS. If marinas are like car dealers, they are using list price even though no one ever pays it. IRS employees buy cars too and should easily understand that gimmick.

Copied from P C World:How to turn off Windows 10's keylogger (yes, it still has one)Lincoln Spector J Confusion worries that, despite assumptions that it would be removed, the final version of Windows 10 still has a keylogger. Last fall, I discussed the keylogger that Microsoft openly put into the Windows 10 Technical Preview. The company admitted that “we may collect voice information” and “typed characters.” At the time I defended Microsoft, pointing out that the Preview was “intended for testing, not day-to-day use,” and that Microsoft recommended against installing the Preview on a computer with sensitive files. I said that “I seriously doubt that the worst spyware features will remain in the finished product.” I was wrong. [Have a tech question? Ask PCWorld Contributing Editor Lincoln Spector. Send your query to [email protected].] Microsoft pretty much admits it has a keylogger in its Windows 10 speech, inking, typing, and privacy FAQ: “When you interact with your Windows device by speaking, writing (handwriting), or typing, Microsoft collects speech, inking, and typing information—including information about your Calendar and People (also known as contacts)…” If that makes you feel creepy, welcome to the human race. Speaking of online Microsoft documents, you may want to browse the company’s overall Privacy Statement. To Microsoft’s credit, it’s in plain English rather than legalese. On the other hand, it’s about 17,000 words (as someone who’s paid by the word, I’m frankly jealous), so it will take time to find out if there’s anything else that’s truly awful inside. The good news is that you can turn off the keylogging. Click Settings (it’s on the Start menu’s left pane) to open the Settings program. You’ll find Privacy...ummm....hold on a sec...OH! There it is!—on the very last row. Once in Privacy, go to the General section and Turn off Send Microsoft info about how I write to help us improve typing and writing in the future. While you’re there, examine the other options and consider if there’s anything else here that you may want to change. Now go to the Speech, inking and typing section and click Stop getting to know me. (I really wanted to end that sentence with an exclamation point.) You may also want to explore other options in Privacy. For instance, you can control which apps get access to your camera, microphone, contacts, and calendar. I wish I had that capability in Android. Actually this seems to more invasive than what Google does !

There have been cases in the not so recent past wherein the taxpayer prevailed in reporting the value shown on the 1099-Misc, then on line 21 reducing that amount to what he was able to sell the property (in one case, a car) for, so that the FMV reflected the amount that a willing third party would pay for the property. Lynn

Thanks, JM, for your explanation and the link. Exactly what I was looking for.

So let's review. The client gambles at a casino where his name is entered into a hat every time he makes the appropriate gamble. His name ends up being pulled out of the hat. Since the boat was not his intended winnings from gambling, I can not even fathom a write off of his gambling losses associated with this boat winning. Of course he could use his gambling losses on Schedule A against any other gambling winnings, but not the boat. That would be a very large leap. So now he sells the boat for $4,000 less than what it was purported to be worth. He sells it to a dealer who, as jmdaviscpa, points out, is only going to pay wholesale price for it. So should the client be permitted to write down his winnings to the $16,000 because he did not want to try to sell it himself at retail? I don't think that would be right. He might be able to find some information about what the exact same boats were selling for at retail at the time and if less than the $20,000, I believe he would have an argument there.

To clarify, both the s corp and the shareholder will deduct the taxes and insurance, but the shareholder will also include them as income. So, when the dust settles, the expenses are only deducted once. -1+1-1 = -1

I have a client managed by Merrill Lynch advisor paying 1%. The advisor is, in my opinion, doing a lousy job of actively managing the portfolio, however. I have 6 clients with portfolios managed actively by a local advisor who charges 1% for up to $1,000,000 in value, 0.75% for $1,000,001-$5,000,000 and 0.5% for over $5,000,000. Another client with a different local advisor is charged 1% and with a portfolio held with USBank pays a graduated fee like the one above. Both of these are actively managed. This is, of course, different from whatever internal mutual fund fees may charge. It isn't clear if your client's advisor is charging this over and above the internal mutual fund fees and is not actively managing the portfolio. Nonetheless, in my opinion, this seems high. Perhaps it's time for the client to interview a few other advisors. Then again, what has been the total return on this portfolio? Sometimes higher fees result in better performance.

Wow. I have people paying 2% and 2.5% on smallish accounts. My big investors are paying much less. I need to do some reading before next tax season so I can check management statements as they come in. Although, my client who's paying the most has huge returns all the time and has for years even when all my other clients had losses, so her manager is probably worth his fee.

If she can handle doing it herself, she can save some money: http://money.usnews.com/money/personal-finance/investing/articles/2010/06/03/mutual-fund-fees-how-much-is-too-much-to-pay Vanguard Total Stock Market Index expense ratio is 0.18%. That fund attempts to mimic the entire stock market. If she really needs a financial person's help, 1.35% sounds high according to this article: http://money.usnews.com/money/personal-finance/investing/articles/2010/06/03/mutual-fund-fees-how-much-is-too-much-to-pay

Agree with rfassett . One of my clients won a new vehicle a few years ago and received 1099 on basically "suggested retail". We simply checked "other" dealers for FMV typically paid and were able to show actual value several thousand lower than 1099 on which we based the tax. No problems from IRS and we simply explained in writing our basis (of course, it was a simpler and fairer time back then).

No, that's not correct. From Pub 544: Buyer's (borrower's) gain or loss. You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale or exchange. The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. Amount realized on a recourse debt. If you are personally liable for the debt (recourse debt), the amount realized on the foreclosure or repossession includes the lesser of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The fair market value of the transferred property. You are treated as receiving ordinary income from the canceled debt for the part of the debt that is more than the fair market value. The amount realized does not include the canceled debt that is your income from cancellation of debt. See Cancellation of debt, below. So let's say a TP has a truck with basis $100,000. Outstanding loan at the time of repo is $110,000. FMV is $80,000. So according to the Pub 544, the amount realized is $80,000, which will create $20,000 loss this year. My concern here is that if next year the debt will be cancelled due to bankruptcy and won't be subject to the income tax the TP will end up with $20,000 loss, when in reality this should have been $10,000 income due to cancelled debt, or at lease zero...

I had a similar situation a few years back. Don't remember the details but the transaction was reported net on Line 21 at the FMV. KCJ advised on the reporting. I will try to reply tomorrow with more details. Have to go to nephew's soccer match.

And I catch flack for not upgrading to WIN 10. (somewhere there is an "I told you so...)

i was considering doing that as well.

well - received a 1099 from Seneca Gambling. Apparently, your name was entered each time you played certain games at the casino. 1099 was for 20K. The marina that provided the boat , bought it back for 16K a few months later, because client did not want boat. So client gets stuck paying tax on 20, even though in the end they only got 16K. But - still - they got 16K more than I did...............

No deductible loss. It is a personal asset. But now as I sit here and think about it, how did he sell it at a loss? What was his investment in the boat? I would believe that he may have sold the boat for less than what the organization raffling (if that was the case) valued the boat. But unless he spent enough on tickets to exceed what he received for the boat, he did not even have an economic loss.

Look to what the lease says. In situations as this, you can get into what's called single net leases, double net leases or triple net leases. https://42floors.com/edu/basics/types-of-commercial-real-estate-leases