Abby Normal

2 hours ago, mcb39 said:

I have a client who purposely has no Federal taxes withheld so that he can use the money all year.  What part of "penalty" don't these people understand?

It's more of a lifestyle than any financial logic. They're just being contrary and childish, and they're willing to pay the price.

https://www.law.cornell.edu/uscode/text/26/2036

The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death.

Sounds to me like as long as they had the right to possess the house until they died, it is included in their estate and the kids get a step up in value. In other words, a de facto life estate should work.

In instances where the owner of the property has deeded the property to others but did not retain a life estate in the deed, but nevertheless continued to live in the property as a life tenant, see IRC § 2036 which uses the word “retained” not “reserved”. It has been successfully argued in the past that a right can be retained without being reserved, and that the continued occupancy of the home after the transfer of title, without paying fair market rent, is evidence of an implicit agreement, understanding or assumption of the parties of the transaction. Estate of Linderme v. Commissioner, 52 T.C. 305 (1969)
 

The notice tells you who issued the 1099R. Have the client call them.

55 minutes ago, artp said:

Am I missing something

Yes, a transcript of the account so you can see what actually happened. Could be a previous debt or inaccurate estimates or a host of other possibilities. Wait for the IRS notice.

5 minutes ago, Margaret CPA in OH said:

IRS cares not a whit.  My question relates to the client selling this condo that was gifted to her by now dead mother.  I'm asking about the basis in order to determine gain on sale.  That's all.  If the gift tax return should have had FMV, it would make a difference.  If original basis to mother is correct, I've got it.  Just asking for reassurance.

 

It's my understanding that basis gets full step up in value as if the life estate never existed.

12 minutes ago, mcbreck said:

I'm confused. If ownership changed via a gift made to the daughter, why should the IRS care that the previous owner died?

Because a life estate changes the gift into an incomplete gift.

https://www.stoufferlegal.com/blog/navigating-life-estate-remainderman-tax

But the death of the "previous owner" essentially wipes out the life estate and the beneficiaries get a full step up in basis. Basis is more complicated if the house is sold before the life estate owner dies.

I just did this for MD. Check the box on the state EF info form to unlink from MeF. Then just create the state efile. Easy peasy.

Both articles I read said it was half year, and I tend to assume ATX has it right.

https://www.journalofaccountancy.com/issues/2022/nov/amortizing-r-e-expenditures-under-tcja.html

Use Z-Amortization and 5-Amort-174-Rsch and exp and you'll get 5 year SL HY.

Thank you and good luck with the move!

21 hours ago, scottmcfly said:

I have been using ATX since 2004. First Total Tax Office then Max.  But I am getting old and don't need the money that bad so I just finished my last tax season.   I am very familiar with ATX and like it a lot.  If they made a "1040 LIte" I would buy it just to do my return as well as my brother's and daughter's. 

But since the 1040 product costs about $1100, I guess I will be doing those three returns next year on Turbotax.  Unless someone here can suggest something better.  Its just that it seems that there is no program in the $300 to $400 range.

 

I dropped back to 1040 to do my 1065, 1120S and 1040, plus my fiancee's 1040. Still cheaper than paying someone to do all of those or messing with some other software. But then I added 8 or 9 simple paid returns that more than pay for the software.

19 hours ago, joanmcq said:

I hate it when the K1 sale is on the 1099-B.  The basis is NEVER correct.

I don't, because then you just use the adjustment column with the appropriate codes, usually BO and combine the two adjustments, basis and ordinary income, and enter the net amount in the adjustment column. Easy peasy. I don't even break out the K1 sale to a separate line. I just leave it in the totals for that category (A, D, E, etc.). If that line already has an M for a code or an MW, the the code you end up with is BMOW, because they must be enter alphabetically for some reason.

THEN, go to 4797 and enter the ordinary income in section II, using the Input tab. There a drop down box to select the K1 the income relates to.

The ones that are easy to miss are when there is only a partial distribution of a K1 investment, because the K1 is not marked final.

You're also supposed to attach a 751 election to the return, but I sometimes skip that part, even though I have an election boilerplate in my Blank Elections tab.

Some people call support for some of the dumbest reasons, and both tie up the lines and increase costs for the software company. I hope the software companies can flag those users and make them a lower priority. I wish the software would only allow you to call 5 or so times, and then you have to pay per call for additional support. That would make these inconsiderate people think twice about calling for dumb .

I saw a note in ATX that they now track basis for PTP K1s, which is nice I suppose, but the K1 always includes supplemental pages when units are sold, to show the cumulative decreases in basis, and the amount of ordinary income for you, so I doubt I'd ever bother with that.

I had one yesterday where units were transferred to a new account, and the K1 included all the info as if the units were sold. I checked the 1099B and the K1 was not listed as a sale, so I ignored those pages, but I worry what will happen with those amount when the investment is sold. If those amounts should have transferred with the units in the new account, then it may be lost. I allocated some carryover losses to the new account because I thought that made sense.

Sometimes, you just can't worry about tracking all this nonsense.

Been years since I did one of those. Best of luck!

We treat the payments as a separate from the extension, and the client handles that, most of the time. so we efile extensions without payments and let those who normally know they should make a payment.

If I have nothing, I just use last year's tax as a guesstimate for this year. I automate that in ATX by linking the prior year tax from the comparison form to the 4868. It's better than zero.

Agree with Tom. The capital improvements are owned by the association and the association will depreciate them.

But there should be a basis increase. The amount will likely be different than the assessment, though.

https://www.nolo.com/legal-encyclopedia/tax-issues-when-selling-condo-townhouse-other-property-homeowners-association.html

25 minutes ago, Patrick Michael said:

Wondering why a 3115 would be necessary since the returns can be amended.  There is no change in accounting method.  The original basis and other improvements have been depreciated. Just forgot this remodel.

It's a lot less work for both you and for the IRS to handle with a 3115 and just the current year. It basically works out the same in the end, except for some IRS interest.

I think you can with a 3115.

Go into the same place you attached it and click on the icon to remove it. I think it's a red circle with a minus sign in it.

Try this. https://obliviousinvestor.com/solo-401k-contribution-calculator/

The computer I bought a few months ago is Win11 and besides not being able to move my taskbar location to the right side of the screen where I've had it since Win8, 11 is still buggy. For example, I have my taskbar set to hide so I can have that screen space, but it won't stay hidden, so I have to restart Windows Explorer to make it hide again, which of course closes all of my file explorer windows.

They also really want you to login in with a microsoft.com account instead of a local account, and to use OneDrive. I changed my account type to local and I think I've disable OneDrive, for the most part.

6 hours ago, Lee B said:

I am on Windows 10 also. I am going to wait and see how expensive Microsoft Extended Service Agreements will be.

For businesses, the first year is priced at $61. It then doubles to $122 for the second year and then doubles again in year three to $244. If you enter into the ESU program in year two, you’ll have to pay for year one as well since the ESUs are cumulative.

On Wednesday, Microsoft updated its Windows IT Pro Blog post to note that the pricing listed applies to commercial organizations only and that details of consumer pricing “will be shared at a later date.”

https://www.theverge.com/2024/4/3/24120093/microsoft-windows-10-extended-security-updates-price

The first thing to suspect when that kind of activity is going on, is a virus or other malware.

This is the antivirus supplier I've used forever.
https://www.eset.com/us/download/tools-and-utilities/