Max W

Thanks, Joan. That did the trick. Still had to make some adjustments, but at least this time they worked.

This might be a software glitch. Have run into it before and was able to juggle a few numbers and correct it. However, this time, nothing seems to work, because Sch D becomes involved and would affect the 1040.. When setting up efile, an error message comes back " Total Sch E activities must equat amount reported on Sch CA Line 17 Col A. Adjust col C and/ or d as needed" The error is linked to FTB-3801, Sch E activities. The problem is - the FTB3801 worksheet is showing Other Adjustment as a loss (-$140K), when this is the net gain (($180-$40K) The only other place that the $140K shows up, is as net gain on form 8582. Have any of the CAL preparers run into this before and how was it solved?

Thank you , Judy. Everything worked out ok. It is the ATX 8824 work sheet that gave me fits. Now I see that I was overthinking it and making it more complicated than it is.

I rounded the numbers the wrong way. It should be $125K mort & $225K cash out. =, $350K minus $200K new prop. = $150K. That works out on paper, but cant get it to work on the worksheet. Also, does the $40K depreciation get recaptured?

Client exchanged a $350K property for a $200K property (bad move right there). Basis of sold property $160; depreciation $40k = Adj Basis $120K Mort paid off $100K; cash out $200K. = $300K boot. Paid cash for exch property $200K. Net boot $100K. (300-200). Besides the $100k boot, isn't there a Cap Gain on the transaction? Don't seem to get the proper results using the 8824 worksheet. Any ideas? TIA

here is the link again. just tried it and it worked fine http://www.susanmooney.com/?page_id=530

Life estates work best when they terminate on the last parent's death. When they don't, you will run into some complications. The following, gives a pretty good explanation, with examples, of a life estate, sold prior to TP's death. Note - Link is invalid. I've sent a PM asking Max W to follow up with the link or to provide it so that this post can be edited with it included.

There is no bank involved. The time share company is the lender and takes back title on foreclosure. They lose nothing, they just resell the time share to someone else. With banks it is a different story, unless they take and sell the property There is no mechanism on Form 982 to write this off. Time shares do not fit any of the categories of assets, so it can't be written off there. It is not rental or business property and it is not the primary residence where the COD can be used to reduce basis.

Jack. FMV has everything to do with it. http://www.irs.gov/publications/p4681/ch01.html#en_US_2014_publink1000192656 See paragraph "Sales or Other Dispositions (Such as Foreclosures and Repossessions)" The FMV stands in lieu of a sale price and since the FMV was Greater than the debt cancelled, there is no tax liability. Since it is personal property, and not a primary residence, the question is how to report it. I am leaning to offsetting the COD reported on Line 21, with an entry on Line 35.

the numbers came from a 1099-C. I doubt that an A will be issued, especially coming from a time share. Most of the large mortgage lenders seem to handle 1099's appropriately. Usually, the A comes first and then a year or more later, as you say, the C is issued.

Client had a timeshare that was foreclosed. The debt was $45K and the FMV was $50K. The COD does not fall under any of the categories for discharge of debt, form 982. Since the debt is less than the FMV, is there any way to offset the COD? I've thought of Line 35 as an adjustment of income, but do not know if that is acceptable. Any thoughts? TIA

I treat these the same as if they were in Box 7 and should be added to gross income, unless they are already included. As for item #2, you will have to find out if he or the office received the payment, if there are other MD's or providers in the office. If not, it is all his.

To Jack and mcb, the difference may be that one location is a company store and the other a franchise store.

Thanks, JM, for your explanation and the link. Exactly what I was looking for.

Let me clarify. The S-corp that the client runs, is housed in buildings that the client owns. Client collects rent, but the S-corp, clients business, has been paying property tax and lnsurance on the building the client owns. The previous preparer deducted the tax and insurance, but did not add it as income to Sched E. Can the S-corp still deduct as long as those deductions are added as income to Sch e???. I have tried to find substantiation for this, but have not hit on any yet. (Got to show the client something from the IRS or tax code)

Client has an S-corp and operates out of building owned by the client. S-corp pays rent to the client for Sched E, but also pays property tax and liability insurance. Shouldn't the tax and insurance deduction paid by S-corp be included as income to the client? And then, can the client take the deduction on Sched E, I have been unable to find any definitive substantiation - except for this - "Deduction only allowed to property owner . . . Taxes are deductible only by the person on whom they are imposed. A similar rule applies to expenses and interest" Appreciate any help.

tHIS MIGHT HELP! http://www.nolo.com/legal-encyclopedia/nebraska-probate-shortcuts-32147.html

http://www.irs.gov/pub/irs-utl/Acceptance Agent Training.ppt SEE FRAMES 47 & 48 An AA only reviews supporting ID documetnation, original or Certified Copies and attaches to W-7. A CAA Reviews and Validates the documents and attaches to W-7COA, Certificate of Acceptance.

Catherine, that is not the case here. All the money the client receives as child support, MUST be spent on the kids and accounted for.

Any return can be amended withing three years of the filing the original. http://www.irs.gov/uac/Nine-Facts-on-filing-an-Amended-Return There is one exception - change in filing status. This has to be amended within 3 years of the original due date.

Rita, that is not the case. The client was told by the atty that the CS pmts were Not taxable.

The de minimus rule is $50 in income. http://www.irs.gov/Tax-Professionals/2014-IRPAC-Public-Report-Burden-Reduction-Subgroup

According to court documents. there is absolutely no doubt that the payments are designated as child support and that they terminate when each child reaches 19. There is no mention in the docs about alimony or spousal support. The mystery is why? Is there some benefit to somebody somehow?

We have run into several of these payments. They are mostly payments to vacate the premises. Usually they are correctly reported in Box 3. In the case that they are in Box 7, a Sched C-EZ is added with an offset of the total amount to Line 21.

Update! Spoke to client yesterday, and he says that all the money he receives goes to paying certain expenses for the kids, mostly private school tuition. He keeps track of the expenses and keeps nothing for himself. I still think that the IRS would construe the money he receives as alimony. I'm still scratching my head over why the atty would set this up. But then atty's and taxes is not a good mix - as we all know.