DANRVAN

And for whatever it is worth, I live in a non-com-prop-state and have never ever seen a 1065 prepared for a married jointly owned real estate rental; always on a single Schedule E. The last audit I had involved a married couple with several jointly owned rentals, the issue never came up.

The code is the authority. Per 761(f): "(2)Qualified joint venture For purposes of paragraph (1), the term “qualified joint venture” means any joint venture involving the conduct of a trade or business if— (A the only members of such joint venture are a husband and wife, (B) both spouses materially participate (within the meaning of section 469(h) without regard to paragraph (5) thereof) in such trade or business, and (C) both spouses elect the application of this subsection." *************************************************************** Rev Proc 2002-69 is the IRS position: (tax courts are not bound by Rev Proc) ".02. Qualified Entity. A business entity is a qualified entity if: (1) The business entity is wholly owned by a husband and wife as community property under the laws of a state, a foreign country, or a possession of the United States; (2) No person other than one or both spouses would be considered an owner for federal tax purposes; and (3) The business entity is not treated as a corporation under § 301.7701-2. **************************************************************** -The code does not make any reference to community property or an LLC. -The RP refers to community property, but not to LLC's in contrast to the IRS webpage. -In Argosy Technologies, LLC, T.C. Memo. 2018-35, the husband and wife owners asserted that their business was a single-member LLC in order to avoid a levy to collect the Sec. 6698 penalty for failure to timely file 2010 and 2011 partnership returns. The taxpayers lost. - The determining factors in that case were the previous filing of 1065 by the plaintiffs and the failure to make an election under 761(f) as a QJV. - The facts that the plaintiffs resided in a non-community property state; and were an LLC were not mentioned in the opinion of the court. - Therefore it appears to me the court looked to the code for authority and was not bound by the RP stipulations. In answering your question Judy, yes I believe the IRS page is an incorrect interpretation of the tax code. If so, then they have failed to make the 761(f) election and must continue to file 1065.

An LLC has no bearing on tax reporting since it is the underlying entity that counts. In this case the entity is a Joint Revocable Trust, which is also disregarded for tax purposes due to its grantor status. Therefore the grantor is treated as the owner(s) for tax purposes. Since the husband and wife are the actual owners for tax purposes, they meet the requirement of sec 761(f)(2)(a) for a QJV as I see it. I don't see where community property state vs non comes to play under sec 761. Based on that, I would report on Schedule E.

But we have always done it that way with Turbo-Tax. Depreciation, what is that?

No, the instructions to Schedule E line 12 would be good place to start your research. No business purpose means no business (or rental) deduction under section 162. Suggest you research the definition of "acquisition debt".

I am familiar with the OAR, it has been around for several years. But it does not exclude out of state sourced income from Oregon taxable income, regardless if the other state taxes income or not; it is still subject to Oregon tax per ORS 316.048.

What is CA's rule for preparing CA resident tax returns by out of state preparers?

I agree that in your example your fee could be considered an out of state source of income. However, I do not see any authority which would exclude it from your Oregon taxable income under ORS 316.048. Since the starting point is federal AGI, I am not aware of any provision to subtract it out for determining Oregon taxable income. Also, I don't see any reason why income from non-income tax states would be treated differently from states with income tax for Oregon taxable income, since Oregon taxes all sources of income, but allows a credit for tax paid to another state.

I think I follow what you are saying now. For example you prepare a tax return for a Washington resident. You are saying your fee is not subject to Oregon Income tax? Your not talking about whether the client has Oregon sourced income but whether you do for your services?

I am still not following you on this Still subject to Oregon tax, but not subject to the Oregon Preparer rules as I see it.

There is no other reason!

Per the proposed rule notice: NEED FOR THE RULE(S) The proposed new and amended rules were made necessary, among other things, by changes in the technology that may be used by tax preparation businesses for the preparation of personal income taxes. Oregon Tax Preparation Businesses, who take in more work than their trained preparers can handle have, more than occasionally, been found to be reaching out not to other Oregon Licensed tax practitioners for assistance but to tax preparation businesses located outside of the State of Oregon – businesses whose employees have no training or expertise in the preparation of Oregon personal income taxes and as such pose a significant consumer protection risk to unwitting Oregon taxpayers who thought they were turning their tax information over to an Oregon Licensed Tax practitioners for the preparation of their Oregon Personal Income Taxes.

I am not following you on this. If they have Oregon source income what has changed? They can have their returns prepared out of state, but still subject to Oregon tax as I see it.

The proposed rule 800-002-0000 states "(1) An out-of-state unregistered tax preparation business whose employees or contractors are not exempt from licensure under ORS 673.610 may not contract to, and may not solicit or advertise to, prepare Oregon Personal Income Tax Returns for Oregon residents, or maintain a physical or electronic Oregon drop box location for delivery and pick up of materials pertaining to preparation of Oregon Personal Income Tax Returns for Oregon residents, unless the out-of-state tax preparation business registers with the Board and maintains an Oregon Licensed Resident Tax Consultant(s) on its payroll who is assigned to supervise the preparation of all Oregon personal income tax returns. ¶ So it in that situation is sounds to me that since the taxpayer is no longer an Oregon resident the rule would not apply; even if he/she had been a full time resident for the tax year, but moved out of state and were nonresidents at the time of filing.

You are in a different world. $50,000 for new will not buy much of a tractor for an average operation in my area, and will not hold it's original value for the amount of use it will receive. In any case, the original cost is a moot point in determining fmv at DOD, it needs to be done by an independent third party.

And how did you answer form 8867?

I assumed OP already made that determination; and return was filed, or to be filed without 8332 (So we don't have an 8332 and we go ahead and file electronically without one.) His question was: "Will the IRS hold up processing the return? Researching to see whether "Jack" has claimed Toddler?" Answer is, IRS does not track who custodial parent is from year to year. They are not going to hold up the return while they research "to see whether "Jack" has claimed Toddler". So even if the return is filed by non-custodial parent without 8332, the dependent will go to noncustodial parent if custodial parent has not claimed. I know many of us have had to file an appeal for custodial parent when ex beat them to the punch and claimed dependents without permission.

To clarify, if custodial parent signs 8332 and also claims the child, then IRS will disallow the claim by custodial parent and allow to noncustodial parent per the signed release. The noncustodial parent needs to be proactive and request the 8332 for not only the current year in part I, but also for future years in part II. The noncustodial parent also needs to be aware that custodial parent can revoke for future years by filing an additional 8332 and filling in part III. In that case, the custodial parent must attach a copy of the 8332 as proof of the revocation.

But the custodial parent is not required by IRS to provide 8332; that is strictly between the two parties or legal system.

Not in the world I live in. Original cost certainly does not reflect DOD fmv of farm equipment.

So aren't you taking the same position as Fleischer v. Commissioner? Assignment of income to the Corp. Why doesn't the firm become RIA and follow the code?

You are filing an incomplete and inaccurate tax return. Filing form 8332 (or similar statement) for noncustodial parent is a requirement, not an option.

Make sure you are familiar with Fleischer v. Commissioner, Tax Court Memo 2016-238 before you consider an S-Corp for an investment advisor. And in the case of Fleischer it came back to bite him as assignment of income to his S-Corp.

I think you only use 5405 in year of disposition. You could calculate interest and penalty and include with the unpaid balance due.