Lee B

I originally assumed that your description of what happened was just imprecise. However your posts imply that he sold the original property, personally received the proceeds,and then put $300,000 into escrow. If that is what happened then he received very bad advice. In which case his receipt of the proceeds poisoned the 1031 exchange. The timeline and procedures for properly executing a 1031 exchange are very precise.

Your basis in the new property is reduced by the capital gain deferred from the sale of the first property. Just follow the Form 8824 Instructions.

Maybe this banker prepares tax returns too

If he doesn't want income then his investment should be an interest paying loan. If they wanted to do exotic allocations of revenue and deductions then they should be a Partnership.

If your IRA is self directed there aren't a lot limitations as how your money can be invested. However I am confused, is your client trying to buy an Annuity or trying to buy a Whole Life Policy with a LTC benefit? Unless you are a Licensed Investment Advisor, I would tread very carefully.

You are correct

More Depressing Details: "As of March 5, 2021, the IRS had 4,434 Submission Processing function positions that remain unfilled or for which employees are not working for various reasons,” said the report. “In addition, continued closures related to COVID-19 and limited service from the Federal Records Center impact tax record storage and retrieval. As of March 1, 2021, IRS management stated that they have more than 31,000 boxes (approximately 4.7 million documents) that need to be refiled or retired to a Federal Records Center location. As of March 1, 2021, the IRS estimated there were approximately 70,000 tax return requests that need to be fulfilled."

Yes, one the life lessons that I have learned the hard way is that you have to care of yourself in order to take care of others.

I didn't realize your basis was negative. Let's assume that the -55,000 is arithmetically accurate. If so, that means there was enough debt on the PTS books to allow withdrawals of capital excess of basis. Either way, the prior basis numbers and probably the previous 1065 are not reliable.

IRS Topic # 510: "Standard Mileage Rate - For the current standard mileage rate, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses or search standard mileage rates on IRS.gov. To use the standard mileage rate, you must own or lease the car and: You must not operate five or more cars at the same time, as in a fleet operation, You must not have claimed a depreciation deduction for the car using any method other than straight-line, You must not have claimed a Section 179 deduction on the car, You must not have claimed the special depreciation allowance on the car, and You must not have claimed actual expenses after 1997 for a car you lease. To use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use the standard mileage rate or actual expenses. For a car you lease, you must use the standard mileage rate method for the entire lease period (including renewals) if you choose the standard mileage rate."

Assuming that the partners just did an S Corp election, then the partner's capital was exchanged for stock with no tax implications. Of course your client's outside basis and inside basis may or may not be the same?

Under Payer's information on a 1099 NEC, you have to enter either the payer's EIN or their SSN. I assume he means that an ATX software glitch is not allowing him to file when entering the payer's SSN?

Both SSN and EIN have 9 digits

You need to insist that they go to an attorney specializing in elder law. I wouldn't touch this for $ 10,000. I know it's common practice for law firms in my area to ask CPA Firms for bids to prepare gift, estate and trust returns in situations like this. If the attorney wants to engage you then fine, but don't put yourself on the line when it's not your area of expertise, because inevitably down the road they are going say but the CPA said . . . . . . . . .

You can't avoid mortgages by gifting property. plus the medicaid lookback period in most states is 60 months. "All asset transfers within the timeframe of the look-back period are reviewed, and if an applicant is found to have violated this rule, a penalty period (a period of Medicaid ineligibility) will be established. This is because had the assets not been gifted, sold under their fair market value, or transferred, they could have been used to pay for the elderly individual’s long-term care. If one gifts or transfers assets prior to this look-back period, there is no penalization. The date of one’s Medicaid application is the date from which one’s look-back period begins. In 49 states and D.C, the look back period is 60 months. In California, the look back period is 30 months. New York will also be implementing a 30-month look-back period for their Community Medicaid program, which provides long-term home and community based services. (At the time of this writing, NY has a 60-month look-back for nursing home Medicaid, but no look-back for Community Medicaid). As an example of the look back period, if a Florida resident applies for Medicaid on Jan. 1, 2021, their look-back period extends back 60 months to Dec. 31, 2015. All financial transactions during that timeframe will be subject to review."

Based on the information you have provided, there was no 1031 exchange. 1031 exchanges involving the sale of the old property and the purchase of the replacement property have to be handled thru a Qualified Intermediary usually involving investment real property. There is no after the fact magic you can perform to address this situation.

Actually the Covid 19 EIDL Loans were handled thru banks. If it was a regular Disaster Loan then it was probably thru the SBA.

She's probably referring to an EIDL Loan, which are not forgiveable. She should have already received an SBA 1601 statement letting her know when the monthly loan payments start and how much. These loans can potentially be a real can of worms because they have very restrictive loan covenants which can really hamstring a business! So you are either going to have to dig in and learn about these loans or refer her to someone else so you don't get blamed if problems occur.

The reason they are copying and printing is because many of their software systems aren't capable of sharing information. The reason that their systems and hardware is so out of date is because Congress hasn't appropriated the funds to update their systems and hardware. Then on top of that Congress and the While House keeps making so many last minute changes. I would have thought that this group of people would understand why we are in the mess we are in. Unfortunately, I guess it's human nature to scapegoat the low hanging fruit. I really feel sorry for the people working at the IRS because it really isn't their fault.

Copied from MarketWatch: Long-languishing 2019 tax returns and tardy tax refunds are being held up partly because of a shortage of working printers and copiers at Internal Revenue Service processing centers, according to a new Treasury Department report. Copy that, you heard right. “Lack of functioning printers and copiers contribute to the inability to reduce backlogs,” said a Treasury Inspector General for Tax Administration (TIGTA) report on the current filing season. Some background on the printer problems and their wider significance. When the pandemic first hit last spring, the IRS temporarily shut down its facilities and wound up with more than 20 million pieces of unopened mail and hard-copy 2019 tax returns. Then began the slow process of digging out from the 2019 backlog — all while sending out three rounds of stimulus checks and then revving up the current income tax filing season, which ends May 17. Meanwhile, taxpayers counting on 2019 refunds from their hard-copy returns waited and waited and waited. By the end of 2020, 8.3 million individual tax returns and transactions still had yet to be processed, TIGTA said. The tax collection agency has 1.7 million returns still in process that were filed before 2021, IRS Commissioner Charles Rettig told Senators last month. Most of those are 2019 returns, he said. The plan is to work through the backlog by the summer, Rettig said, noting that the agency is resorting to overtime and weekend shifts. When TIGTA staff inspected Ogden, Utah, and Kansas City, Mo. tax processing centers, they wrote, “a major concern that surfaced during these walkthroughs was the lack of working printers and copiers.“The IRS workers at those centers said “the only reason they could not use many of these devices is because they are out of ink or because the waste cartridge container is full.” That mundane office headache matters, the report said, because the copiers and printers are used to copy and churn out important tax documents. “The employees we spoke with were concerned that they would have a work stoppage if these remaining devices became unfunctional. This issue has been an ongoing challenge since March 2020,” the report said. 42% of the printers and copiers used at the centers are either unusable or broken, and others are still functioning, according to IRS estimates cited in the TIGTA report. The snafu has to do with a new contract for printers, the report said. The old contract ended in September and the new contract started in October 2020. But the employees speaking to TIGTA “indicated that the new contractor may not have been coming into the sites to replace the old printers due to COVID-19 concerns.” IRS told the watchdog agency it’s working on the matter and replacing the devices. The IRS had no additional immediate comment beyond report. The TIGTA report comes at a time when the Biden administration is seeking an increase in the IRS budget. If approved, the money would go toward measures such as adding staff to increase tax audits of rich people and corporations. But opponents say a report like this shows that’s a bad idea. “This report again demonstrates the ineptitude of the IRS,” said the right-leaning Americans for Tax Reform, founded by Grover Norquist. “The agency’s inability to do its job is due to incompetence, not lack of funding.” The IRS has so far received 121.1 million tax returns for this tax season, according to agency statistics through the end of April. The authors of the TIGTA report say they are concerned about whether the IRS has brought on enough seasonal staff to handle the current tax season and the backlog." Truly unbelievable It's like watching a slow moving train wreck They still have over a million unprocessed 2019 paper filed returns.

As long as your client didn't cut employee wage rates too drastically or reduce FTEs it should be pretty easy, especially if you can cover the $53,000 with payroll only, if you have to document additional covered expenses then it will be a lot more time consuming.

NEI

Do you prepare and file their quarterly and annual payroll reports for your client or does your client do their own?

How did he even receive a 1099 C? There must be more to this story?