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Everything posted by bbstacker

  1. Thank you for your replies. I did have the opportunity to speak with Tech Support and found out that the program does not automatically make the calculation for the fact pattern I described. The tech support representative looked into the programming for F8880 and found it requires the entry of the distribution amount on F8880 in order to properly calculate the credit amount, if any. Seems to me that it should be an automated process for the program to perform and not require the distribution amount to be entered twice. Putting numbers to the fact pattern: MFJ return AGI 40k Retire plan distribution 11.5k Retire plan contribution 2.5k
  2. I'm new to Drake software but have run into a situation that doesn't make sense to me. When the taxpayer contributes to a retirement plan and takes a distribution from a retirement plan, Drake requires entries on F 8880 to report the distribution. If no entry is recorded on screen 8880 the software calculates the credit when the credit is not applicable. Am I missing something with the CARES act or other change that would allow the credit?
  3. He sold the company to Intuit, I believe in the mid 90's. I don't know if he has/had some affiliation with Tax Act. It may be that some of the former employees of Parson's Technology is the group that started Tax Act
  4. It appears to be the sale of Section 1245 property. The fact that is was used in a farming operation is of no importance. If the selling price of each piece of equipment does not exceed its original purchase price, the sale is not eligible for an installment sale. If the selling price of a piece of equipment happens to exceed its original purchase price, the gain over the original purchase price is eligible for installment sale treatment. It is likely that the gain reported will consist solely of depreciation recapture and is reported in the year of sale without regard to the amount of proceeds received. If there are instances where the selling price exceeds the original purchase cost, it will require Forms 4797 and 6252, if the installment sale is elected for the portion greater than the original purchase cost. If the sale generates depreciation recapture only, the sale is reported on Form 4797. From IRS Publication 544 If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. This applies even if no payments are received in that year. If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. If you dispose of more than one asset in a single transaction, you must figure the gain on each asset separately so that it may be properly reported. To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Report any depreciation re- capture income in the year of sale before using the installment method for any remaining gain. For a detailed discussion of installment sale see Pub. 537. See Gail's comment about the interest on the sale.
  5. Please see the following links: https://www.krotterlaw.com/single-post/2018/09/20/How-do-you-value-a-decedents-unharvested-crops https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=11&ved=2ahUKEwjemtvqm8flAhVGqZ4KHRE-CssQFjAKegQICBAC&url=https%3A%2F%2Fwww.iowafarmbureau.com%2Ff%2F9673bb8a-b240-43ee-8acb-d4e9e06ef8e6%2F19%E2%80%8B&usg=AOvVaw2tIbazWZCYM2ROIPzdX8sz https://lawprofessors.typepad.com/agriculturallaw/2018/04/post-death-sale-of-crops-and-livestock.html
  6. Please see: https://www.irahelp.com/slottreport/5-qcd-rules-you-must-know Item number 4.
  7. bbstacker


    It sounds like Mom held a life estate in the property as the daughter did not receive the property until Mom's death. Based on "Pursuant to ' 2036(a) of the IRC, the transfer of a residence with a retained life estate permits the transferee of the residence to receive a full step up in his or her cost basis in the premises upon the death of the transferor, to its fair market value on the transferor's date of death. This occurs because the residence is includible in the gross taxable estate of the transferor upon his or her demise. This, of course, presumes the existence of an estate tax upon the death of the transferor. A "life estate", pursuant to IRC ' 2036(a), is the possession or enjoyment of, or a right to the income from the property or the right either alone or in conjunction with another to designate the persons who shall posses or enjoy the property or income thereof." I believe the property receives a full step-up in basis upon Mom's death.
  8. Neither mean or crabby, it looks to me that you are avoiding penalties for yourself. Learned a long time ago you can't save clients from penalties when they don't follow our advice. The link is from a Forbes article that appears to be on point to your situation. Topic Number 513 is from the IRS website. https://www.forbes.com/sites/anthonynitti/2016/12/21/tax-geek-wednesday-deductibility-of-professional-education-expenses/#26ff2b974fc4 Topic Number 513 - Work-Related Education Expenses You may be able to deduct work-related education expenses paid during the year. To be deductible, your expenses must be for education that (1) maintains or improves your job skills or (2) a law requires to keep your status or occupation. However, even if the education meets either of these tests, the education can't be part of a program that will qualify you for a new trade or business or that you need to meet the minimal educational requirements of your trade or business. Although the education must relate to your present work, education expenses incurred during temporary absence from your job may also be deductible. After your temporary absence, you must return to the same kind of work. Usually, absence from work for one year or less is considered temporary. Expenses that you can deduct include: Tuition, books, supplies, lab fees, and similar items Certain transportation and travel costs, and Other educational expenses, such as the cost of research and typing To determine if your work-related expenses are deductible, see Are My Work-Related Education Expenses Deductible? Self-employed individuals include education expenses on Form 1040, Schedule C.pdf, Profit or Loss From Business (Sole Proprietorship), Form 1040, Schedule C-EZ.pdf, Net Profit From Business (Sole Proprietorship) or Form 1040, Schedule F.pdf, Profit or Loss From Farming. For more information on work-related education expenses, education tax credits, or information for specific types of employees, such as performing artists, refer to Publication 970, Tax Benefits for Education. Also, for additional information about education benefits, review Tax Benefits for Education: Information Center and Am I Eligible to Claim an Education Credit?
  9. HH bonds could only be purchased by exchanging E or EE bonds. One of the features was to defer the accrued interest on the E or EE bonds and pay the tax due when the HH bonds matured. When a decedent owns savings bonds at death the accrued interest can be either reported on the decedent's final return or the beneficiary of the bonds pays the interest. Please see treasurydirect.gov website for additional information.
  10. Why wouldn't the basis be the cost of the replacement property purchased? You elected out of the installment sale and have treated the transaction as a sale of Property A and a purchase of Property B. With the election out of the installment sale there is not deferred gain, it was recognized and realized with the election.
  11. I have prepared a few Oregon tax returns but this is the first time I have run across a Box 14, Code V, Occupational tax. I can find the definition of Occupational tax term, but have not been able to determine if it is potential tax deduction. If it is a deduction, I believe it would a 2% itemized that is no longer available for federal but possibly for a state itemized deduction. Oregon is not one of the states I prepare on a regular basis, it is a new client that moved from Oregon. I appreciate your insight to the possible deduction.
  12. Don't know your definition of early nineties but Roth type IRAs started with the Tax Relief Act of 1997. Is it possible he originally had a traditional IRA later converted it to a Roth IRA? If so, it could be the reason the basis is difficult to establish by the broker.
  13. Potential new client with the following scenario: They are a US company, owner is a US citizen. All employees of the company are US citizens. The company performs services in American Samoa for the American Samoa government. These are short term contracts of generally less than 14 days in duration. I'm having trouble wrapping my mind around the filing requirements. The company will file US tax returns as well as American Samoa tax returns. I believe that part is straight forward. The issue that is giving me fits is what returns do the employees need to file besides US income tax returns. I have and am reviewing Pub 570 for at least a starting point for a determination of the returns needed. The publication refers to US citizens employed by a Samoan company. The employees are not working for a Samoan company, it is a US company. If the employees are required to file American Samoa tax returns it may be difficult to recruit employees and if a return is required for American Samoa it should most likely be explained to the employees that accept an employment offer. In my mind I'm trying to compare it to an employee working for a company based in (and generally works in) State A and is sent for 10 days to State B to perform services. Under that scenario, generally the employee would have a filing requirement in each state. I am open to all suggestions to continue my research. I'm hopeful that someone on this board has experience with this scenario.
  14. Please see the below copied text. This is from Publication 51, Circular A, Agricultural Employer's Guide. The corporate status does not appear to change the filing requirements. 10. Federal Unemployment (FUTA) Tax The Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. For a list of state unemployment agencies, visit the U.S. Department of Labor's website at workforcesecurity.doleta.gov/unemploy/agencies.asp. Only the employer pays FUTA tax; it isn't withheld from the employees' wages. For more information, see the Instructions for Form 940. For 2017, you must file Form 940 if you: Paid cash wages of $20,000 or more to farmworkers in any calendar quarter in 2016 or 2017, or Employed 10 or more farmworkers during at least some part of a day (whether or not at the same time) during any 20 or more different weeks in 2016 or 20 or more different weeks in 2017. To determine whether you meet either test above, you must count wages paid to aliens admitted on a temporary basis to the United States to perform farmwork, also known as "H-2A" visa workers. However, wages paid to "H-2A" visa workers aren't subject to the FUTA tax. Generally, farmworkers supplied by a crew leader are considered employees of the farm operator for purposes of the FUTA tax unless (a) the crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act, or (b) substantially all of the workers supplied by the crew leader operate or maintain tractors, harvesting or crop-dusting machines, or other machines provided by the crew leader. Therefore, if (a) or (b) applies, the farmworkers are generally employees of the crew leader. You must deposit FUTA tax by EFT. The deposit rules for FUTA tax are different from those for income, social security, and Medicare taxes. See Deposit rules for FUTA tax , later in this section. FUTA tax rate. The FUTA tax rate is 6.0% for 2017. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base. Your state wage base may be different. Generally, you can take a credit against your FUTA tax for amounts you paid into state unemployment funds. The credit may be as much as 5.4% of wages subject to FUTA tax. If you’re entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.6%. You’re entitled to the maximum credit if you paid your state unemployment taxes in full, on time, and on all the same wages as are subject to FUTA tax, and as long as the state isn't determined to be a credit reduction state. See the Instructions for Form 940 to determine the credit. In some states, the wages subject to state unemployment tax are the same as the wages subject to FUTA tax. However, certain states exclude some types of wages from state unemployment tax, even though they are subject to FUTA tax (for example, wages paid to corporate officers, certain payments of sick pay by unions, and certain fringe benefits). In such a case, you may be required to deposit more than 0.6% FUTA tax on those wages. See the Instructions for Form 940 for further guidance.
  15. If the bonds final maturity date is in a closed year, based on the three year statute, the interest in effect becomes non-taxed. As in any other inadvertent omission of income or error, the IRS has three years (generally) to audit the return. The financial institution will issue Form 1099INT for the year the bonds are redeemed. The reporting for the tax return will report the bond interest and also record an offset amount of interest equal to the interest amount for the prior year(s). The reporting of prior year bond interest is not to report it on the current year tax return. The publications refer to filing an amended tax return for the year(s) in question. If the year(s) is/are closed, the IRS is barred from adjusting the closed year. If the interest in question represents a 25% understatement of income then the statute is 6 years. Depending on the circumstances it may be possible to exceed an understatement of 25% for the year(s) in question.
  16. The following link explains the rules better than I can type them. https://www.benstrat.com/downloads/HSA-GPS_HSAs-and-Medicare.pdf TP can enroll in the HSA as long as they have not signed up for Medicare.
  17. Might try CCH Small Firm Services Client Accounting Suite. The live payroll module can be integrated with the general ledger module. I use the GL for my write up clients, but have not used the payroll module.
  18. Please research the Military Spouses Residency Relief Act for additional information about taxation of military spouses. The posted link may be useful to determine the service member's state for tax purposes. I believe the Home of Record (HOR) is the determining factor for state taxation. If the service member enlisted in Florida, they will be subject to Florida taxation (no state tax), no matter where they are stationed, unless he or she changed their HOR to a different state. https://www.military.com/paycheck-chronicles/2015/02/27/residence-vs-home-record
  19. To correct a misconception. The Amish are subject to Federal and state taxation. They are exempt from Social Security and Medicare taxes if they filed the proper documentation. They do have a SSN to be used when they file their taxes. Your client should contact the builder to have them complete Form W9. If they refuse, follow the same protocol you use when any other contractor has not supplied Form W9.
  20. I've taken a very brief look at the conference report provided by jklcpa but cannot find the tax rate table for corporations. I do see where it indicates a maximum rate of 21%. Is the 15% bracket still in place? If so, was the bracket expanded so more taxable income is taxed at a 15% rate?
  21. Thank you for your insight. The state is Hawaii. The employees are not covered by a bargaining unit. All employees are in the same class, everyone is paid on a weekly basis. Payroll is consistently paid in the manner explained. It just seems odd that the paper checks are made available before the direct deposit. I do realize the time lag for the direct deposit is controlled by the banking system as it requires a 2 day lead time to process the payments through their systems. Which leads me back to the question, can the employer delay issuing your payroll if you choose the direct deposit option.
  22. This is something I have not seen before and I am unable to find clarification for the issue. Employer offers direct deposit or payroll check for payment of wages. The payroll cycle is Friday through Thursday. If the employee utilizes the payroll check option, the employee receives the check on Friday. If the employee utilizes the direct deposit option, the employee does not receive the deposit until the following Wednesday. Is the employer legally allowed to delay the payment of wages if it is by direct deposit? I am unable to find any information as to the legality of the method the employer uses regarding their payment system. I'm hoping someone can, at a minimum, point in the direction to be able to address this issue.
  23. No, life insurance premiums are not deductible to the corporation. You will also want to look at Form 8925, Report of Employer-owned Life Insurance Contracts to ensure compliance.
  24. This may be a "managed" account where the investor is charged a fee based on the value of the account, not on commissions. From what I'm seeing on some brokerage statements the fees are relatively small. If it is a managed account the number of trades may not be that important. Obviously, the loss is important as well as any unrealized gains and losses. Is the value of the overall portfolio increasing?
  25. I believe if the rollover (transfer) was trustee to trustee there is not a limit to the number of rollovers per 12 months. If the tax taxpayer received the funds and within 60 days deposited to another IRA, the once every 12 months is going to be an issue. If this was a trustee to trustee transfer they may or may not receive Form 1099R, depends on the IRA administrator.
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