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For the partial year 2017 and forward, what type of return was the LLC filing? Was it a 1065, 1120, 1120S?

Once the work goes back to a lighter load, each year I go through an adjustment to my new schedule. I don't have any current personal works in progress, so I'll have to get something going soon so that I don't end up wandering aimlessly around the house or yard. My husband just watches and smiles knowing it's going to happen.

Perfect. I must remember this.

For IRS, the tax forms (1040 series, 1065, and 1120 series) all have a "name change" box near the top. Check that and it will change the IRS master file. You could write to the address where the return is filed, but I've never bothered. YMMV for the state(s) and their various depts. My state DOR requires it in writing for a global change for all its separate depts (withholding, inc tax, gross receipts tax, unemployment) and DE Sec of State for franchise tax is completely separate from DOR and definitely requires notification along with a fee.

Was it this topic? https://www.atxcommunity.com/topic/24232-no-bs/?tab=comments#comment-173137 and this article? https://www.thetaxadviser.com/issues/2020/jun/elective-capitalization-tcja-planning.html

Each topic on the forum has its own unique web address, so it is possible to save it to your browser's bookmarks like any other page. Was it me? I post a lot of articles.

It does seem clunky, and if your software carries the sq ft over to next year, you'll have to remember to increase it to the full sq ft, not the diluted average.

Thanks, Dan. I was way off on the first line, but you had a couple of errors in the figures that I've corrected in bold. I fixed up the basis and cash outlay, and this does come back to the deferred gain and basis in the new property as I'd calculated above. I do have one question for you though. In your first and second lines, why isn't the $300K held in escrow included in the amount he received and why isn't it included in the amount he paid for the new property?

I googled "OIH for partial year" with that acronym and the IRS FAQs page was at the top of the list. I guess I get lucky with a lot of my searches.

If my reasoning above is correct, then I think the basis in the new property is $487,500. That is the $510,000 paid less the deferred gain of $22,500. This basis makes sense if you think of property give up with adjusted basis of $277,500 plus the cash outside of escrow of $210,000 that he had to use. Again, maybe someone will correct me if I am all wrong.

Yes, he can do a partial 1031 exchange, however as I said earlier, he has bigger problems and larger gain that you initially thought. Here's what I think, and someone feel free to correct anything that I have wrong. What I say here is based on the facts you provided and assumes there is no debt on the property sold or the property acquired and also doesn't take into account any closing costs. In a full tax-free exchange, the sale price $612,000 less adjusted basis of $277,500 = realized gain of $334,500. That is the maximum that could be taxed in a sale. Then you have to calculate the recognized gain. If the seller reinvests all sale proceeds, all is fine and there is no recognized gain, but your client reinvested only $510,000, so that alone creates boot of $102,000 and would be the taxable portion of gain if all of the sale proceeds were held by the qualified intermediary, but that is not what happened. The problem your client has is that only $300K was held by the qualified intermediary and he took the remaining funds of $312,000. This is the big problem. At that point where the client purchased the property with FMV of $510K, only $300K of the sale proceeds were used, and taxpayer bringing the other $210,000 of cash to the transaction does not remedy this. As I said in an earlier post, any time the taxpayer touches the money before the 1031 exchange is completed is a problem! Because he took the $312,000 of sale proceeds, I think the gain to be recognized as taxable is the lesser of the realized gain of $334,500 or the cash he took out, so I think he has a taxable gain of $312,000. Maybe someone else will correct this if my thinking as wrong, but there is definitely more than the gain you initially thought it was.

Maybe start by reading this on how partial exchanges and boot can occur. It's a fairly easy read but only an overview: https://learn.roofstock.com/blog/partial-1031-exchange This one on rules of boot is more detailed and gives some examples of the traps that one can inadvertently encounter in the 1031 process: https://www.efirstbank1031.com/advancedTopics/rulesOfBoot.htm Sorry, I don't have much time today to work through numbers. Maybe I'll be back late tonight but make no guarantees to have time then either.

The asset sales aren't included. Here is what I found for the SSA's Code of Federal Regulations to determine what is earned income. Also, keep in mind that in the year of retirement, I believe that only the earned income through the end of the month preceding retirement is counted. Here's that first link: https://www.ssa.gov/OP_Home/cfr20/416/416-1110.htm And here is the link to that same Code of Fed Regs for 404.1080 that is referenced in the first page: https://www.ssa.gov/OP_Home/cfr20/404/404-1080.htm

This transaction has multiple problems going on. Client created "boot" by not investing enough (not trading even or up), client only put $300K of the $612K in escrow(any time seller touches money it has potential to create up to that much recognized gain), and client doesn't have the deferred gain that you think he has. Also, this may be only a partial like-kind exchange.

According to the IRS Q&A on OIH, you prorate and only count the month if it was for more than 15 days. This is accomplished by paring down the square footage by coming up with the average sq ft over 12 months. This should help: IRS Q&A page on OIH

@Matthew in the PNW congratulations on landing the new position and best wishes on this new path. Don't be a stranger; you are always welcome here.

To answer this part of the original question - No, 3115 is not appropriate and will not be a remedy. This is not a change in accounting method. The taxpayer missed making the election, and there is no way to fix that now.

Yes, that is what I am saying. Please see cbslee's and TexTaxToo's posts above also. Rev. Proc. 2010-51 says this: "By using the business standard mileage rate, the taxpayer has elected to exclude the automobile (if owned) from MACRS pursuant to § 168(f)(1)" and that election must be made by the due date of the return including extensions. The time for making this election is in §301.9100-7T(a)(1) and §301.9100-7T(a)(2)(i)(A) that says:

Have you actually seen the return to know that both were actually deducted? Just guessing, but is that what the client thinks, that both were deducted but weren't really? I'd want to see for myself and not rely on what the client is saying. I mean, every program allows the input for both methods and it will choose the better of the two, so if he did that and actual exp+deprec was higher then that is what may have happened. Also, client may be thinking mileage was used if he entered it for the program to calculate the percentage of use for business purposes.

No remedy. Must use mileage in the first year for that method to ever be available again.

Capital loss as long as it was an arms length sale, to an unrelated party, and not used personally or intended for personal use before the sale.

Are you using ATX? Check to see if that form had an update and make sure yours is the current version. You could try deleting the form, closing the return, maybe also closing the program, and then reopening the return and adding that form back in. See if it is calculating correctly after that.

cbslee is correct. Keep in mind that even if there was a valid 1031 exchange that was properly set up and executed, there wasn't though, the fact that he took money from it would make at least that much taxable and indicates that not enough was spent on the new replacement property for the transaction to be totally free of tax.

The fact is that we all probably have equipment that is more UTD than that of the IRS. Remember when they tried to tell us how small our shredder chips had to be? IRS is a disaster.

Not a tax professional. Runs a business providing hardware repair, virus removal, surveillance systems, and IT consulting.