Pacun

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.

Based on your information, I see no reason not to take EIC....and I would amend last year and claim it as well.

Please verify date of birth as stated on my previous amended posting.

Grad student in medicine, age 27, single, claims own exemption & no one else can claim her.

Tuition of $32K+ is paid by student loans each year.

Lives on her own, but parents obviously give her $$ to help with living expenses.

2007 return:

Wages $8,712

Divs 10

Tuition deduction: ( 4,000)

AGI 4,722

Std ded ( 5,350)

Exemption ( 3,400)

Taxable income 0

She was 26 last year, return showed very similar $$. Previous preparer didn't take EIC. So this has me doubting EIC calcs on this return I'm doing are correct.

ATX is coming up with EIC of $296. It looks to me like she is allowed this. Could someone who is comfortable with EIC please confirm?

Thanks for any help.

ANY program will not calculate EIC if date of birth is not entered. So, I believe previous preparer didn't enter her correct date of birth. You are correct, take the credit.

ALSO, being 27 now means nothing regarding previous year. Give date of birth so we can assist properly if you want to amend.

I am in DC and I do not have problems with Maryland efiling and I have not registered with MD.

I would appreciate any help. Have client who was paid to get Masters Degree (paid tuition by re-embursment) in 04-05. He resigned in 06 so Company deducted from pay part of Tuition paid and forced a promisary note for balance. Client paid all back ($7K out of Vacation pay they held, $25K paid off note) in 06. Can this be amended as Sched A Misc Job expense (all in 1yr) or do I need to amend 04 & 05 to get College Lifetime Credits. Any options or opinions please, thanks, JB in VA.

I would assume that the tuition reimbursement is a loan that you are responsible for if you leave the company. Since in fact, your client left, he becomes personally liable for the loan. I would amend and get the education credits. Make sure you keep good records. Is the company called SRA? (not that matters).

I have a client who moved to New York City. Part Year MD and Part Year New York City. What forms besides the IT 203 have to be filled out for New York.

You have to file State and NYcity forms.

he can file MFJ if he chooses to file an election and attach a statement to claim his wife as a US resident. He must then claim all of her income as worldwide income on the return.

Publication 519 (page 10 for choosing to make your nonresident spouse a resident)

Did Page 10 say 1040 or 1040NR?

TP uses 2 vehicles for business (80% each for delivering computers.) TP wants to use the std mileage rate. My question is if this option is used will TP loose the ability to claim other expenses such as depreciation. My other question is, where do you enter interest paid on the vehicles. Line 9e of the vehicle expenses tab of the sh-C is not active.

Thanks

Jeff

You take mileage or actual expenses which include depreciation and interest.

Yet another opinion. He cannot file 1040 MFJ. He can file MFS. If Gail is right, he should file single.

Am I the only one running into this scenario?

Perhaps I am using a methodology that just needs some tweaking . . .

I take my laptop to a client's home, prepare the return using ATX Max, check it, get it ready to efile, export to a flash drive. I then return to the office, import the return from flash drive to ATX Max on my desktop. When I click on efile I get some message about not being able to set up efile (goes by too quickly to read) and then the program immediately starts downloading acks for tons of files that have already been completed. And although it seems to not change any dates, DCNs, or statuses it's really buggy in that nearly all my "complete" checkmarks in the e-file manager vanish.

Grrr! How annoying. I've put the checkmarks back (which is no easy task) 3 times already. I considered just leaving them go but find I miss the usefulness they provide in sorting physical files.

After the kooky download I am able to proceed with the efile of the imported file without any problems at all. Acts no different that the ones done on the desktop computer.

Any ideas?

Elfling

My suggestion is... leave the date blank on 8879 form. Then try to create the efile, solve all other problems and leave only the error message about the date. Print, have the client sign and then export your file. When you get to your office, import it, open it up, type the date and create the efile on the desktop computer.

Hello Everyone

Have a client who gave 12k to his ex-wife towards child care support for his daughter, this was not court mandated but mutually agreed upon, my question, does he gets to take credit for this amount on his 1040, i dont see any line item on 1040 to deduct. Somebody please advice

If he doesn't have that particular dependent on his return, he cannot claim the credit. It is called (adjusted just for you) dependent care expenses credit.

client has own business. he bought a new cell phone. He uses phone for 85%for buss. can this be ded. as listed prop. and take first-year expensing deduction for % of use.

I don't see why not.

She makes a better picture than my "meme". She will not stay still long enough for a picture. If I had a camera out last night she would have. She had been to the spa and had her nails done and was striking a pose like your little one. She helps me sometimes when I am at home doing taxes and sits in my lap or on the chair beside me.

Even with the "better picture", the dependent cannot be claimed because he made too much money and he is not under 24.

My brain just won't squeeze one more thing out tonight - help!!

Single-shareholder s-corp has dissolved business. Only a few thousand of assets, which were distributed to the shareholder in exchange for his stock and an unpaid loan from shareholder of $50,000.

[shareholder loaned money to pay all the debts of the corp before going out of business.]

There are no assets with which to repay the loan. Do I leave the liability on the balance sheet with an offsetting negative retained earnings??

Or zero out the loan and post the offset to retained earnings which zeroes out the whole balance sheet?

If the shareholder was willing to pay $50,000 for the desk and telephone set, just assign assign the cost of the desk $40K and assign $10K to the analog telephone device. (I am assuming that the only assets were the desk and telephone).

I have an LLC that filed as a partnership on Form 1065. During 2007 both members sold their units to an outside party. The outside party is a corporation. Since the LLC is now a single member, they elected to file as a corporation. I assume that we file the 1065 as final using date of sale as the end of year. Since the assets are still in the LLC would our final balance sheet be the balance sheet on the date of sale? I do not think there is any reason to show distributions of property to original members because they sold their units not the assets. I think I would just show the K-1 ownership at end of yr...sale date as zero. Does this sound correct?

I have never had this situation so I am trying to determine how we report the sale of units on the 1065 or do we?? I know the gain will go on their 1040's Sch D.

Any comments are welcome. This is my year for LLC issues and there is still a month to go!

It is not clear to me if you are talking about two corporations and an ex-LLC. Please clarify.

If I understand correctly, partners sold their interests to a corporation so you have file a final 1065 and dispose all assets and reports gain on schedule D.

If one of the partners started new LLC, and wants to file as a corporation, you just need to file a first 1120.

Thanks.

I said schedule C by mistake because on the back of my mind I was thinking about SE taxes. I have done this 1065 for a couple of years but this is the first time they are not spliting evenly. Thank you again.

Guaranteed Payments to Partners; which are based on their active participation. Deductible to the Partnership, but taxable to each Partner for his pro-rata share.

Does it mean that I will have to file a Schedule C with the amounts from K-1 and guaranted payments?

LLC with 2 partners share losses and profits 50/50. These are 2 acrobatic dancers.

Each time that a partner performs, he gets paid $200 and the rest goes to the pool. At the end of the year, one partner made $3,000 more than the other partner. How do I report this on K-1? If I leave the 50/50 sharing, each gets equal amounts on K1.

Sounds like a vacation home rental to me.

Sounds like schedule E to me.

Request an ITIN for lady and file 1040NR.

File 1040 MFS for husband.

As long as he didn't provide more than 50% for his own support, he qualifies mother for HOH and to claim his dependency.

I am looking at a W2 and it does not have a SSN!!!! TP has 2006 return which has ITIN. He is not carrying one today but name on the w2 is same as the name on the ID (issued in a foreign country).

How do you deal with this situation?

Thanks

Jeff

Paper file using ITIN on 1040.

"What if someone out there is needing a fresh social security number so that they can find work and get a drivers license or fresh credit. Losing a tax return with name, ssn, and possibly date of birth can do a lot of damage to your client and a lot of good to a good thief."

Why will you use a social security number when you know they might get if there are other 300,000,000 that you can use?

How will you get a driver's license with the tax information? NOT in DC.

1 800 tax 1040

option 8 for Español.