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Everything posted by DANRVAN

  1. Hopefully by advising your client you need this information dad will cooperate.
  2. And he should know better than posting past his bedtime....thanks for the correction!
  3. A 645 election would have to be made by filing form 8855 by the due date of the first return. To qualify for the election, the trust would have to been revocable up to DOD. Also, the election would end no later than 2 years after her death. So in order to file an accurate amended tax return, you will need to use a year end of 12/31, unless the election was previously made. Actually you will need to file an amended return showing zero income or expenses for 7/11/20 - 7/10/21 (the dates on the original return). Then file an original return for the correct period ending on 12/31/20. When the late filing notice comes, refer to the original return with the incorrect periods when requesting penalty abatement. (I dealt with a similar HR BLOCK correction a few years ago) Seems like it should be matter of posting deposits and disb. from bank statements, including anything you have personally paid. With the family issues you mentioned, sounds like you should consider turning over accounting and tax prep to a third party to work with the attorney.
  4. Is this a trust or an estate? Trust would have a calendar year end unless a section 645 election has been made. The first tax year of an estate must end no later than the month end preceding D.O.D. So in this case the first year end must end no later than 08/31/21. I am not sure what you are asking. But as Lion pointed out, you use cash basis unless accrual was elected on the original return.
  5. For a trust that was not making required distributions? Without knowing the details, sounds like a potential breach of fiduciary duty. Beneficiaries paying tax on money not received? For a simple trust, earnings can be distributed within a reasonable period after the end of the year. Reg 1.651(a) uses the example of paying out 4th quarter earnings within 15 days of the year end.
  6. I am not aware of any tax advantage of holding the investments an S-Corp., but there is extra accounting cost as you know. Now they are stuck with it, unless they wish to deal with gain from distribution under section 311(b); or nondeductible losses if basis of investments are greater than fmv.
  7. And along that same line, it is not common practice to itemize every single piece of personal property owned by the decedent on form 706; 10 pairs of socks @ $5, 6 blue jeans @ $10...........etc.
  8. I agree with you Sara, those items are immaterial, and right or wrong I have never itemized them out on form 709.
  9. Wow, that sounds brutal! But I it will depend on facts and circumstances. If the child is a minor dependent, then I believe most of those gifts could be considered support: clothing, recreation, transportation...if reasonable.
  10. Sounds like a theft loss since scammers took possession of his funds through a forced sale. Capital loss does not sound right since it did not result from a change in market value.
  11. Schedule G on page two should show where the tax came from. 5 year carryback was allowed by CARES in 2019. sounds right if 2021 is the final year
  12. It is not clear to me how this scam works. Did the "traders" remain anonymous and pulled his money out with out a trace of where it went to?
  13. A Schedule C reported on from 1041. It is not clear what the situation is. Need more detail. Are you referring to the business above?
  14. However, as explained in RR 2009-9. Ponzi scheme type of losses are still deductible since they are not subject to the disallowance of sec 165(h)(5)(A) for the years 2018-2025. Personal theft losses which are disallowed fall under sect 165(c)(3). Since Ponzi losses result from a profit motive transaction (other than from a trade or business) they fall under sect 165(C)(2) and are not subject to the limitations of sect 165(h) so they are still deductible as an itemized deduction. You should also be aware of the safe harbor under Rev Proc 2009-20.
  15. It is a gray area and depends on facts and circumstances. If the client went through a broker it would help his case. Take a look at RR 2009-9.
  16. Not if you are going to comply with the tax code. See section 162(a)(3), Exactly.
  17. Bare land is not deductible. Interest and property taxes are deductible.
  18. A log which list every job in chronological order. It starts fresh on January 1 and has columns for date in, client name, extension if applicable, date out, amount billed, check box for paid, and a check box for efiled. I am a one man show so the responsibility is all mine.
  19. Because children had a remainder interest in the property. I don't have time to search for the tables right now.
  20. They get a share of mom's basis as I stated above. Mom received a stepped up basis when dad died. So children receive a portion of mom's basis which was stepped up on dad's date of death. Why would you go back to cost basis if mom had 100% step up?
  21. So it sounds like dad passed away and mom received a stepped up basis (100% if community property state). Then she created life estate and house was sold while she was still alive. So children, including your client, received part of proceeds based on their interest, which should have been allocated per life expectancy tables. Since it was a completed gift, children receive a share of mom's basis. Mom's basis should be prorated in the same manner as the proceeds. So children receive a portion of stepped up basis from death of first parent in this case.
  22. I agree with Lion. You have no idea if this taxpayer would benefit from becoming an S-Corp. Most likely not if business and personal account is intermingled.
  23. Exactly. Winding up the business takes time.
  24. You are correct, I said that backwards; left brain vs right brain. If he had 5 vehicles but one was strictly used as a spare when one of the other four was not in use he could continue to use SM.
  25. Looks to me like they should be deductible, but aren't you past the three year window to amend a 2018 return?
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