Pacun

I strongly suspect they might have goofed up, My client when he spoke to current lender, they said, when the loan got transferred from old lender to them they paid some 20K interest on behalf of client to old lender, but client never paid this amount from his pocket. I am not filing return until this thing gets sorted out, my client is even ready to file complaint against current lender, come what it may

Well, those $20K are actually deductible because he is getting a loan for that. Maybe other transactions like that are deductible.

Let's say I have a house and I need to pay $20K on mortgage interest and I go and get cash advances from my credit cards, I still deduct the mortgage interest. I think it is the same.

The additional for the parents is only for Qualifying Children

<<Additional Payments for Parents and Others with Qualifying Children

Parents and anyone else eligible for a stimulus payment will also receive an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.>>

Additionally, anyone who is claimed as a dependent will not receive the stimulus rebate.

<<Exclusions

Individuals who file Form 1040NR, 1040PR or 1040SS are not eligible for the stimulus payments. These returns are normally filed by Nonresident Aliens, residents of Puerto Rico and residents of the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI). Residents of U.S. possessions will be receiving their rebates directly from the possessions.

Also ineligible are individuals who can be claimed as dependents on someone else’s return.>>

Nice conclusion but I still didn't understand.

Cientax... It is my understanding that as long as both TPs have valid social security, file 1040, etc., they will get the stimulus refund and they also will get $300 per head on the dependents that qualify. In this case, it is my understanding that TPs will get $600-$1200 for themselves and they will get $900 for the 3 children if they were under 17 on DECEMBER 31, 2007. Am I correct?

I would have the daughter pay rent (even if parents had to gift her the money) and then take all expenses.

Good point.... BUT why do you want to deviate from reality??? The truth is that she doesn't pay rent. I would go with intent and reality (both are the same since parents did not intent to collect rent from daughter).

Parents bought a 4 bedroom home to rent out and have their dependent college student use also. It is four bedrooms and is rented out all year. Daughter comes home for summer. They rent to 3 students who each have bedroom and run of the house. Is it legal to depreciate and use 75% of the expenses as offsets to rental income? Do they have to add rental income from the daughter. Each person pays $250 a month. I am confused on this one. Any help would be appreciated.

Thanks, Kathy

Depreciate 75% of the structure, 0 for the land and take 3/4 of utilities, taxes, mortgage interest, insurance, etc. The other 25% will be considered personal use of the owners, which might fit on schedule A (taxes and mortgage interest).

Can you take Section 179 for used equipment that a business purchased?

Thanks

It must be new.

There is some info. on page 177 of pub. 17 for rural mail carriers, also instructions for form 2106. I'm not sure what is in box 32, is it 'qualified reimbursement'? If so, it should be set up like an accountable plan, and therefore not included in wages on the W-2. If his actual vehicle expenses are more than the qualified reimbursement, then the total expenses go on form 2106, and also the reimbursement. If the actual expenses are less than or equal to the qualified reimbursement, do nothing. Rural mail carriers cannot use the standard mileage rate.

Thank you Linda. I am reviewing the information and hope some one else replies to my question.

I have a W-2 from the Postal office with entries on box 32. TP is a rural mail man and purchased a jeep and moved the direction wheel to the right. TP is getting his last pay check stub and I will check if what he got reimbursed for miles, is added back to box 1. In any event, can any one tell me how the postal office does its calculation?

Can I depreciate his jeep?

Any information about this will be appreciated.

Good suggestions. Also, other employees might not be affected by this if they made less than $87K from this employer or made more than $89K from all employers including any Sch SE in 2006.

Of course medicare doesn't have a ceiling.

You should mention how much he made so we can suggest you the best course of action. If he made $6K, there is no need to even mention the ITIN on the thread. If he made $20K, maybe. If he made $30 and paid more than $15K on mortgage interest, there is no need to mention the mother. As you can see, I am assuming a lot of things here, since the question came from a TAX PROFESSIONAL, it also bothers me the fact that you do not put all related matters on the table.

You file as HH (based on the information you have tea-spooned out from the barrel). He is living with his child and he is providing more than 50% of his/her support. Again, if he made less than $10, it does not matter if he files HH or single with one dependent. Also, if he made $20K and paid $12K on mortgage interest and $2K on real estate taxes, it doesn't matter if he files HH or single with one dependent.

NOt within the facts given, but if BOTH H&W withdrew $10K from individual IRAs they could file 2 forms 5329 and claim total exemption of $20K??

Yes, they will not pay penalty on $20K if both are firts time home buyers.

I believe the term "First Time Home Buyer" means EXACTLY that...the taxpayer's

FIRST home bought.

Booger

Each state has different rules. If you sell a house and you move to another state and buy another house, you are considered a first time home buyer. If 3 years have passed, you are considered first time home buyer.

Client is single and owns a house. I itemized on Federal but it seems that West Virginia doesn't allow itemize deductions. Is this correct?

Keep in mind that you filing last year's taxes and therefore your client was 60 on December 31, 2007.

On the other hand, the mom retained a deemed life estate by continuing to live in the house, if she had pass away while living in the house, the house would have been included in her estate tax return. However, I don't recall if the the move to the nursing home would be considered a temporary absence and thereby maybe causing the sale to fall within the Section 121 exclusion.

The brother would be considered a nominee holding his brothers' money. and as such, reports 100% of the interest on Schedule B and and reports the nominee amount it the line provided for same.

Since no one provided more than 50% of mom's support, have son that got the 1099int claim her as a dependent and 25% of the $42 of medical expenses should go to sch A (provided they are using house money to pay for medical expenses).

Basis of the house should be her basis plus improvements. If any of the children lived with her, that child should be able to exclude the gain if he lived there for more than 2 years in the last 5 years prior to sale.

By the way, whose taxes are you preparing? Ask other sibblings to sign form so that your client can claim her exemption.

I am trying to input a new asset for Sch C its a computer. It's used 60 % business.

So I enter the date in service, 60% business use New etc. the I go to enter the cost 495 and it takes it down to 257 basis. ok but when I want to use 179 I input 257 for 179 but then it still gives me a current deprec of 25 So its over depreciating. What am I missing.

Thanks for any help

The only thing I can think of is that you are entering an amount lower than 297 (just as you did on your posting "oops typo its 297 not 257") I have calculated and everything works.

Try delete and roll over from correct name. Sometimes I have two clients with the same name. Also, open the 2006 program and verify that all the forms are there.

I had a client in to sign returns. While he was here he wanted to do some tax planning as he will begin drawing his ss benefits this year. I plugged in his projected ss benefits on this year's return so we could get an idea of how his return would be affected (yes, I know this was stupid but I was in a hurry). I guess the automatic backup feature saved the return before I closed it and now I've efiled the return with the projected figures for 2008 on it and not the 2007 figures. Is my only option to amend the return? Or can I somehow retract the efile before it is accepted?

ATX rejects any created efile when you save again. So, I guess you did your tax planning and recreated the efile. You must amend if it is not rejected for other reason.

Hi everyone,

It has been so long since I have dealt with the sale of a residence that I don't know how to report it anymore.

There used to be a form for that (2119 ?).

At any rate, client lived in California many years, moved to Nevada in Nov 2006 to take a new job, spouse stayed in current home in CA. Client sold house in California to his niece in July 2007, client's wife then moved to Nevada. Client sold house for $299,000 and bought a new house in Nevada for $325,000.

1. Where and/or do I report this sale of prinicpal residence ?

Client had to rent an apartment from Nov 2006 to July 2007 to be able to work in Nevada. Hardly able to commute 380 miles round trip on a daily basis. He came home on week-ends and back to work in Nevada - Monday - Friday.

2. Is it possible to deduct the rent for the apartment as Temporary Living Expenses or other such statement? If so, where and how do I deduct it ?

Client also gave $15,750 to his niece as "Gift Equity". It was listed in the "Special Sale Instructions" of the title company as "Seller to give Buyer a gift equity of $15,750.00. Buyer is Seller's niece". There is no mention of this in the "Seller's Closing Statement". I don't believe it is mentioned in the "Buyer's Closing Statement" either (however, I don't have that document in front of me).

3. Is this action reportable by either the Seller or Buyer ? Is it taxable to the Buyer ?

I bow to my learned professionals on the forum for any help on this.

Jerry

1.- (answer to question 1) You don't report the sale of primary residence anywhere if they had a loss.

2.- Not deductible since the apartment rent is a personal expense. Husband will have moving expenses (transport expenses for himself and his belongings).

3.- Seller needs to file a gift return and taxes (most likely) will be killed by the credit. Niece's basis on the house should be reduced by gift amount and that's it.

>>use Balance of principal as Sales Price on Sch. D or FMV?<<

Why use either? The instructions for Schedule D say not to report a Section 121 exclusion unless there is additional non-excluded gain. By the way, doesn't the mortgage company now owe your client $10,000, since the house sold for more than the loan amount?

Interesting point Jainen. By the time the bank is finished with this guy, this guy will owe the bank more than 10K.

Bank charged about 4K to my friend because he was late with payments and the bank sent him a foreclosure notice. If lawyers had repossed the house, I believe my friend would have owed more than $10K on attorney fees. Also, I think the bank will sell his property for less than the FMV and I believe there is a clause on loan application to cover the bank's position. So the 1099-A is a document just to show the ex-owner that he doesn't have any rights on the property anymore.

Thank you Linda.

In my client's situation, it doesn't matter which house he can use on 982 because he will get a 1099-C for both. The difference between one 1099-C and the other will be about $2K, which is not much.

I agree, you don't enter anything on line 21 unless this was not his primary home and no need for 982.

I have a related question. Client owned and lived in a house for 2 years and 2 months. He purchased a second house and move to it. He rented the old house for 3 month and they he walked away from both houses. He lived about 6 months on the new house. On both houses, he will get a 1099-C showing that he had debt cancellation. On the first house, he didn't report a gain because he used the 2 year exclusion because it was his primary residence. This year's Sch D shows a profit on the older house which is wiped out by the exclusion and a personal loss on the new house, which is not deductible.

My question is, which house will he use for form 982 since he will get a debt cancellation for both houses?

File the return based on what actually happened or the actual intent on the date of the transaction.

I'm confused. Is the 1996 date incorrect, and everyone is just assuming it is 2006? Do you need to report the sale of the home to the kids on M&D's 2006 return? Were they renting to Daughter and Son prior to the sale?

Nice catch. I am assuming that she meant that the sale occurred in 2006. Regarless of whether the son and daughter were renting, they didn't own it for 2 years.

I have a client who in 1996 sold there home to their daughter and son in law. In order for the daughter and son in law to qualify for a loan, my client reduced the sales price of their home to the tune of about $100,000.00. Daughter and son in law lived in the home prior to purchasing it, for at least two years, but sold the home after only 5 months of the purchase.

My clients, the mom and dad still have not completed their 2006 tax return, I will be working on that right away. Daughter and Son also want me to prepare their 2006 return. The sale of the home 5 months later did generate a profit from purchase price to sale of about 100,000.00. In other words what mom and dad deducted when sold to child is what child ended up with as a profit.

My thinking is that mom and dad should have to file a gift tax return, because obviously they gifted 100,000.00 equity in the home. (and this is not just an asumption on my part, parents agree as well as comperative sales in the area).

My question is how do I show this on the gift tax return, and also does this mean that daughter and son now add the $100,000.00 gift of equity to the basis of the home which then makes the sale pretty much a break even thing?

I am no expert on the gift tax thing, so any thoughts and help would be greatly appreciated!

Thanks in advance,

Deb!

Let's assume, parents bought house for $300K and sold it for $450 eventhough the house was valued at $550. If parents sold the house for $550, since they lived in the house for more than 2 years, no taxes would paid.

Currently, child has a short term gain of $100,000 and you want to see if filing a gift tax form, his gain dissipates. His basis will be the same even if mother files a gift tax.

DOB is Jan 21, 2981.

Dad brought info to me & hesitated on DOB, so I even confirmed with Mom

And thanks for the responses.

Does amending to claim EIC raise red flags?

Seems pretty clear cut, but you know, when things just seem too easy ... I just didn't want to fall into any traps!

It seems a pretty straight forward return so amending shouldn't be a problem. She should get EIC for both years if salary is low and no one claimed her.