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BB, you've given me a great idea on what to do with that old laptop that's waiting for destruction. Hope it doesn't cause a trip to the ER for stitches. hee hee. Just kidding, of course. I don't know how my last post translated into my husband not being supportive. There's no arguing; I made a comment in frustration and he commented. Y'all didn't hear the context or tone. It was a release valve is all, and I assure you that all is well. We'll be celebrating our 25th anniversary next month so husband has been through many tax seasons, and every year he's done about 99% of the grocery shopping and cooking too, and he does some pretty good meals, I must say!

David, as I said before, you have to go property-by-property unless the taxpayer elects to treat all of his r.e. holdings as one. The taxpayer has to meet rules for r.e. professional designation for each property, or each partnership. You can read about that here on the IRS page for partners, starting at the heading Passive Activity Limitation. Please go to the IRS page and read it, not just my little snippet below, but under that heading for PAL and under #2 it says: Obviously, the above is not conclusive. You have to determine whether or not your client meets the r.e. professional rules for each of the partnerships. You might also be interested in this court case a few years ago that addressed this issue for an LLC member. In Chambers v. Comm'r, T.C. Summ. Op. 2012-91, the Court held that the taxpayer could count the hours he spent on the LLC in his total real estate professional hours and that he should be viewed as a general partner because under his state's law (TN) LLC members may participate in management of the LLC, and because he was required to participate in management under the the LLC's articles of organization and did so. Because Chambers established that he materially participated in the LLC, he could count the hours spent working on it for purposes of the real estate professional test.

I've been pretty miserable because of some clients this season too. My husband told me this evening that I should scrap the whole thing and do something totally different.

Really sorry to hear about your mom's troubles, Terry. Put tax season behind you and be with your mom and family, and remember that we're here as your online tax family for when you need support or if you need to talk.

Perhaps some of our newer members don't know the story of how this fab forum got started, or realize that it is privately owned and maintained by Eric. One of the benefits of private ownership is that it can't be controlled by any one software company or its policies. Eric is not in the tax business, and he takes the time and his own funds to provide this space for us. If this forum and its members have helped you in any way, by answering questions, guiding you to areas to research, or just knowing that we are all going through the same things, please think of the value of that benefit that you've received for free and please consider making a donation.

Thanks for the reminder.

Paragraph 10 of the article, or IRC sec 1402(a)(1) "... there shall be excluded [from self-employment income] rentals from real estate and from personal property leased with the real estate ... together with the deductions attributable thereto, unless such rentals are received in the course of a trade or business as a real estate dealer ...."

Unless the taxpayer elects to treat all properties as one entity, then the determination of being a real estate professional must be determined on each property individually. Real estate professionals are not subject to SE tax, and also not subject to the net investment income tax. Maybe this article from The Tax Advisor will help: http://www.thetaxadviser.com/issues/2014/jul/skarbnik-july2014.html

Caption: "On April 18th, Mr Tax Preparer headed outta Dodge as those last-minute so-special clients are after him to do just one more return." Sorry I couldn't find one of the TWD zombies clawing at a locked door or gate.

It's OK. For taxpayers in the 10 and 15% brackets, the capital gain tax rate is -0-.

My husband spent the summers of his youth in a little town with a section of road that the locals referred to as Eight Mile Road, and it was still this way the last time we visit there in the mid-1990's. Only one side of that road was paved for the entire eight miles because way back in time someone figured out that they could pave twice as far at one half the width. Everyone would drive on the paved section until meeting head-on traffic, and then would move over. Why am I telling you all this, you might wonder? That is how my day has been. I've done lots of "half things" today. It's surely not making me feel like I'm getting anywhere faster because I still have to pave that other side and I'm running thin on my main materials. Happy computing!

I think where some of these people with questionable exclusions get it by the IRS is when the settlement agent asks about the move and usage dates. Isn't there some form or question that is asked of the seller whether or not they qualify for the gain exclusion, and if they say 'yes', then the 1099-S is not issued?

I feel like a babysitter. Most returns are well on the way to being out the door. One left to drop off late this week for an extension. Then one very old lady I must go see because she broke a hip, can't drive and can't get into my office any more. It's OK. I did the same for one other, and this one I've known this family for about 50 years, and she only lives 1/2 mile away. It will be close to the deadline and go on extension. They understand and are appreciative. The one that is really bugging me is a man that isn't terribly responsible with paperwork. He's had his package for almost 3 weeks and hasn't bothered to look at it or return the signature forms. Two emails and finally a phone call, he's now asked me to send only the signature forms again, this time to a different email address.

Excellent!

That was in both of my posts in the links above. Hope your returns go through now.

Here's other posts on the same thing. http://www.atxcommunity.com/topic/19668-rejects/ or this one https://myatx.blogspot.com/2017/02/irs-reject-195196-ip-address.html

It sounds as though the program thinks the coverage is for both of them. The box on line 61 of the 1040 should be blank because not everyone has coverage all year. Then you have to tell the program that the premiums paid in the lower portion of the 8962 are for only one person. Then calculate the penalty for the husband on 8965. If you've included the 8965, is the program generating an exemption code?

I have never had anyone try this, and I haven't researched this. My knee-jerk reaction is that this probably isn't allowed since these plans generally follow along with the rules that the medical expenses paid by these plans that allow pre-tax pay'ts via salary reduction have to be deductible medical expenses under the tax laws. Following through with that thought, this should disallow prepaid medical expenses for future care that aren't associated with a long-term care policy or plan. I don't know if there are any special provisions though that may be allowed if this is under a noncommercial, self-funded medical plan that the employer maintains though. Sorry, no definitive answer, just my ramblings from a very tired brain so don't take this as fact. Give it 5 minutes and someone will say I'm wrong. ~sigh~ What does the HR dept or plan administrator say?

I don't enter these W-2s. The DD is informational only, so without any taxable wages to report, there really isn't a reason to input into the return.

Rich, nothing related to the owners goes on Sch C, not even the part that is considered the employer's share. Both employee and employer shares for the owner is all reported in the adjustment section on the front of 1040. That way, IRS can see the max limitation has been applied. You try to bury it on the Sch C and IRS can't figure out the compensation and doesn't know how much of that employer's share is attributable to the owner. Next, about the final deduction. The max that may be contributed to a participant's account by one employer in a given year cannot exceed the lesser of $53K or 100% of comp (comp max is $265K), and that limitation includes the employer's share, so I think this client is stuck with a max of the $53K for each of them unless over age 50. This limitation includes the 'ee elective deferrals, 'er match, 'er nonelective amounts, and forfeitures. If I recall though, that max doesn't include catch-up for those over 50, so in those cases the max would be $59K for the 2016 tax year.

I think you are on the right track.

Terry, they do roll over.

Jack, please see code below and also the exception to qualified non-use factor: IRC 121 (a) Exclusion - Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more. (5) Exclusion of gain allocated to nonqualified use: (A) In general Subsection (a) shall not apply to so much of the gain from the sale or exchange of property as is allocated to periods of nonqualified use. But, then there is this: (C) Period of nonqualified use. For purposes of this paragraph— (i) In general The term “period of nonqualified use” means any period (other than the portion of any period preceding January 1, 2009) during which the property is not used as the principal residence of the taxpayer or the taxpayer’s spouse or former spouse. (ii) Exceptions The term “period of nonqualified use” does not include— (I) any portion of the 5-year period described in subsection (a) which is after the last date that such property is used as the principal residence of the taxpayer or the taxpayer’s spouse, (II) any period (not to exceed an aggregate period of 10 years) during which the taxpayer or the taxpayer’s spouse is serving on qualified official extended duty (as defined in subsection (d)(9)(C)) described in clause (i), (ii), or (iii) of subsection (d)(9)(A), and (III) any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the Secretary.

This person might also qualify for the reduced exclusion if his move to VA was work-related or can qualify for one of the other exceptions that would allow proration of the exclusion.

I would report the shortfall on 5329 and not pay the penalty. Request abatement. If this is the first year of the RMD the case is stronger, plus looking at the calendar for December 2016 and Jan 2017, 12/31 fell on a Sat, 1/1 was Sun making 1/2 a legal holiday where all the financial institutions were closed, so if he called too late in that last week of December then it is plausible that it wasn't transacted until 1/3/17...at least that is a somewhat reasonable explanation for what could have happened.