MsTabbyKats

Rollover...put it back into an account within 60 days

I've never done, nor am planning to do gift taxes.  Yet a situation arises...and I have a question that is probably simple but I can't figure it out in my readings.

Father gives son something worth $100,000 as a gift (let's say an apt).

Father can exclude $14,000

Does father pay tax now on $86,000....or is the $86,000 rolled up into some account that is used after father dies?

Father is not rich...no big estate here.

Thanks in advance.

Thanks...

Unlike the typical client..when I told him loans were not taxable...he said he knew he had to pay.

If he's OK with it...I'm OK with it.

So....the client said that he was told it would be taxable...so...back to my original question....was I doing it correctly?

I guess a loan is not always a loan.......

I just asked him to call the companies...and go over this.

They are loans...and he is repaying.

Did he by any chance terminate his employment with the company that the retirement plan was with?  Generally, if the participant is no longer employed, the loan is treated as a distribution.

I doubt it...since he didn't mention it.  But I'll ask.

Hmmmm...that's what I was thinking...but I was going by the coding. (And suppose he doesn't pay it back?)

Is there a place to indicate this?   Something on 5329?  Code 12 (other)?  and then take out the entire distribution?

Or, should I change the Code to 2 on the 1099-Rs?

He had 3 distributions...two were coded 1....and the third was coded 2.

Taxpayer is in 30's

Took loan from retirement fund of $25,000 (code 1) for medical bills

This is taxable

AGI is $90,000

Form 5329

Line 1-$25,000

Subtract $9,000

Line 2-$16,000 (not subject to penalty)

Line 3-$9000 (amount subject to the 10% penalty)

Line 4-$900 penalty

Is the above all correct...distribution is taxable...but only $9000 is subject to penalty?

Thanks

Don't give marital advice!

I'm confused too.

Taxpayer did work....but didn't get paid in money. Got services instead.

I'd do s C .....and expense it all as "barter expense".

Or...issued in error.

We can't take the value of services as charity....babysitter should not take the value of her service as an expense.

Around here, $250 would rent a room -- with no house privileges, no kitchen privileges, no food, no garage, no storage, no laundry, no dry cleaning, no shopping for the roomer, no anything at all except maybe a mattress.

Around here, you couldn't even get a parking spot....an outdoor parking spot at that.

I have a different take on this.

The "kid" already said he didn't want to cause a problem...and I assume because he told you his mother claimed him, had no expectations of claiming himself.  Most likely he told you his mother claimed him...so you would be aware to "not" give him the exemption.  This "kid" does not want to go into battle with his mother.

Just tell him what the difference would be if he claimed himself...and tell him to work it out with his mother (ie-she lowers his rent or gives him  lump sum) to cover that difference,

ETA...for all you know, he puts his money in the bank.  I doubt $250 is more than half of his monthly upkeep...assuming mom pays the rent, electricity bill and all the food.

No...what I think happened is that he had to find someone who would  "check the box" indicating that for whatever reason, he wasn't liable for the tax...and the person charged him accordingly.

He did not want to pay me up front....got really angry and sent me some nasty e-mails.

One said, since we are of the same ethnicity....I should be more considerate towards him.

Another one said I was bigoted against Chinese people. (His wife is Chinese...but I never even met her.)

Then, after he probably paid dearly to get this person to "check the box" he came back to me because I'm cheaper.

I mean...70 and still hasn't paid off his student loans!!!   I think the 1099-C was credit they got in the wife's name.

Listen to the stuff I had to put up with:

His wife takes the subway to work...about an hour away.  So..they rented a second apt closer to her job...which of course, he wanted to take as a deduction.  His reasoning was that "she is such a fragile little thing...you cannot expect her to travel for an hour each way by subway".

No...friends...he didn't get that deduction.

Oh, don't get me started!  (Too late!)  I had a guy in here bragging about how they finally got out of debt.  I look in his crap, and there's two 1099Cs.  He can't believe he owes tax on that.

 

Hello???  You got $15,000 of shoes and make up at your house that you never paid for. 

Oh please....

I had a guy (I think I wrote about this a few years ago...when I was new here) who still owes on his student loans.  He's almost 70.  Anyway...a few years ago he gave me a 1099-C for $35,000....and he went ballistic when I told him he had to pay tax on the forgiven debt.  I asked him if he knew he wouldn't pay off the debt...why did he spend the money.  His response "They gave it to me".  Then he hung up on me.

Anyway...he came back to me the next year...and I told him he would have to pay me in advance. (I mean...I had done all the work..plus spend an hour on the phone to IRS just to confirm I wasn't missing something).  He got mad...and said I forced him to find someone else the prior year who charged him a lot...and how he had trouble finding someone (we live in NYC...there are perhaps 1000 tax prepares per square mile).

In all the years I've been doing this...I have heard this a few times and only from Non-Americans.

They have low incomes....and they have kids.

EITC!

Out of habit...I say "refund".

I have been asked..."How do I get an $8000 refund if I only paid in $1000?"

So...I have to explain "The American Way".

Who is paying his tuition?

I'm not seeing where it's a donation. Sean did some work....and was compensated. I'd do a C.

What box on the 1099?

Nobody else guessed!

So...I looked at the IT-253, and at least it  has "carryover" lines.

The instructions don't have anything about "death of a spouse".  But, there is a lot about beneficiaries and about "recapture".

Now...I think a car is only owned by one person (again...we don't have cars here...and last time I owned a car I was single).

My guess is: It depends on whose name the car is in.  If the owner died, part of the credit has to be recaptured.

If the owner lives...he's entitled to "whatever".

And, that's my final answer.

JB-

This is why I talk to clients as little as possible.  I don't want the details of their lives.  I live in apt. building...and unless someone can e-mail or fax me...I go down to the lobby to collect their papers.  And I go down to the lobby to hand them their return.

No more...bring it to my apt.  No more...sit down and I'll do it while you're here.  And I cut to the chase on all phone calls.

FWIW...one of my EITC gals had to pick up her return today because she's flying to Aruba on Friday.

Well...my son, the civil servant is kind of dissatisfied with his job.

Last spring I suggested the HRB class...and I'd transition my clients to him. (DH just sold his business...so why am I still working?)

Anyway.....he declined the offer.

Considering we are "the top minds"...and most of us are baffled...just imaging the baffling of other people.  Let those IRS agents be baffled.

I remember when they changed the Schedule E a few years back...and nobody noticed.

At the IRS conference in the summer one of the speakers said that "since just about nobody got it right" they weren't going to penalize etc. for that year.

My passive take on this is to depreciate any repairs over $200 from now on.

Good thing I'm not upstate....my software doesn't have IT-253

Guess 1:

You have to figure out the % of usage of each spouse...and that part rolls over

Guess 2:

$0

(Just a guess based on NY wants to keep the $$$)

I just hope I don't lose this one....if he wants someone more familiar with GA.

Really nice guy, easy to work with...and generally a 2 W-2 and one child in daycare return.

I have a client in GA.  Nice guy...PhD is rocket science type of guy.

He bought a zero emisssion car (hey...I'm from NYC...we don't have cars here) and he sent me a certificate showing a $5000 GA credit.

I did the return....his tax was about $3000...so the credit covered the entire tax liability.

Then he asked me about using the $2000 for next year.  I looked all over the form.  Didn't see anything about carry-overs  from last year or to next year.  I read the GA booklet...and it didn't say anything about this.  I called the GA tax dept....and the rep never heard of this.

But...my client insisted that his friend got this carryover.

Long story short (after many google searches)....on the GA Environemental page it mentions this carryover.

So....after several calls....I finally got connected to "the right person".

This credit does indeed carry over for up to 5 years  There is no line for it on the tax return.  You (the client or preparer) have to keep  track.of how much credit is left, until it's used up.  The GA Environment Dept. keeps the certificate on file.

Weird....  It's one of those things that "how would you know unless you know".