Abby Normal

Here's a pertinent article that didn't come up the first time I searched: Incorporating an Insolvent Partnership: Availability of the Insolvency Exclusion https://www.thetaxadviser.com/issues/2013/apr/clinic-story-06.html

I have too many alter egos! And what day is it?!

Hey Newbie! I saw this post on Facebook! Welcome! This doesn't directly address the negative capital. I'd be tempted to just leave it as negative retained earnings, since it's the same entity. https://www.thefreelibrary.com/Holding+period+and+basis+considerations+of+partnership+conversions.-a0203028393 Partnership liabilities transferred as part of incorporation may also offer opportunities for planning. If, in addition to the assets transferred by the partnership, the corporation also assumes liabilities of the partnership, then under Sec. 357(a) the assumption will not taint an otherwise tax-free incorporation of a partnership, as long as the sum of the liabilities transferred does not exceed the adjusted basis of the assets transferred to the corporation. However, when the sum of the liabilities exceeds the adjusted basis of the assets transferred by the partnership to the corporation, Sec. 357(c)(1) requires the recognition of the excess as either ordinary income or capital gain. An important exception to Sec. 357(c)(1) exists for certain obligations of a partnership. Under Sec. 357(c)(3)(A)(ii), partnership obligations for payments to a retiring partner or a deceased partner's successor in interest (Sec. 736(a) payments) are not included in liabilities for purposes of Sec. 357(c)(1) and therefore cannot give rise to income on incorporation. This treatment allows for flexibility in planning payments to partners contemplating retirement in the period immediately before incorporation. In addition, since under Rev. Rul. 83-155 (13) Sec. 736(a) payments can be deducted by the newly formed corporation when paid, the anticipated tax rates of the remaining partners, the retiring partner, and the new corporation should be considered when planning the timing of the incorporation. Care should be taken in timing the incorporation of a partnership with an existing active business. Sec. 482 allows the IRS to allocate income between or among taxpayers if the allocation is necessary to prevent the distortion of income or the evasion of income taxes. The IRS successfully applied Sec. 482 to the incorporation of a partnership when it concluded that the partnership had earned the income ultimately realized by the corporation. In Foster, (14) income reported by four corporations on the sale of land developed by commonly controlled partnerships but transferred to the corporations after substantially all development was completed was reallocated to the commonly controlled partnerships. In the Service's eyes, the partnerships had done everything necessary to create the potential for income recognition and could not avoid that recognition by arranging for the property to be in the hands of another taxpayer at the moment the income was recognized. By carefully planning the timing of the cessation of business activities in the partnership and the commencement of business activities in the corporation, incorporating partnerships should be able to avoid this type of problem.

The TCJA Makes Cost Recovery for QIP More Restrictive The TCJA, in addition to enacting 100 percent bonus depreciation for certain assets with a 20-year recovery period or shorter, made changes intended to simplify the tax code. Among these changes was the consolidation of the different types of improvement property under the single definition of Qualified Improvement Property, with intent to assign this new category a 15-year recovery period, eligible for 100 percent bonus depreciation. The wording of the final bill, however, fails to provide a recovery period, and as a result unintentionally makes QIP ineligible for 100 percent bonus depreciation. Reviewing the Joint Explanatory Statement of the Committee of Conference provides some insight as to what lawmakers intended to do with improvement property.[6] The Senate version going into the Conference Committee would consolidate the different definitions and assign a shorter, 10-year recovery period:[7] As a conforming amendment, the provision replaces the references in section 179(f) to qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property with a reference to qualified improvement property. Thus, for example, the provision allows section 179 expensing for improvement property without regard to whether the improvements are property subject to a lease, placed in service more than three years after the date the building was first placed in service, or made to a restaurant building. During the Conference Committee, lawmakers made some changes to the Senate version to arrive at a final proposal, explained here:[8] Senate Amendment: The provision eliminates the separate definitions of qualified leasehold improvement, qualified restaurant, and qualified retail improvement property, and provides a general 10-year recovery period for qualified improvement property, and a 20-year ADS recovery period for such property. Conference Agreement: The conference agreement follows the Senate amendment….In addition, the conference agreement provides a general 15-year MACRS recovery period for qualified improvement property. Recall that for property to qualify for the TCJA’s 100 percent bonus depreciation provision, it must be property “with an applicable recovery period of 20 years or less.”[9] The conference agreement clearly intended to simplify the classifications of improvement property under the single heading of Qualified Improvement Property and assign a recovery period of 15 years to make QIP eligible for the new 100 percent bonus depreciation provision. The final changes made to legislative text did succeed in this first effort: it removed the separate categories of improvement property and added the new QIP definition. However, the changes to make QIP eligible for 100 percent bonus depreciation did not occur. The conference agreement removed the 10-year language from the Senate amendment but then failed to add the 15-year language decided during the Conference Committee. Also, it did not adequately update the 20-year language for the alternative recovery period. The result leaves the newly defined QIP category without an assigned recovery period, while the alternative recovery period definition references a 10-year period provision that does not exist in the final law. What this means for QIP is that without an assigned recovery period, QIP will in most cases be treated as nonresidential real property with a 39-year recovery period (and 40-year alternative recovery period)—making QIP ineligible for 100 percent bonus depreciation. https://taxfoundation.org/fixtures-fix-qualified-improvement-property/

You expect me to remember that day to day?

The trust needs to issue a 1099 to the partnership, if you can't get the management company to correct the 1099.

Support should be able to tell him how to zero out box L. That is partly a program operation. I used negative contributions in ATX to zero out the capital account, and made sure contributions were zero on the basis computation. I know the K1 instructions say to show it as distributions but I don't like doing it that way because it's too confusing. ATX needs a capital transfer tab for these cases. I did one of these in ATX with hot assets and just use line 20 code Z to let the partner know the hot asset amount. The rest is up to the partner.

Or call that vaunted support Drake supposedly has. Or is it ballyhooed?

Read your user manual: https://www.drakesoftware.com/sharedassets/manuals/2017/partnerships.pdf

It's so easy in ATX! And you're not adding basis, you're "adding" capital.

Quite simply, basis can never be below zero. Cash received in excess of basis is a capital gain, just like any other investment. (Sch D/8949) The capital gain is not on the K1, just the partners 1040. On the final K1, just have an other adjustment to zero the capital accounts. Capital accounts and basis are not the same thing and almost never match in partnerships. Section L is the capital account, not basis.

I honestly don't think anyone can make a living properly reporting bond transactions. I also think almost no one even knows how they are to be reported. I usually lump all the various adjustments into one number and enter on 1099INT with code for 'other'. I also find that the totals in the detail pages of the 1099 are often different from the 1099INT. https://www.thetaxadviser.com/issues/2007/oct/taxtreatmentofmarketdiscountbonds.html Good luck!

They actually look pretty good with decent functionality, but time will tell.

CCH is updating their websites. I was able to get in just now.

Congress has cut their budget so much, they no longer have the resources to perform basic functions. They even sort CP2000s by dollar amount and only send out the number they can handle. I haven't seen a CP2000 for less than 1,000 in the past two years.

You're overthinking this. It was not the trusts income or expenses. This was merely a banking error. I would not file a trust return. Just treat this bank account as if it belonged to the new partnership that succeeded the trust.

Because you are in a small minority. ATX says they have less than 10 users who file more than just a few 1040NRs.

You can't be your own dependent, and neither can your spouse.

Never use a home OS at work. If I was doing the whole office I'd consider Enterprise, although my experience with a lot of 'business' software has not been good. The business versions are often less user friendly.

https://myatx.blogspot.com/2018/04/windows-10-april-2018-update-releases.html?q=windows+10 Microsoft is releasing a content update to Windows 10. These content updates can potentially make your software not open as designed temporarily No thanks! Others reported printers and other peripherals not working after Win10 updates. I just need my OS to work and stay out of my way.

I run VMWare and have a virtual XP machine for old software, if needed. It's not as simple as having an old XP machine around, but it works.

If you don't mind giving Microsoft permission to install updates when it pleases and reboot your computer without asking. Why do you think they changed 'My Computer' to 'This PC'?

BINGO! And why would anyone with common sense design a two half-pages form instead of a one page form? Answer: just so some politicians can say 'postcard'. I need to meditate to lower my blood pressure.

This is good news: It is not uncommon that for legal or other non-tax reasons taxpayers may segregate rental property from operating businesses. This rule allows taxpayers to aggregate their trades or businesses with the associated rental But it doesn't look like regular residential and commercial rental income qualifies for 199A.

You can always go to 8.1 for a few years before we have 10 forced on us. 10 is largely based on 8.1 so you can get familiar with the inevitable future. I've been using it with zero problems since 2013. It's actually my favorite flavor of windows ever. It's faster, more secure and simply works better than 7. FYI, I almost never go into the 'modern interface' of 8.1. There's one or two settings that are only there and you set those once in the beginning and you're done. I never installed a 3rd party menu for 8, because I just pin my main tasks to the taskbar, my secondary tasks are in the QuickLaunch bar and I have desktop icons for rarely used programs. And if I need something unusual, I press the WinKey and start typing and it finds it in seconds.