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From pub 544: The amount realized from a sale or exchange is the total of all money you receive plus FMV of all property or services you receive. The amount you realize also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage. In pub 544, look under the section sales and exchanges.

Is the soc sec and SE income his only income? There's the AGI limitation and phase-out, but his income if single would have to be about $81K for it to be the cause of the additional reduction.

You didn't give dates, but the holding period of gifted property includes the donor's holding period. For the portion the sons inherited, the holding property of inheritied property is always considered long-term.

Since the stock was in all three names when mom died, only 1/3 of the value should be in the mom's estate. Her 1/3 gets the step up in basis. Because that stock was purchased entirely with mom's funds, in effect she gave each of her sons a gift of 1/3 of that stock at the time they became owners. The date mom put the sons' names on that stock is important in determining their basis. If the sons became owners at the initial purchase, then their basis in their 1/3 is equal is the adjusted basis paid at that time. If the stock was 100% mom's and then she added their names later, then the rules for determining the basis of a gift would apply. If the FMV is greater than mom's adjusted basis on the date of the gift, then the sons pick up her adjusted basis on the date of the gift. If FMV is less than adjusted basis, it is more complicated. Here's a summary on the IRS site of determining the basis of gifted property. After determining the basis of each of the sons' 1/3 ownership that they got from mom while she was living, to that you'd add whatever stepped up basis they inherited from mom's 1/3.

Awesome, JB. Tell her to only take one course in frikkin. No minor is necessary. We don't want you to wait 4 years for that pie!

On the TIN, that's what I would do. I realize the ptnship didn't have the number and applied very late, but ultimately that is the number assigned to the entity, no matter what the name. Attach an explanation of the EIN assignment and the name change to the returns. Have you advised your client about the late filing penalties for 2007. For 1065s due after 12/20/07, it's $90 per month, per partner, for max of 12 mos. That's $3,240. I'm assuming 3 partners, that son and DIL are each a partner with the mom. That's if you have no reasonable cause. The partnership may also be assessed the failure to furnish information timely (K-1 to each partner) at $50 each. That amount is assuming it wasn't intentional.

Margaret, you are correct with that reference. An existing partnership that incorporates to an LLC but is still filing as a partnership simply continues to file a 1065 using the same EIN. The entity doesn't file a final return. It would be a name change only. If you are rolling over from the initial return's file in ATX for the LLC for the second year, be sure to check the name change box on page 1. Also make sure to change the entity type box on page 2 in Schedule B from partnership to LLC.

Lion, I think you are right in your reporting on Form 1065: Guar Payments, including health insur should appear on 1065, pg 1, line 10, and page 4, line 4 of Sch K. Guar Payments excluding health insur on page 5, Sch M-1, line 3 Make sure that page 3, sch K has the entry on line 13d for wife's health insurance. That could be what's throwing you out of balance, because that would affect the reconciling of the Sch M-1 to that first line at the top of pg 5, line 1 in Analysis of Income. I think your K-1 reporting sounds o.k. Hope that helps.

Happy Birthday, Taxbilly. Sorry I'm so late. Hope you had a wonderful day!

Other than 2 on extension, my return was the last one finished this year. All of it was complete in mid Feb with the exception of my husband's part time Sch C. I did that Sunday evening. We owed money, otherwise we'd have filed 2 months ago.

Thanks Linda, It is new even though a 2007 model. They bought a left over from the dealer.

Landscaping business, a partnership, purchased an '07 Chevy 3500HD 4WD with reg cab. It has a dump bed on the back, seating for 2 or 3 passengers (not sure if it's bench or bucket seats), no seating behind driver, 100% business use. Chevy calls this heavy duty, and I know this truck weighs over 6000 lbs, but I don't think it heavy duty for IRS definition because I don't think it weigh over 13K unloaded. I am always confused over how to classify this. Is this just 5 yr listed property (vehicle)? Does it qualify for the 50% bonus deprec without limitations? Cost was almost $35,000. Could I use sec 179 for the full price, or is it limited? I think my head might explode...

Good for you, JB. Enjoy the time with your daughter.

bcolleen, was yours was sent back because the client's sig was missing? Kea is asking about the preparer's signature. It seems to me that if the IRS will accept a rubber stamp or computer-generated printing of the preparer's signature, then Kea should be OK. Kea was asking about signing a return as a preparer & faxing that return to his/her client for filing. As long as the client's signature is original, Kea's idea should work. The worst case I can see is the IRS saying that Kea didn't sign and assess the $50 preparer penalty for failure to sign the return.

Thanks. I think it just shows how old I'm getting. :)

Is it possibly a name control issue on the 1041 EF info form that's in error?

ACRS stands for accelerated cost recovery system. ACRS-19 was for real property property placed in service after 5/8/85 and pre-1987. ACRS was the predecessor to MACRS, the "M" meaning modified. This method used a table that was 19-year 175% declining balance with a mid-month convention. The table had yrs 1-20 down the column and the 12 months across the top. It should be fully depreciated by now. I looked at the input for the asset entry, and I believe the method you would choose is A19, and the convention code would be MM for mid-month.

Client owed back taxes for 2004 and 2006. Just a week ago, she paid these based on payoff figures I got through e-services by email. Her checks have cleared her bank, but account transcripts as of today still shows balances outstanding plus add'l interest. Should I ask for a different report, or write in through e-services again? Here's my problem: 2008 debt cancellation income is creating a balance due on her return of $10,500. She has $2,000 to send in now. Can she get an installment agreement approved before the back year payments are posted? If not, would she be better off paying the $2K with an extension request, then waiting for the payments to post, and later file the return with the instal request?

are both returns identical? maybe you missed something on one of the returns - like qualified divs that are taxed at a lower rate, even though the taxable income on both returns is the same?

How about having the boss write a check that your client can mail in with 1040-V?

Did you check the box for 'Simple Trust' upper left corner of page 1? That should put the $300 exemption on line 20. Is DNI populating?

Taxpayer is filing her return as married filing separate. She received 1099C from credit card debt canceled. Credit card was in her name only. Client is still married, but separated from husband. Separation has not been formalized in any document. She (my client) is living in and paying 100% of mortgage on marital home. They are getting divorced, not finalized yet, no settling of assets as yet. My question: how much of the home's FMV and debt would be included in solely the wife's insolvency calculation? Is it 1/2 of FMV and 1/2 of debt, if they still own it together, or would she include all because the mortgage co could come after either party? Just to add some juicy details: husband was diverting mail, bills and money. Skipped off to NYC and left her with all this crap. Once he left, she found that the house was almost in foreclosure, which her parents helped to keep. Back year taxes had outstanding balances which we just last week got cleaned up and paid off. Lots of other stuff too. Husband is in banking!

Amazing. I use that tab all the time & never noticed that worksheet. Thank you so much.

Taxbilly, thanks for the important reminder. I am totally stressed over these clients. I need to step back & look at the bigger picture of what's really important in my life. I too was a cargiver: 6 years ago my husband was going through treatment for stage 3 cancer during a nightmarish tax season. Later that year, he was barely back to work & my mom fell and broke her femur & elbow on the same side of the body. The femur was so badly broken, even with a rod in place, she had to go for a 3 month say at a nursing home & was on complete bedrest for 6 weeks of that. All this while, I was also taking care of my dad, still alive at that time, but had many physical limitations & parkinson's. My dad has since passed, but thankfully my husband and mom made full recoveries and are still with me.

Thanks, Gail. That's what I thought, so I'll have to see it and then decide.