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Terry D

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About Terry D

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  1. Terry D

    SECTION 199A - IN DEPTH ANALYSIS

    SSTB restrictions kick in at the threshold levels. If they are below the threshold levels the restrictions do not apply. Below taken from IS FAQ regarding section 199A & SSTB's. 8. In 2018, I will report taxable income under $315,000 and file married filing jointly. Do I have to determine if I am in an SSTB in order to take the deduction? Is there any limitation on my deduction? A8. No, if your 2018 taxable income is below $315,000, if married filing jointly, or $157,500 for all other filing statuses, it doesn’t matter what type of business you are in. You will be able to deduct the lesser of: a) Twenty percent (20%) of your QBI, plus 20 percent of your qualified REIT dividends and qualified PTP income, or b) Twenty percent (20%) of your taxable income minus your net capital gains.
  2. Terry D

    E-file already accepted

    Is it possible this return was accepted by the Drake servers and not the IRS or CA? From the client manager, right click on the client's name and select "Open Efile Data Base For Selected Client. This will give you the transmission detail. Maybe you just got one thru. To answer your second question, in the client manager, the status will be displayed. It will show accepted, rejected, pending; etc. Also, look at the left side of the screen under alerts and notifications, if you have a notice you have acks to process, click that and it will give you the status as well. Trust me when I say, once you get used to Drake, you won't regret it. Yes, a small learning curve. In the early years of ATX/Sabre Pro, I always fought with how to know the status of a return. Last year I used ATX was 2007 so a lot may have changed.
  3. I'm not sure if this actually applies. I take most of what you posted as amending from MFS to MFJ. My take is separate amendments. Where do you get the figures for the first column of the 1040X? It asks specifically for the amounts on the original return. May be the out here is do one 1040X with copies of the two originals attached with a statement attached showing the calculations to substantiate the amounts in the first column of the 1040X. I'm a bit confused. The returned filed single would seem to benefit from the MJF status where the HOH might stay the same. Let me be that bad guy here, sounds like these folks may have been on the outs with each other and now gotten back together and looking for a benefit. Maybe as you say, they just want to do the right thing. I would want to ask some more questions to see if there is something sleeping under the rug here that could take a chunk of me later. Then again, maybe I am way off here.
  4. Terry D

    Horrible Customer Service

    Once you finally get fed up with ATX's support, come to Drake, yo won't regret it.
  5. Terry D

    Rental property owned by two SMLLCs

    Agree with michaelmars, how is the property titled and to whom? Knowing this should determine if it might be a partnership. The other question is was a partnership between the two SMLLC's established? If so, everything goes on the 1065 and passes thru to the SMLLC's in their respective percentages and then onto the Sch C as a disregarded entity. Other than that, it does sound like a joint ownership.
  6. Terry D

    SECTION 199A - IN DEPTH ANALYSIS

    Only if you exceed the income thresholds. Small time folks like me can still take the QBI, possibly. A lengthy read but seems to be the best analysis given to date.
  7. Terry D

    QBI Scenario

    Thanks Gail, I can promise you I', not telling my clients anything except that I am not sure until I calculate everything. I learned this numerous years ago after having to find a way to remove my foot from my mouth. I have several rental property clients that are individuals with one property, two or more properties, and rental partnerships. I am handling them each individually. The partners that I do not preparer their individual returns will receive instructions from me for the QBI. That will be limited to the statement on the K-1. It will be their preparer's responsibility to calculate the QBI on the 1040 correctly.
  8. Terry D

    QBI Scenario

    Judy, I didn't quite catch that part. If they can't use the safe harbor then it would seem to be reasonable they meet the definition of a trade or business according to section 162. I wish there was some definitive answers with this. I am still waiting to hear how one poster said the IRS stated not to rely on section 469 when determining if the RPE rises to a trade or business. I've not seen anything on that. But, section 469 is really clear on what conditions cause rise to a trade of business. The same language is used to determine the 25K loss rule. It appears the more I study and research the more uncertain I am becoming. I'm sure we will be hearing various opinions on this. BTW- Were you or are you looking at joining the webinar from Drake explaining how Drake calculates QBI? The timing is terrible for me. I hope they archive that for later viewing.
  9. Terry D

    QBI Scenario

    I prepare the individual return for one partner. I know the income, investments, cap gains; etc, do not figure into the QBI. I'm confused at your figure for guaranteed payments. The only amounts in my scenario are approximately 279.00 respectively. It looks like you're calling the rental income guaranteed payments. Explain please. I do not know about the other partner and I can only provide the partnership income he is to claim on his 1040. I agree the QBI final figures are calculated after the deductions on the 1040. The class that I took never mentioned that. Give me resource if you can. On item #7 you are correct. I should have noted that this would be the potential deduction before anything else on the 1040. Sorry about that. Here is a blurb from the class notes that were handed out: "What Does This Deduction Do Anyway? It allows a below the line deduction to taxable income (NOT AGI, SE tax, itemized deductions, or AMTI) for qualified business income (QBI). QBI is defined as the net amount of domestic income, gains, deductions and losses from a qualified trade or business more than long-term capital gains (they get special treatment already) on the individual taxpayer's Form 1040. This is usually going to be the number AFTER the itemized/standard deduction less the long-term capital gains. The deduction is them calculated as the lesser of 20% of QBI or 20% of the taxable income. If the taxable income on the 1040 is below $157,000 or $315,000 for MFJ then the calculation is done at this point. If the taxable income is between the thresholds, you must calculate the limitation to the QBI deduction." This partnership has no employees and is all rental real estate. Therefore there are no W-2 wages to play into the calculations. Because the one partner that I know of, income will be below the threshold, then the depreciation test is not used either. My client would be looking at either the 20% of QBI or 20% of taxable income.
  10. Terry D

    QBI Scenario

    Working with a partnership that holds 11 properties that are residential real estate. I would like comments on my thoughts here to be I am hitting this right on the mark. The partnership has two partners so which qualifies them for the QBID as a pass thru entity. 1. I feel they should aggregate all properties into one activity per section 199A. Comments? 2. The total rental net income equals $41,187.00. 3. Other partnership income equals -$1678.00 ( Parts of this loss is small guaranteed partner payments that don't qualify for QBI correct?) 4. Income for QBI purposes equals $39.509 = $41187.00 - $1678.00 (figures are rounded) 5. Each partner is MFJ with income under the threshold so limitations do not come into play. 6. No W-2 wages and no depreciation test required. 7. Each partner QBID equal $3,950.90= $19,754.50 x 20% ($19754.50 = $39,509.50/2) 8. Create the statement of either trade or business under sec 162 or safe harbor method 9. Yes, I have to figure the guaranteed payments out of the QBI calculations. Comments please.
  11. Terry D

    QBI from Sch E

    Gail, I agree. The paragraph below is taken from the revenue procedure and is fairly straight forward. So, if a rental property owner hires an HVAC contractor to replace the Heating/Cooling unit, those hours should be documented and apply toward the 250. Same with a roof replacement or lawn maintenance. .04 Rental services. Rental services for purpose of this revenue procedure include: (i) advertising to rent or lease the real estate; (ii) negotiating and executing leases; (iii) verifying information contained in prospective tenant applications; (iv) collection of rent; (v) daily operation, maintenance, and repair of the property; (vi) management of the real estate; (vii) purchase of materials; and (viii) supervision of employees and independent contractors. Rental services may be performed by owners or by employees, agents, and/or independent contractors of the owners. The term rental services does not include financial or investment management activities, such as arranging financing; procuring property; studying and reviewing financial statements or reports on operations; planning, managing, or constructing long-term capital improvements; or hours spent traveling to and from the real estate.
  12. Terry D

    QBI from Sch E

    Also, in my post above, the 250 hour requirement would be met by both partners. So, I will let the partners make the decision as to whether they want to take on the task of maintaining activity logs for TY 2019 and beyond. For TY 2018, the section 162 requirements will be used as I am sure neither one of these folks will have the activity logs.
  13. Terry D

    QBI from Sch E

    >>>>>>“IRS declined to provide any further guidance on when a rental qualifies nor any bright line test - trade or business is still the standard. It specially says it will not reference 469 for 199A purposes.<<<<<<< I personally have not found this statement yet. Doesn't mean it's not fact. Please provide a reference. It appears it is much easier to determine if the RPE rises to a trade or business under section 162 than having a client provide the log hours. I have two real estate rental partnerships, that have two 50/50 partners with a total of 24 properties that invest, maintain and control all aspects of the activity. There is a profit motive, and continuity which meets the requirements of a trade or business under section 162. While in this scenario the calculations for QBI are going to be involved, I am of the opinion they still qualify for the QBID. Any comments are welcome.
  14. Terry D

    Trump Sets Final Rules for QBI

    Separate books shouldn't be that difficult. I have a few partnerships and individuals that invest in rental real estate. Each of them keeps records for each property that includes the income received, itemized expenses with receipts, depreciation schedules, etc. I agree with keeping a log of the hours of activities will cause some problems. I would propose if the property owners want the deduction they'll keep the records. I would like to see the statement that folks create for the clients to sign.
  15. Terry D

    QBI from Sch E

    All I am sure of is I started studying the 199A last May and the more I study the more confused I get. Who would have thought a 20% deduction would turn into what it has. Geez!
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