Gail in Virginia

I believe you are overthinking this. I think the 2019 could be used in 2020, but has no bearing on 2021 even if it was used to calculate the 2020 return. I think.

A 709 is for gift tax returns. Once the person is deceased, they can't make gifts- the property would transfer by inheritance. The basis would have been reported on the 706 the previous year, even if it did not transfer until this year. Not may area of expertise, so if someone knows different I am willing to learn something new.

I would not touch this one with a ten foot pole, and that includes the spouse. However, the penalty for the withdrawal from retirement accounts will occur in the year in which the withdrawal occurs. So if I were his spouse, I would not file a joint tax return with him in that year, or ever again for that matter.

If he has legal custody of the child, I don't think this is even be a question. If he has court approved physical custody of the child, I again don't think there is any question. But in any event, Taxmann seems pretty certain that the step-child relationship is still in existence.

I think (although could be wrong) that you can continue to use the same EIN but you have to file an 8822-B indicating a change in the responsible party if the shareholder who was the responsible party is no longer involved for whatever reason.

The difference is that before you could look up such information with only a minimal amount of identifying information. Now, you can still look it up but you have to do it through your IRS account and it requires a lot of shared information to be able to establish your identity OR you have to wait for something to be mailed to you to establish your access. So that makes it less accessible and useful to us, but more secure for the taxpayer. Life is just full of these little trade-offs.

I am not sure how clear it was that the card was from the IRS. It is an actual bank card, although I forget the name of the bank. I don't often see actual credit cards in the mail as a solicitation to open a new credit card account, but I used to and I suspect other people did as well. I always shredded those, so I could see myself shredding this also.

Is there any way to round or truncate basis on something so that $1 of income is carried to the front of the return? I think that would allow you to e-file without making a tremendous difference in carry forwards.

Thank you. It appears we are still waiting on guidance for that part of the law. And apparently it is income to me since i deducted it. First time it has ever been more than a couple of dollars for me.

I received a refund check from the health insurance company that serves almost everyone in this region because the premiums collected were more than the benefits paid by more than the allowable amount. This is not income to me, but I assume that it does reduce the amount that I can claim as an itemized deduction or SEHI on my taxes. My question, really, is for those who pay no premiums because ACA completely covers their insurance. Is this a taxable event for them when they get back money they never paid in the first place?

I have had at least one client who swears she did not get the second stimulus payment, and actually looked at the bank accounts to check, but got the letter from the IRS saying that she did. When we checked, they had issued the payment as a debit card. Once they have done that, the only recourse is to contact the "bank" that actually issues the debit cards for the IRS. She did that, and they reissued the card, but after she activated the card, it showed a zero balance. And apparently it is impossible to talk to an actual person to get anything cleared up. This is a huge waste of my time holding their hand through all of this.

I am sure that will help in catching up on the paper backlog they currently have. /S

If an S-Corp owns a C-Corp, and the C-corp pays dividends out of retained earnings, then the C-Corp would issue a 1099-Div to the S-Corp, which would in turn issue a K-1 to the S-corp shareholders reflecting those dividends. I think that is what you were saying.

I find the question a little confusing. If I am following, the sub-s owns the LLC. The LLC has elected to be taxed as a corporation. I am assuming it is taxed as an s-corporation since a k1 was issued. In my experience, most owners of entities taxed as s-corps pay taxes on the amount reported on the k-1, and any amounts received are usually distributions rather than dividends. If they are dividends, they should be reported on a 1099-DIV and taxed as dividends. If they are distributions, they may not be taxable at all since tax on the profits earned was paid based on the k-1 at the time the profit was earned by the LLC.

I filed a final return for a client last year (2019.) However, in the rush of tax season 2020, I filed for an extension for this client's S-corp even though the corporation had been closed the preceding year. Will this cause a problem? Do i need to file return with no information marked final again? I would like to just forget it but also don't want this to be an issue for this client in the future.

Wow. And for how many years have we been hearing that IRS is looking for sole shareholders to take reasonable compensation, telling our clients that, and yet never seeing any evidence that they are auditing for that? I guess they weren't really - just trying to scare more honest/frightened people into paying up voluntarily while those willing to take their chances continued to get by.

I don't think that in this business being crazy is a reason to quit - I thought it was a requirement?

I have one that just surface yesterday that she swore she did not get the second stimulus payment for anyone in her family. IRS finally issued her refund for the amount calculated less the stimulus we claimed. She finally admitted she GOT A LETTER saying they sent her a debit card, but still says she did not get the debit card. Maybe she did, maybe she didn't -mail has been a little iffy especially last December and January. But if she had told me she had the letter to start with, it would have been a whole different procedure to try to get the money for the stimulus. Some days my head hurts.

That was the answer I gave but then I second guessed myself. Thanks PapaJoe!

This is a personal question, sort of. Our church has a house that we were using as an office complex for the church. We build an addition to the church where the offices are now located, and have decided to rent the house as a residential rental. Would the income from that be considered UBIT? My first thought was yes, but when I look at the instructions for a 990 i see: Exceptions to UBIT Even if an activity meets the above criteria, the income may not be subject to tax if it meets one of the following exceptions: (a) substantially all the work in operating the trade or business is performed by volunteers, (b) the activity is conducted by the organization primarily for the convenience of its members or (c) the trade or business involves the selling of merchandise substantially all of which was donated. In general, rents from real property, royalties, capital gains, and interest and dividends aren’t subject to the unrelated business income tax unless financed with borrowed money. Then I looked at IRC section 512(b)(3), which seems to say rental of real property is excluded from UBIT unless it is either 50% or more personal property being rented, or the lease payments are based on the income earned on the rental, or it is debt financed. So now I am thinking that it is not, and the church would still have no filing requirement. Does anyone have any other information that contradicts this? Or confirms this?

It sounds like H and W meet the requirements for the full exclusion - they both lived there two of the last five years, and W owned tow of the last five years. However, I agree that an attorney needs to be involved to determine portion owned by estate of B, and how the property basis and proceeds have to be treated. Was this considered a gift to B at the time he was put on the deed? Is the estate gifting the property back to W ? Too many questions unanswered.

I believe the filing fee for an OIC has increased to $205 for the IRS. Then any available funds have to be used to pay as much as the IRS thinks is collectible towards the tax. I suspect if the kiddos got the money from grandma, the IRS is going to look at whether they can pay the taxes in determining how much the offer can be, and so they will wind up paying the taxes anyway. I am not sure about that - I have never done an offer in these circumstances. Then there is the fee for someone to prepare the offer unless they are willing to do it themselves. I don't have any idea how organized they would be as far as getting the numbers together, and I have always charged by the hour for an OIC. I can't imagine it would be less than 2 or 3 hours, even if they do most of the heavy lifting by giving you everything you need in an organized manner. Someone more familiar with offers will hopefully chime in - they might be faster at preparing them than I am.

I am envious. I would love to be able to work for someone else doing just taxes from late January through April, and then leave the bookkeeping and payroll issues to someone else the rest of the year. Congratulations, Possi!

I have had what i think is the same problem a couple of times. I get a text page that says something like error - unable to to log in at this time. Then there is a button to try again. Sometimes that works, sometimes I need to go all the way out and come back to the page. Nuisance, but I always get in eventually.

For two children, I think the amount would be $600 per month, so it sounds like they based it on the MFJ return with 2 kiddos and gave her half and him half. Maybe? I agree this sounds screwed up, and somehow it will likely be my fault - everything always is.