jklcpa

Amend; it affects each partner's basis. State that correction is to allocation of distribs only and total distributions are unchanged. You don't want rhis to be a case of inconsistent treatment by partners vs partnership.

schirallicpa, as Abby explained, you would have until the date in June 2024 to get it to the IRS. A moot point now, but IRS extended the due date of the 2020 returns for everyone to May 17, 2021, so wouldn't the 3 year portion of the rule take that to May 17, 2024 or was there additional guidance that said to use the earlier date of April? As I said, a moot point now for this case, but I'd like to know either way.

Memorial Day is to honor those that have died while serving. It should be a solemn day of remembrance, and it was once called Decoration Day for the activity of laying wreaths and flowers on the graves of those fallen soldiers. For some of us that have lost family and friends in war, this isn't a happy day. Veteran's Day is to honor all those that have served in the military.

The ones I have entered have all come forward. IIRC, this is one of the items you select to either roll forward or not when first creating the file for the year.

It depends. I believe it is included as earned income for purposes of calculating the student's standard deduction, and any amount above that is unearned and subject to the kiddie tax, that is if kiddie tax applies to this child. Check me on this though.

Probably. The amount received isn't a lot when considering cost of higher education costs today. As long as student meets the requirements for the funds to be tax free, he or she can exclude it and sounds as though it may be the case. Then for the parents, was the net amount paid after reduction for the scholarship still more than the allowed amount so that the credit claimed is still unchanged and correct? If so, then even though the amount of education expenses shown as paid was the incorrect amount, no amendment is needed. I agree with Tom that you may be overthinking this.

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.

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.

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.

"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.”

Of course, it seems so obvious now. Thanks for explaining, Kathy.

^^ 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.

How can that be though? The amounts for 2024 are exactly double at $4,150/$8,300, so applying the same inflation percentage should result in the amount for 2025 family being exactly double that of single coverage if what you say is true. Something else must be factored in because the amounts for 2023 weren't exactly double either. The 2023 amounts were $3,850/$7,750.

So it will be $11 until the third party contract is renegotiated in 2026 at which time the PTIN fee will probably be revised again. https://www.thetaxadviser.com/news/2024/may/regulations-finalize-ptin-fees-for-tax-return-preparers.html#:~:text=The IRS arrived at the,training%2C supplies%2C and overhead.

In determining gross income for the filing requirement, gains but not losses are used in that determination. It is not the proceeds, but the gain that is taken into consideration. That being said, even when the basis is reported to IRS and no gain exists, the AUR will be using the sale side only and this new client may receive a CP2000 in about 18 months. You should explain the filing requirement to the client, and personally I'd advise this client to file a return to avoid the notice. Even without an extension, there shouldn't be any penalties assessed since no tax is due and the client doesn't actually have a filing requirement. If penalties are assessed, those should be easily explained and abatement requested. Filing also establishes the statute of limitations date in the event that you are missing some piece of income from this new the client. What about a state filing requirement?

@BrewOne, I'm curious about how often you find issues by going through this exercise? I have only one client where I feel this may be useful but have never done anything like this and haven't personally known any preparer that does. Maybe this is will be year I get this client a POA.

It's in the 1040 instructions, pub 501, the interactive tax assistant on the IRS site, tax research books such as The Tax Book, Master Tax Guide, should easily be found using a search engine such as google, etc ....

The site does have the option to stay logged in, and stays that way until the user clears browsing history unless leaving cookies intact. I'm logged in almost all the time. The site also has the ability for a user to log in anonymously too and stay that way.

That's covered on the FinCEN site's BOI page of FAQs. See section D. https://www.fincen.gov/boi-faqs#D_5

I wasn't asking if the preparer must send two emails. Based on what Margaret said here: ...what I meant was, for example, must each party signing the 8879 have his or her own separate email address.

Does a form requring 2 signatures need to have two separate emails?

I am wondering that as well. Also, do you have access to the Drake forum?

Any time is ok with me for the conversion business-wise, but I may have withdrawal during the downtime. As always, thank you for taking care of us so well, Eric.

Oh right, he meant after the program updates. I had that happen once mid-season but hasn't happened since then. I'm more tired than I realized.

What program are you having to sign into again?