Gail in Virginia

Can the payment of the lien be handled through the attorney or mortgage company handling the closing? In other words, show the lien on the settlement, give them the paperwork received from the IRS and the funds to cover the lien and have them pay the lien from their escrow account so that they know that it was done? Will this satisfy them so the closing can proceed?

I would be inclined to agree that it is non-residential property because of the transient nature of the tenants. None of the tenants will be using it as a residence. It is closer to a hotel than an apartment building. That said, I have no idea why ATX doesn't want to let you use it as 39 year property.

I thought they were directly helping the people laid off by adding $600 a week to their unemployment from the federal government. What I don't understand, if everyone either has a job or can get unemployment (or is business as usual getting their retirement, government assistance, whatever) why are they not able to pay their rent? Or afford food? I understand some increase in need from small businesses who have no income coming in and are having difficulty proving their self-employment to draw unemployment since that has also been expanded to include them, but is it really that many people? Are they all working in the underground economy so that they can't show any earnings? Maybe someone should make a list and investigate them for back taxes after this is over.

In this case, though, the misinformation is at least partly the treasury department's fault. They at first said that people who don't normally have to file would have to file a simplified return to get their information in the system. Then they changed it to they would use SS/RR information to send the payments. So I understand the confusion people are experiencing.

I don't know that it will do you any good to hurry up and file. I had the same scenario of balance due in 2018, so I filed my 2019 return 4/8 to try to get bank info in before stimulus check. But I am getting the same message you are getting if I check on my stimulus payment to make sure bank info went in. I am thinking maybe I will get my check in October?

I don't have a good answer. Virginia complied with federal tax law as of December 31 except for items they did not comply with. Making IRA deposits after April 15 was not federal tax law as of December 31. So they don't have to comply with it. But will the General Assembly actually address this? Who knows. Technically, VA returns are still due May 1, with an automatic extension of time to file until November1. The governor has stated penalties will not be charged for the month of May to give people until June 1 to pay, but he did not have the power to waive interest due for May. The assembly may address that when they meet for the veto session later this month. They may not. If asked before April 15, I would have advised making the IRA payment on time to be safe. If asked now, they have until July 15 for federal, and can take their chance with Virginia because I don't know which way this is going to go. If the assembly does nothing, it may be ignored by taxation and just use the July 15 date. Ain't life in the pandemic fun?

Personally, i paid taxes in 2018 and used my own account to pay them rather than our joint account. This year, I only filed last week and changed to bank information to our joint account since we were due a refund. I wanted to check which account, if any, the IRS was using. I can't even get as far as the refund amount because they can't verify I am eligible. I don't have anywhere close to $150,000 income on either return. I also tried for a taxpayer who had 0 tax due or refund because he was a farmer with a whopping big NOL last year. Apparently negative incomes are not allowed, and I can't check or change his either. Not a perfect site, but all we have for now.

Does Rita have to wait until social distancing is over to hug people now? And is social distancing an actual word?

I like the advisors that tell the client to put the money in traditional IRA and then convert it to Roth, no taxes and back door Roth contribution they otherwise would not qualify for. Wonderful plan, except they have $150,000 balance in their traditional IRA and have to include the biggest portion of the contribution they take out as income. And I get to try to explain that.

I think he can substantiate involuntary conversion, but is there a tax advantage to that for stock as opposed to real estate and tangible personal property?

I don't think that the 1202 exclusion for small business stock would apply in this case because I don't think that is available for S-corps, only for C Corps. I was hoping something about the involuntary nature of the sale would offer some relief. But maybe I am wrong about 1202. Right now I could be wrong about almost anything.

Taxpayer owned minority interest in s Corp with multiple shareholders. New management had a personal problem with taxpayer and persuaded a majority of shareholders that taxpayer had to be forced out of ownership. Taxpayer sold half his stock to unrelated party and gave half his stock to a related party to comply with majority stockholders wishes. Taxpayer thought giving up stock for nothing would be a loss offsetting gain on shares sold. I don’t think it works that way. I have never had a shareholder forced out before. Is there any tax break available?

I thought that this was supposed cover everything - insurance, repairs, oil changes, etc. According to the OP, the TP only pays for gas, not the other costs of owning a vehicle. So I am not sure they could take mileage, even without the depreciation component. Not sure they can't..... I have not had this particular situation.

In another thread, Possi mentioned filing an extension showing a $2 balance due that would be deducted from the checking account to get the account on file with the IRS. I don't know if that will work but it might be worth a try.

To go back to what I understood the question to be, the T/P can give the ex-spouse the 8332 at any time. The bigger question is will the IRS flag the return because it wasn't done timely, and will they accept it if is done after the fact? Years ago, this would not have been a problem. I have not had it come up for quite some time, so I am not sure what the service's position is on this. But personally, I would try it.

So if she has the business miles, and knows what miles per gallon the car gets for gas, and the average price per gallon she paid for gas, maybe she could take some business expense for the car. But not as much as she probably thinks it should be.....

Was it an alternative fuel car? Did she have to buy gas for the car? Is she a statutory employee, or self-employed? It sounds like she is an employee, and there is no longer a place for employees to deduct business mileage. If she is self-employed, how did they add the personal use to her income? If she had to pay for gas and insurance, and they just provided the car, and she is self-employed, then she might could take the non-depreciation portion of the business miles. But if the car was total free to use and she had no costs, what is she deducting? Sorry, but I have more questions than answer on this one.

But if, and it is a big if, I understand this correctly, he can now structure his income to get that $2900 when he files his 2020 tax return. In which case the only thing that he lost was the time value of the money for approximately 9 to 12 months, which at an interest rate of .5% on $2900 can't amount to much.

Personally, I would expense the water heater as de minimis (under $2500 or 2% of the cost of the property), depreciate the refrigerator as an appliance, with bonus depreciation or 179 available , and capitalize the flooring as a restoration. I would not have used 179 on a structural component like a roof. However i an not an expert on rental property and did not look up cites for any of this, so someone else may know more and give you a better answer.

That is correct - we are only discussing the treatment on the VA tax return.

I have always done it that way as well, Christian. The administrative code actually says. "A. Lottery prizes subject to taxation. Any lottery prize of $600 or more shall be subject to Virginia income tax. To the extent included in federal adjusted gross income, any lottery prize of less than $600 shall be subtracted from federal adjusted gross income in determining Virginia taxable income. No subtraction is allowed for the first $599 of a prize of $600 or more." The instructions for Virginia returns say "Virginia Lottery Prizes - Enter the sum of all prizes under $600 awarded to you by the Virginia Lottery Department to the extent that you included them in your federal adjusted gross income." So IMO the law says one thing but the department of taxation will most likely enforce another.

But does the tax program think that it is passive? The software that I use has a box on the K-1 that if i forget to check for active participation, the K-1 is treated as passive. It has been a long time since I used Tax Wise and I don;t remember how that worked and it might have been different then anyway.

The IRS first said yes, but just announced that if you are getting SS or Railroad Retirement, you don't need to to file anything - they will use that direct deposit information for the stimulus payments. https://home.treasury.gov/news/press-releases/sm967

And if is passed as a gift, even though it might be long term, the part of the gain that is recapture of depreciation is ordinary income. And it sounds like that will be almost all of it.

I seem to remember in some of the early information that I heard somewhere, that they would not use banking information that was used to pay taxes but only information for depositing refunds. That may have been an unreliable source, early in the game before any official information came out. Right now I am an unreliable source myself.