RoseK

All I found on the subject is that bonds after death still have to pay taxes on the interest. I would assume that the same rules for some interest not being taxable because the bond is invested in fed obligations. That may help a little. The only other way to lower the intest is to find out if the Uncle had reported and paid tax on any the bond intest sometime before death. Other than those two ways out. The ref book I am looking at says that unless the decedent made the election to pay any of the interest before he died, it is all taxable to the estate, is considered IRD and is taxable. It is taxed the year redeemed. If the trust redeems them before distributed it all is taxed on the estate/trust return. If the bonds are distributed before redeemed the recipients would include the interest on their own personal returns. This could lower the tax if the recipient times the year he redeems any of them. He could hold them and only redeem the number that would not affect his tax rate. A thought. That is what I found, Good Luck! RoseK

Hi everyone, When I went to ATX community with this question was when I found it gone so never got any ideas from you all. Has anyone dealt with contractors or interior decorators who did work at one of the charitable organization "Benefit Houses?" For anyone who doesn't understand what I am talking about. In our area in the "elite" area of town some owners of the to-die-for homes allows a charitable organization to hold fund raiser functions and host tours of the house AFTER a group of interior decorators and contactors have worked their magic on the house. After all the work is finished there all different benefit functions at the house and there are tours of the house for the public on some of the days. When all of this is done the owners of the house are left with their home decorated by the best in the area. My problem that I am holding up finishing a return for starts with the client owning a business where he is the only member of the company who does artistic designs on walls using plaster and paints, glazes, etc. He also refinishes floors with designs with different woods and other flooring materialsl He was chosen to finish the walls in several rooms of the "______House". He was to present an invoice for his work so that it could be added to the brochure for the tours. His bill was for "10,000, He worded the amounts as: Project totals: $10,000 - Donation total: 47500 - Total Due: $2500. First, he was never paid the $2500 which he tought was supposed to be the owners of the house. The "project manager" told him that he could deduct $500 on his BUSINESS tax return. He thinks I should put the entire $10,000 on his Sch C, $7500 as a contribution and $2500 as a bad debt. I don't know who told him he could deduct $500 but I can't find anything that says he could take anything other his out of pocket costs I was under the impression that you cannot take your services/time as a contribution on Sch A and don't remember anything about contributions on Sch. C. Has anyone dealt with these Benefit Houses and know the tax treatment for the "chosen few" who transform the homes into palaces. . I can't find anything in my reference books that talks about this. I really could use some input because I want to have a good way to convince my client of the outcome I think you all will give. RoseK

Hi Bill (Wisconsin) You are getting my first reply since I joined about 20 minutes ago. I am also in WI and glad to know there others on board. WOW you really do have two amazingly intense questions About the tuition deduction on Line 11 I REALLY had my mind jogged because when I first read the question, I was thinking it was just the stupid way WI treats the Fed tuition adjustment because they considered it a subtraction. But When you said "out of state" I remembered there was some difference and just pulled the WI-X to read the line 11 instructions. I hope I haven't had too many students attending out of state schools because I am screwed. I would think that Wisconsin would expect the EIC to be based on the Fed income without the tuition adj. Just removing the deduction on Sch I without the line 11 entry would probably flag the return for a closer look. So I am thinking they would expect us to refigure the fed eic. Personally I think we should ignore both adjustments, but the education adj is a biggy and would cause the client a big problem. Regarding the difference in WI depreciation and the 1/2 SE, I never heard that we had to adjust that amount. There isn't anything in the Sch I instructions regarding the 1/2 SE, and it is not one of the 45 listed items subject to an adjustment on Sch I. RoseK