Patrick Michael

I have been reading up on why it is usually a bad idea for an S Corp to own real estate.  Most makes sense but there is one phrase that I'm not understanding.  When it is said that "Contributions of appreciated property into an S-Corporation are subject to tax when the shareholder owns less than 80% of the corporation’s majority vote, and value after the transfer occurs", what does "value after the transfer occurs" mean?

Thanks and Merry Christmas to all.

On 12/18/2021 at 2:20 PM, cbslee said:

But what if they throw your letter away?

I have done everything I can.  I'll tell them how to get a transcript and if they don't want to, go with what they give me after explaining the consequences if it's wrong.

I just sent a quick letter telling clients to expect a letter in early January and to make sure they do not throw it away.

The IRS will be sending out letter 6475 in early 2022 with the amount of the third EIP.  Sending out an email to all my clients to look for the letter and make sure they keep it.

I bet that you will have to use this to sign up for any government benefit, including SS and Medicare, in the future.  Scary stuff.  I'm not a conspiracy nut but am afraid of how this could used to to control human behavior.  In China they are using it for public shaming and punishment (https://www.cnet.com/news/in-china-facial-recognition-public-shaming-and-control-go-hand-in-hand/).  

Thanks.  I did not know about these!

Been busy and haven't logged in for awhile.  I appreciate all the comments.  I have taken courses in partnership accounting and taxation and have a fairly good grasp on the concepts.  My reason for asking for practice returns is to become familiar with the software while I have some down time before busy season.  I hate wasting time looking for that illusive check box or worksheet that's needed to get the numbers to flow to the right line on the return when I have returns waiting stacked up.

I have a new 1065 client and do not have have much experience with the form(s).  I have been reading up on the subject but cannot find a comprehensive practice return. Does anyone have a practice 1065 return with source documents and completed form(s) that they would be willing to share with me?

Thanks.

I have an Epson EcoTank E-4750 and love it.  I printed about 300 returns last year and ink cost me about $20.  Very easy to refill the tank and ne mess.  I have had it 3 years ago and not one problem.

I'm assuming when you say "Property" you are referring to a principal home.  If this is correct, my question is was the $34K half the gain on the sale or just half of the proceeds?  If a gain, can the husband take a section 121 exclusion and pay no tax?  

Can this tax season get any more messed up!!!

I remember reading George Orwell's book "1984" in Jr High in the 70's and thinking this can never happen  in the United States.  Guess I was wrong. 

If their only concern is liability it would would it be cheaper and easier to purchase a million(s) dollar umbrella insurance policy.  I have a 1 million policy that  costs about $150 a year.

From Accounting Today  

Link to Entire Article

"Internal Revenue Service regulation of return preparers, sidelined since its prohibition by the Loving decision, is back for another try. 

Key measures in the bill include the following:

Giving the Treasury the authority to regulate paid tax return preparers;

Clarifying that the authority being provided is to reinstitute the IRS’s 2011 paid preparer regulatory program;

Giving the IRS authority to revoke an incompetent or fraudulent preparer’s Preparer Tax Identification Number;

Clarifying that certain nonsigning preparers — those who prepare returns under the supervision of an attorney, CPA or Enrolled Agent — are not required to obtain a PTIN; and,

Requiring a Government Accountability Office study on the sharing of information between the Treasury Department and state authorities regarding PTINs issued to paid return preparers and preparer minimum standards."

I hope they get it right this time.  I still find it hard to believe my barber has to get a license to cut hair but anybody can prepare a tax return.

16 hours ago, grandmabee said:

any advanced child tax credit?  they are making up for missed July payments by adding them to the remaining monthly payments.

No kids.  No EITC.

On 8/28/2021 at 7:51 PM, Catherine said:

Had something like this happen to a client some years ago. We got interest waived because he held (and never cashed) the check - knowing the IRS would want the $$ back. Our stance that he never cashed the check meant he never made use of the funds and so there was no call for interest.  But that only has a chance of working if you hold the check.

Not possible. Direct Deposit.

Here's a link to a good summary of NY's PTET from Deloitte.

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/Tax/us-tax-mta-overview-of-new-yorks-new-pass-through-entity-tax.pdf 

LOL Max!  I did advise them to put the money aside in case the IRS wanted it back.  

Very frustrating.  Now the client is wondering if I did something wrong and I'm second guessing myself even though I went over the return several times and can't find anything wrong.

No community property state (NY)  Yes, Unemployment was $29,000. 

Client received their expected refund in March.  Yesterday they received another $3,000 refund.  They called the IRS and actually got through and were told it was an adjustment for the Unemployment Insurance deduction.  I reviewed the return and the $10,200 was deducted from their UI income (only one spouse received UI) on line 8 of schedule 1.  There were no other credits that could have been affected. Even if the $10,200 was not excluded on the original return this does not make sense.  They would be in the 12% tax bracket with or without the exclusion.  So if the exclusion was not taken I would expect the refund to be $1,224 ($10,200 x 12%).

Any ideas on what I might be missing?  Anyone else experience this?

The apartments do not produce 80% so 39 years it is!  Here's a link to an article I found late last night that discusses the issue https://www.thetaxadviser.com/issues/2012/oct/clinic-story-03.html.

Thanks for educating me. This community is the best!

Client owns a building with apartments.  Building was being depreciated over 27.5 years.  In 2020 they converted the first floor apartments into a restaurant and the second floor remained apartments.,  I'm at a lost how to handle the depreciation.  Should I take the original building out of service and set up two new assets, one residential and one business? I How should the prior deprecation be handled?

Thanks.

34 minutes ago, cbslee said:

The general rule is that unless it specifically excluded from taxable income then it is taxable.

Perhaps your state excluded it from state taxable income?

That's what I am looking for, an exclusion that I can't find!

Client owns a restaurant/bar (S Corp).  The city used funds they received from the federal/state for pandemic relief to give grants to struggling restaurants. Grant does not have to repaid.  I know that forgiven PPP loans do not have to be included as income but what about other pandemic relief grants?  I can't find anything saying they are excluded from income and am hoping I just not looking on the right place.  Anyone else run into this?

Thanks

I also used Gleim back in early 2000's and passed all the sections on the first try.  I found that I never used it to do representation work. In 2018 The IRS audited my CPE and disallowed one of my 8 hour courses because, even though the provider said they were an authorized CPE provider, they were not.  No mercy from the IRS and I would have to take the test again so I decided to forgo it.  Make sure you verify the credentials of the CPE providers!