Gail in Virginia

13 hours ago, Sara EA said:

Prior to EIP3, you could go to irs.gov and look up your EIPs.  Years back you could also look up special credits with an IRS tool.  Wishful thinking here, but it would be great if IRS would make both payment amounts available online.

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

20 hours ago, G2R said:

Thank you for the reply @Lion EA  & @Gail in Virginia -- Originally I was told the LLC was a C-Corp and I'd never seen an S-corp own a C-corp so I was curious how reporting that information would work. I finally got a copy of the actual K-1, and it's an LLC taxed as a partnership, NOT a C-Corp like they said.    

But for future reference, if the S-Corp DID own a portion of a C-Corp, I assume the dividends would simply be reported through the 1120S K-1 right?

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. 

13 hours ago, Corduroy Frog said:

 I need to know whether I'm going crazy and need to quit.

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. 

On 7/23/2021 at 2:10 PM, Possi said:

I did a look-back, and she was the primary TP on the 2019 MFJ return with HIS 2 children on the return. 

We filed the 2020 return on MARCH 7th, 2021.

It looks like the IRS based the CTC on the 2019 return and not the 2020 return. 

How many times will this happen across the nation?PLUS, on the 2021 return, he will most surely be able to claim the entire CTC because HE (likely) never received an advanced payment. I still need to check with him.

 

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. 

If I understand what you are saying, the RE company is buying the house by paying the mortgage, taxes and maintenance expenses.  At the end of the mortgage, they will assume the title but until then the title remains with your client.  And they have a contract to this effect. 

I don't know how long the mortgage has to run but there has to be interest reported on the sale.  If none is stated,you will have to used imputed interest.  So it sounds like there is a good possibility that there is a loss on the installment sale and ordinary income from interest on the installment sale.  So that leaves the question of whether the loss is a non-deductible personal loss or a business loss on a rental property. 

About time!

Virginia has gotten pretty sticky about talking to anyone other than the taxpayer without a POA.  I have not had any luck with faxing while on the phone; I usually fax the PAR101 and wait a few days to try to call.  I have attached the VA form for POA in case that helps.  I am not sure what they mean by poorly or incorrectly formatted - I have not had a return reject for that reason.  But if you need someone here in VA to help, Possi has offered and I will too. 

par101.pdf

11 hours ago, Catherine said:

Ooooh, a little gun symbol on my  avatar - now THAT would be fun!  @Abby Normal, you are SO right on this.

As long as I don't wind up with a target on mine - especially if Catherine has the gun!

Good suggestions, Lion.  We don't have any truly large banks in this area, but I am sure somewhere within driving distance there is one.  We used to have Bank of America, but they closed all of the nearby branches.