Vityaba

You are correct, the basis will be $30K. Example in § 1.1031(d) illustrates this situation: http://www.law.cornell.edu/cfr/text/26/1.1031(d)-1

kcjenkins, you posted a moment before I found in the the reg.

Thank you for your time and efforts

I think this answers the question: http://www.law.cornell.edu/cfr/text/26/1.1031(B -1

Based on Example 1 the TP would have to recognize $25K gain. Am I reading this correctly?

TP does deferred 1031 exchange through a qualified intermediary. All timing restrictions were followed. The problem is that the old property (basis $30K) was sold for $100K while the new was purchased for only $75K. $25K cash was received by the TP after the transaction was completed

Questions:

Does the fact that the new property value was less than the old property value completely disqualify this transaction as 1031 exchange or the TP has to pay tax on $25 recognized gain (for cash received) and increase basis in the new property to $55K (original $30 plus $25)?

Any reference to Reg would be appreciated.

Thank you

I want to bring this up to see if anyone has any input

Thank you

Thanks

kcjenkins - it's $XXX,XXX.00

Jshtax, the problem is that ABC Inc has been doing other things during the year and they never separated their expenses based on the related projects. But I like your idea of capitalizing expenditures instead of expensing them. I do not have any experience dealing with IT companies and capitalization rules application. Usually I dealt with construction company where developers would open a new company for each new project in which case it's easy - capitalize until completed and sold. It does not look that easy in this IT company case.

Any recommendations where I can read more information about capitalization vs expensing, specifically related to the IT industry?

As to the proposed entries, what would be a capital account of ABC Inc in the LLC? Zero?

Scenario - an IT company ABC Inc (S-Corp) with no real income or product as of the beginning of 2013.

Some time in 2013 they found a company XYZ that agreed to put in a few hundred thousand into ABC company and if they develop a valuable program XYZ will be a 50% owner of that program if not XYZ will loss the money.

So far sound like investment...

At the end of the year it looks like the developed program is a good product and what they decided to do is to form a new LLC with 50% / 50 % ownership by ABC and XYZ. Now the newly formed LLC owns that developed program.

Question - how do I classify a few hundred dollars that XYZ Inc gave ABC Inc?

If I classify that as an investment I'd have to show that XYZ Inc is a 50% owner of ABC inc which is not a case

If I classify that as a loan then later when the developed program ownership is passed to the newly formed LLC would have to be classified as a sale which is not a case either.

It looks like the fact of transferring the program ownership to the LLC triggers a sale/income recognition instead of investment

I'd like to get some input from the community how to better structure this transaction

Thank you

"Too many paranoid low information people in decision making positions concerning this kind of thing."

Do not agree - usually low information people do not make these decisions, they just follow procedures set by higher management.

What they requested makes sense as suggestred by Taxed

New “Get Transcript” Service

Early in 2014, a new online request option called “Get Transcript” on IRS.gov will allow individual taxpayers with an SSN to instantly view and print a copy of their tax transcripts. With Get Transcript, taxpayers will save both time and effort. When the new service is available, transcript requests will generally be referred to the online tool. Taxpayers will be able to use the tool to authenticate, view and print copies of their transcript in one session. Taxpayers will still also be able to request that a transcript be mailed to their address of record by using the existing online tool or sending in Form 4506T. A specific date when Get Transcript will be available will be announced early in 2014.

The tool will be available for five types of transcripts: tax account, tax return, record of account, wage and income, and verification of non-filing.

Pacun, I have this problem with ATX 2011 and that is because I move the database from another computer. Do you know a way to eliminate that user name screen?

I renewed in September and received MTG today as well

Taxed,

I do not think ATX allows to set it up to Upper case only, does it?

I hope ATX did not ask you to sign NDA. Please share your today's experience

Jack from Ohio, when do you anticipate to have results of your test written up?

Crank,

What software are you switching from and why?

I also have no problems

Win 7 stand along

Please see the following scenario and let me know if it makes sense:

a TP had a short sale of his rental property owned since 2008

Basis $250K, 1099-C $220K, sale price $50K. On Form 982 I am selecting maximum allowed Qualified Real Property Business Indebtedness exclusion which will bring the basis down to $30. I then show $20K long term capital gain on Schedule D.

This way the TP avoids paying ordinary income rate on the cancellation of debt "income"

Thank you for your input

Has anyone on this forum ever used this CPE provider? I am considering this course but before I spend $350 I'd like to get some feedback if anyone used this company

http://pnwtaxschool.com/oc-catalog/selfpaced-packages-only/package-36

Thank you

Taxed, which manufacturers do you use?

Thanks for your replies. I am going to Drake seminar tomorrow

JohnH, what's your experience with the depreciation? I downloaded Drake demo and it looks like you actually have to manually select Depreciation method and number of years. In ATX you select asset type from the list (machinery, furniture, RE, etc.) and the software will add the depreciation method and years. Am I correct?

Thank you all for the input. The links were very helpful!

A client applies for a mortgage but because he is using his S-corp business account for personal expenses, including earnest money deposit, the lender requires a CPA letter that states that the borrower has full access to business account funds and will not negatively impact business. Obviously I cannot make that kind of statement if all I did was tax return preparations. Any advise what should be performed to make requested statement? I personally do not see anything and think that I should refuse such request

Thank you for your thoughts

I do not have a lot of experience with partnerships and need your advice:

I have a client who purchased a rental property with a deed under her name only but in reality she has a partner who put 50% of the down payment amount paid and they both manage the property. To be fair to the partner and to have a clean picture my client wants to be able to split income (or loss) from the rentals equally between two of them. One way of doing that is to prepare her income tax with and without the rental and whatever the difference is will be split between two of them. Another way I handle this is to file a partnership return. As far as I understand there is nothing real special needed to create a partnership. They just have to have a partnership agreement (written in this case) and I sent them to their attorney for that. As to the taxes, even though the property was purchased in 2012 I I can apply for partnership EIN this year and file 2012 return using that EIN. Correct me if I am wrong

Now the fun part, which I do not really understand a lot and would appreciate if someone can advise and perhaps even suggest good resource where I can learn more about partnerships. I know the partnership can distribute income equally even if the contributions to the partnership are not equal. In this case one partner owns the building, is solely responsible for the loan, and contributed 50% of the downpayment. The other partner contributed the 50% of the down payment. If the partnership has net income I do not see any issues - the income is distributed equally. But if the partnership has a loss which is more than what the partners put down as a downpayment, can it be deducted on their personal returns (assuming their AGIs are less than $100K)?

Thank you