jklcpa

Does the 1099R received by the client show the entire cash amount that was received, or is it just the excess amount over premiums returned to him?

7 minutes ago, BulldogTom said:

The thing that has me stumped is this client is pretty meticulous in his recordkeeping, especially for someone 81.   He does not have any records of anything coming back to him as dividends.   He remembers they sent him a letter telling him he did not need to make payments anymore, but he says he never got a dividend check.   As soon as he decides to cash out the surrender value of the policy is nearly equal to the face value of the policy and 100% of all contributions have been returned as non-taxed distributions of premium.

It does make sense if you think of a whole life policy's surrender in a different way. When the policy is surrendered and CSV is received, that is a return of premiums and the excess that is  being reported as taxable is that which has grown beyond the premium, and that is why it's said that the premiums paid over the life of the policy is considered basis.

10 hours ago, mcbreck said:

Mine doesn't show that. I'd need the detail anyway as I show a bill price and then give a discount. Thanks.

I don't think it automatically comes forward from 2022. When you update the file from last year to create the 2023 return, you would have to check the box to update the bill payment screen.

For MFS, they either both itemize or they both use the standard deduction.

When you run the MFS calculations, from what you described with the husband paying the mortgage from an account solely in his name, he would get the entire interest deduction, and she would have to itemize even though the standard is higher.

If you are still using Drake, in order for it to properly analyze joint vs separate returns, I believe you must have three separate input screens (and please make sure that the program doesn't show one itemizing and the other using the standard):

• one for the mortgage interest and any other potential deductions paid solely by the husband with "T" indicated at the top
• one for any potential itemized deductions paid solely by the spouse with "S"
• and a third one for any potential itemized deductions paid jointly with "J"

Please watch for the state impact as well when presenting them with which filing status provides the best overall choice.

32 minutes ago, jasdlm said:

My login.gov ID, which has worked for months for other payments, etc., won't let me file W2s.  It's so incredibly frustrating.

I ended up with a personal account to log into for SSA using that login.gov and then I realized there is no longer a link on that page for SSA BSO. I had to Google to find the BSO page and found that my old username show up in a drop down box on the BSO page that allows me to access it and file W-2s.

If that hadn't worked, my backup plan was to use an online site to prepare and file them.

4 hours ago, Catherine said:

However, it has been useful to have the facebook group to see or to report what's going on if there is a problem with the forum. I think that's why it was set up; so there would be an alternative just in case.

HVKen was referring to the actual FB group for the ATX software support, not the group I set up.

Filing 1065s for the LLCs also removes a great amount of detail from the 1040 and gives the appearance of being separate from the individual return, no comingling of assets, etc.

Determining whether or not a husband-wife LLC is a disregarded entity is a matter of state law. If the LLC is formed in a state that is NOT a community property state, the LLC defaults to a partnership unless an election is made to be treated as a corporation.

The exception is where the LLC is set up in a community property state and meets the exceptions in Rev Proc 2002-69.  If it meets the criteria, it is considered a "qualified entity" and may be treated as a disregarded entity for federal tax purposes.  The IRS will accept this position for federal tax purposes. Likewise, LLC may file as a partnership for federal tax purposes and the IRS will accept that position also.  Consistency in filing from year to year is key, otherwise a change in filing is considered a conversion of the entity.

The requirements under 2002-69 for the LLC to be a "qualified entity" are:

• The business entity is wholly owned by a husband and wife as community property under the laws of a state, a foreign country, or a possession of the United States;
• No person other than one or both spouses would be considered an owner for federal tax purposes; and
• The business entity is not treated as a corporation under the applicable Treasury Regulations.

None of the above addresses state reporting. Please check your state's law to verify that filing as a disregarded entity is acceptable.

32 minutes ago, DANRVAN said:

The intent of TCJA was to eliminate the federal tax subsidy of state and local  development incentives.

Yes you are correct.   

It is gross income per section 61.

26 minutes ago, DANRVAN said:

Sounds like a  tax planning question, better than coming to you after the fact.

Thank you, Dan. That was my conclusion but wanted another set of eyes on this.  You are correct that it is a planning question for the project that will most likely be completed in 2025.

1 hour ago, kathyc2 said:

Judy, did you see this?  https://www2.deloitte.com/us/en/pages/tax/articles/tax-reform-impacts-on-section-118.html

Not that exact article but a similar one. Thank you for posting.

1 hour ago, DANRVAN said:

Is this a property tax rebate?

No, up to 20% of building's cost.

Different browser may work, or maybe try setting up with login.gov.  I'm not sure if you can have a log in with both of those authenticators though.  

This particular rebate is from the state for redevelopment of certain designated areas and is paid after project's completion. An actual rebate, not a credit. This will be an apartment complex in an SMLLC.

Are these rebates considered taxable income because of the exception under the TCJA sec 118(b)(2), meaning this would be taxable income?  Is it correct that these rebates are taxable, or am I misinterpreting that?

Seller and purchaser should both be filing form 8594 with the returns that document the sale, and those must agree. The sales I've been involved with, one accountant prepared the form and sent to the other party for review, acceptance, and inclusion on their return.

Remember that any items in the sale that are ordinary income are reported in the year of sale and are not eligible for installment sale reporting.

Agree with Lee.  If the taxing agency gave your client credit for the payment being made on 12/31/23, then I'd use that date.  Depending on which type of electronic payment and how it is processed can affect the timing of withdrawal. 

SS-4, tax returns, and bank account should all match the name as specified in the articles of incorporation.  Which is it, with the "LLC" indicated or without?  Is the bank account already opened, and did the bank specifically request the SS-4?

Thx

The business also can't use the same wages for the ERC as used for a PPP loan so there is no double dip there either. Paychex wouldn't know how much of the wages may have been used to qualify for the loan.

Here's to health, happiness, and prosperity in 2024!

May your holidays be merry and bright!

The search requires at least 4 letters.

Of course mine has 11. 

I also had no difficulties with Login.gov. If you got a confirmation, it should be ok. I suppose you could always log in again to double check the payment history or scheduled payments.

Doesn't sound like Frank at all, and I agree that Freddie was better.

1 hour ago, schirallicpa said:

The LLC is just being created - real estate to be moved to it - but I don't think the LLC gets anything more than the current owners cost basis.  Just wanted to quickly double check

It will depend on the tax reporting type that the LLC will use.  Corp, partnership, or disregarded each have their set of rules. This is an older article from The Tax Advisor but may be helpful:

https://www.thetaxadviser.com/issues/2009/oct/contributionsofpropertytoanllc.html