jasdlm

I've just been using 15 April.

I personally would add the $11,700 to the basis and depreciate.  It was part of the cost of putting the property into use for the first time.

Interested to see what others would do.

Are you representing the client or simply seeking information on a client account?

My recollection is that you can request direct deposit to the estate account, but often the banks reject them because the names don't match exactly (name of estate vs irs deposit).  I think the hold up on direct deposit would be a bank issue and not an IRS issue.

You are the best.  This board is the best!  Thanks so much!

Clients have various family-run businesses that all have different ownership structures (with some common owners).  Entity one bought equipment in 2019 and leased it to Entity two.  I have seen the purchase receipts, lease document, etc.  I prepared the return for entity 1.  The preparer for entity two depreciated all the equipment and took an interest deduction (backing into an amortization schedule) rather than taking a lease payment deduction.  (To be fair, this possibility was discussed before the purchase was made, but the lease method was eventually agreed upon.)  There was several hundred thousand in bonus depreciation, which entity one correctly took, and entity two elected out of (unbeknownst to the owners) when recording capital asset purchases instead of lease payments.  The equipment isn't titled, but I feel confident in the evidence chain I have that entity one purchased, paid for, and leased the equipment to entity 2.

I have been practicing for several years, and I have never had to file form 3115, but I am now being asked to prepare the return for entity 2.  I feel that I must (of course) amend 2019 for Entity 2, which I think is going to require form 3115.  2 questions:

1)  Am I correct about the 3115?  I can find many articles on using 3115 for failure to depreciate, but I can't find anything for 'whoops, we depreciated assets we don't actually own'.

2)  Do I have to wait for an IRS response/approval (I hope not) before I can prepare 2020 entity return without the capital assets and showing the correct lease payments?

Thanks much!

Prayers for your family.  Please keep us updated as you feel you can.

3 hours ago, Marie said:

I would imagine there was an informal life estate.  daughter was only child and it was done just to simplify 

Why can't people just use transfer on death deeds?  I guess there are still some states that don't recognize them.  It makes basis so much easier!

17 hours ago, Abby Normal said:

Call the IRS.

Interested to hear the follow-up on this.  I had this happen several years ago, and the IRS said sorry, too bad, can't move it.  We'll credit it toward year X and you'll have to send in another payment for year X-1. 

I would really love to know if that situation has changed.  I have been able to get EFTPS and STATE payments made incorrectly adjusted, but not federal.

18 hours ago, Catherine said:

Short-term asset sale it is.

But what about the loss?  Stays in the trust to be lost, and does NOT transfer to beneficiaries?  Since it was never business, but personal?

I was thinking about this when I responded the first time.  I feel that the loss should not transfer to beneficiaries/is not deductible because personal.  I would think the initial trust return would also be the final trust return.  Just my unresearched opinion.

Is there a 1099-S?  If so, I would just report it as a short-term capital asset sale.  

If you enter the adjustment and code 'W', ATX will adjust the basis (assuming you are using ATX), and your gain/loss will match.  I've seen it for several years (usually in amounts of a dollar or two on managed accounts; sheesh).

10 hours ago, NECPA in NEBRASKA said:

Thank you! I appreciate it. 

I mean it sincerely, so shout out (or pm :)) if you need help.

6 minutes ago, NECPA in NEBRASKA said:

I hope this is true, because as if my year didn't already suck so much, my husband and I have Covid. I was afraid that he was sick last week, but he was positive that he was not and did not get tested. I got sick over the weekend and tested positive yesterday. He got tested today, but we know the answer. His dr is sending him to a Covid clinic tomorrow to get checked over, because he is so high risk. I just need to keep him at home with me. I already lost my mom and I can't lose him, too. I hate this year.

I am so sorry.  I wish there was something we could do to help.  I live in KS; I could figure out a way to help file extensions if need be.

1 hour ago, WITAXLADY said:

aaarrgg - so you did not answer my stupid question -

is the amount of her cash what is in her back account plus her savings account per the bank on 12/31/20 - per the bank

or what she has calculated after writing  the checks out and they have not cleared???

Or what she has after balancing the bank statement

Is it literally what she should have after the expenses clear -

or what the bank says?

D

If you don't use the reconciled balance (the balance after all checks she wrote/deposits she made during the year are accounted for), your balance sheet will not balance, because your expenses will affect net income but your cash will not reflect the subtraction of those expenses.

19 hours ago, Possi said:

Last year, I notified my clients that I had zero intentions of working past June. Fortunately, I have very good clients and they trust me when I say something. 

I will be selling my business after this tax season. 

Possi, are you serious about selling?  Don't leave us!

Just now, Abby Normal said:

If you enter on Sch K as a nontaxable income, it should flow to M-1. You should also show this on the books as other income.

This has the added benefit of flowing to the basis worksheet.

Thanks, Abby.  I do have it on their books as other income.  I should have twigged to entering on Schedule K - M-1 flow-through.  I hate it when I make things harder than they should be.

There is a tax in ATX to record PPP forgiveness and expenses paid.  Far as I can tell it does nothing.  You still have to manually enter to M1.  Hmmm.

Sorry.  Hit submit too soon.  I'm particularly wondering if anyone has had recent experience with the VCP for 457 plans.  I know it's outside of ECPRS.  I'm hoping that VCP has become more friendly.  Also, as I asked, wondering if anyone feels the best option is to correct 2020 and move forward.

New Nonprofit client.  Discovered they have been overcontributing to their 457 plan (basically treating it like a 401(k)) for as far back as I've checked.  Any way to avoid disqualifying the entire plan?  I can, of course, correct 2020 by 15 April, but does anyone have any experience with prior years?  Best to simply correct 2020 and going forward and hope for the best?

Thanks for any thoughts/advice.

7 hours ago, Randall said:

I tend to agree with Sara.  I assume if the 1098T shows tuition paid and scholarships, the scholarships are used for the tuition.  I'm not going around the world to work this maneuver.

My understanding is that even if the scholarship is used for tuition, if it's not REQUIRED to be used for tuition, you can essentially 'assign' it to other nonqualified expenses (room and board, etc.) and use the amounts paid by the taxpayer as the payment for qualified expenses.  I have the bursar's statement, but I also needed the scholarship lingo to make certain they weren't 'tuition only' scholarships.  I know it's a lot of work, but in this case, it's worth $2,500 to the taxpayer. (If my understanding is correct, that is.  If not, I'm wasting my time and yours, and for that, I apologize.)

I'm leaning toward filing this way; It just seems to good to be true, so I wanted to see what others thought.

I appreciate all of your input!

I had my clients reach out to the financial aid office at the school.  I got the language of the scholarships.

Client's freshman student received scholarships of $6,000 and tuition was $4,000.  Client paid another $5,200 for fees, housing, etc.  The scholarships were not restricted to qualified expenses.

I think I can put the $6,000 on the student's return (student has $4,000 of SE babysitting income) and then claim the full AOC on the parents' return.  Student owes only self employment tax because total income is under $12,000.

I've done some research/reading, and I think this is accurate, but it's not passing the sniff test.

I've added back 529 distributions to take AOC before, but this is the first I've had where scholarships exceed qualified expenses.

Anyone have experience?

Thanks much!

On 2/27/2021 at 3:14 PM, rich said:

I do have same error to use 4562 instead of input vehicle miles on Sch C. I see if there is no 4562 attached then sch C accepts direct input but i had some furniture assets so getting error. 

Now I added car as  new asset in Fixed assets and choose option 9 in vehicle category as- 5 year other vehicle(Listed).  Once done then vehicle pops up under Auto/Listed below and answer mileage questions. this info will flow to Sch C and make sure to delete if any previously filled info directly on sch C- Vehicle mileage info. sheet.

Hope it helps.

 

I do the same, and I simply enter no cost, etc. in the asset screen.  I simply list the vehicle as 5 year auto/listed and then complete the mileage questions.

This happens to me often.  I just keep hitting 'retry' until it works.