Max W

There is no free lunch. The tax was deferred on the contributions to the IRA and when the money us withdrawn, it becomes taxable. Also, annuities come with a lot of downsides, high commissions, early withdrawal penalty, no beneficiaries. The client should do some due diligence and not listen to an annuity sales persons, some of whom probably rank right up there with used car sellers.

It was incorrect returns. The K-1's, both as LLC and last year taxed as S-corp, all had losses assigned to her on the k-1's Box 1. Shouldn't the company been evaluated and her equity assigned in dollars? Then from what I understand that equity is taxable. The main problem in trying to get this corrected is that the person doing the books is a 10% owner.

Going back and looking at everything I found that the LLC made an election to file as an S-corp in 2020. I looked at the prior two years and found negative basis there, as well. The client started as an employee and then she was made a partner with a 10% share of profits and the following year 45%. So, it looks like she is a member/partner that shares in the profits (none so far) and has no investment in it. So, I would think that she just has a zero basis.

Let's take this one step further. Client used Turbotax and somehow he took both expenses AND mileage. Now he has been audited and the auditor says he elected to take expenses and depreciation. I am looking for a loophole that probably doesn't exist. But one never knows.

I guess that it explains it. I was concerned seeing the negative $55K. Drake software won't take a negative beginning balance, so I will have to attach the client's worksheet. A bit more of a hassle using Drake.

Thanks. I was hoping you would both say that.

Client prepared his own 2018 and 2019 tax returns and took depreciation and expenses. Now he finds out that taking the mileage expense would give him a much greater expense. Can that return be amended? Would he need to file a 3115? Is there any remedy at all?

Decedents home was sold and the stepped up basis was equal to the sale price. The closing cost produced a loss of $35,000. What happens to this loss.?

I received my client S-corp basis worksheets from my client who has a 45% share in an S-corp that was formed last year. Prior to 2020, it had been an LLC Partnership. The worksheet started with "Beginning Year Stock Basis ($55,000)" This must have been the carry over basis from the LLC. Can this be done, or shouldn't this have been reported as a capital gain upon closing the LLC?

The only time you would need to use a worksheet with the old 1099-MISC, or the new 1099-NEC is if there was tax withheld, and you could probably work around that, too. Just enter the amount paid on Sch C.

With only 10 days left to file the return, MFJ is a huge risk. Everything could be lost of the IRS rejects the POA. MFS salvages something and it could be amended to MFJ if circumstances change.

I would be extremely wary of any general POA's, especially if it is purchased online, or from a stationery shop. The IRS looks for certain wording and if that is not present, they will reject the return. If it is drawn up by an attorney, it might have a better chance. The POA has to be sent in with the tax return. Filing MFS is a safe bet. There is not enough time to refile if it gets rejected filing MFJ. If hers is also filed MFS, and the IRS accepts the return, it can be amended later to MFJ, if necessary.

That is not a new number. It has been the collections number for non-business collections for at least 20 years.

You get a lower set up fee for having direct debit, not a lower interest rate. It is always substantial difference and it keeps changing. At one point it was $45 vs $225. Also, if amount due over $25,000 , it has to be direct debit.

From somewhere I recall that if structures on land, such as a fence, are less than 10% of the value of the land, they can be expensed. This property is in SF and the land for this $1 MM property is 70% of the basis.

It is the same client. Except that last year, the income was only $1500 and it went on Sch E. I am not questioning it as to it being taxable, but as to where to report it. There are a couple of small structures that were there for the tenants a gazebo and a toilet. He does not advertise. It started when one of the tenants wanted to use the back yard for a party and it just spread by word of mouth.

Client occasionally rents out his backyard for small groups, weddings, parties, etc. He provides no services, nor helps in any way with activities and has no expenses involved. The question - Is it Sch C, or Sch E. I am inclined to just put it down as other income. What opine you all?

HUD has rules for making pre-payment. If they are not followed the loan holder can refuse the payment. The 2 main rules are; 1.) the mortgagor has to send a 30 day notice of the intention to prepay.; 2.) the pre-payment has to be made by the due date of the next payment and include any interest. https://www.hud.gov/sites/documents/43301C5HSGH.PDF

Usually when a return gets held up it is for an identity issue, or a credit issue, such as EITC. This year, because of the changes made mid-stream,such as the UI exemption, those returns have to be processed by hand as the software hasn't been developed to process them electronically.

Without having any tax withheld and without any earned income, there is nothing to be claimed. No tax, no injury. The only exceptions are for PTC and community property states. With $27K income and a family of four he should be able to get a moratorium on his student loan payments. With some of the statements coming out of DC, it may be that some of the student loans will be dismissed.

California, and there may be other states, does not conform to the treatment of HSA contributions and does not allow a reduction in taxable income. Sometimes the W2 has will show the same income for federal and state, in which case an adjustment on the state side has to be made.

29 million returns that have to be processed by hand!!! How many mistakes are going to be made by the IRS? The system is broken. And guess who the clients are going to blame?

The case of selective amnesia. Case closed! I sure miss Joe Kenda. The best police detective program, ever.

I have had that happen on occasion with M/L, M/S and E Jones. One is not aware of the problem until the page is printed, so a lot of toner gets wasted.

Thank you.