DANRVAN

1 hour ago, Lion EA said:

Like getting a qualified appraiser.

I have never found an appraiser who will put a value on a fence, even for large estates with miles upon miles of fencing.

It is a good faith reasonable estimate following AICPA standards.  Otherwise clients are missing out on allowable depreciation.

On the other hand, I have seen buyers (non-clients) put values way beyond what the actual replacement cost would be.

4 hours ago, Slippery Pencil said:

Maybe a 3115 for which you'll bill him an arm and a leg.

For the above post my bill was about $900.  My job was to trace out the fences on a map and determine the length on a spreadsheet. Then input the estimated cost per foot.  The client then rated the various sections of the fences on a scale of 1 to 10, where "10" would be in new condition and "1" would be in total disrepair. The overall rating gave an estimated value of about 50% the cost of a brand new fence which was $93,000.

Farm and ranch fences are specifically listed under asset class 01.1 and are 7 year GDS.  Keep in mind these are pasture or range type fences, not corrals which are 15 year property.  New ones are made out of steel post and wire, and that is not cheap.  Neither is labor cost which varies with the terrain. 

Fences are often overlooked and I have used 3115 several times for that purpose.  

You need to reduce that basis of the land for the amount allocated to the fencing.

The client needs to make an estimate of the value at time the property was acquired considering: the condition, age of the fence, and replacement cost at the time.  You also have to consider partial ownership of boundary fences in some cases.

The last one I did came out to $93,000 which was about 1/2 the replacement value of about 10 miles of fence.  That was for a relatively small parcel of property.

This is right up my alley because I also do fencing as part of my other work.   I am starting on a couple mile project next week!

7 hours ago, NECPA in NEBRASKA said:

We are supposed to have a conference call soon. 

And you can drive home the point that preliminary tax planning would have saved time and confusion.

6 hours ago, NECPA in NEBRASKA said:

he had to pay off his portion

Without knowing all the facs, It might have been less complicated if they had assumed his share of liabilities instead of borrowing money to pay him cash; which he then used to pay off his share.

12 hours 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.

That is a good point, however the remodel is treated as a separate asset for depreciation purposes.  3115 is your friend, use it.

23 hours ago, NECPA in NEBRASKA said:

I don't know if the attorney knows how the sale was really handled or if my clients explained it incorrectly

23 hours ago, NECPA in NEBRASKA said:

I hate to extend this, because the old partner really wants his K1s, but I don't know how to fix it. 

At this point do you really have a choice but to extend?

Looks to me like you need to call the clients in for a meeting after 4/15 and document their intent. 

Explain that for tax and accounting purposes there is really no reason for the partnership to continue with the remaining husband and wife.

Does the contract take into account that the assumption of selling partner's share of liabilities by remaining couple is consideration paid to him?

I have worked with attorneys that have gone back and rewrote agreements to fit the actual facts.

Unless there was a compelling reason for the remaining couple to continue as a partnership,  I would suggest a liquidation of the partnership followed by a transfer of the assets at the individual level

23 hours ago, NECPA in NEBRASKA said:

Yet, the loan to buy them out was made to the LLC and it is making the payments on the loan.

Okay, so a loan was taken to buy retiring partner and was secured by the building which is owned by partnership?  Retiring partner was cashed out with a check from partnership?  If that is the case and remaining couple wishes to continue as partnership, treat it as a redemption as dictated by the facts.

12 minutes ago, jklcpa said:

There is also EFTPS

That is how I pay our personal estimates.

13 hours ago, Randall said:

I also leave the amounts blank on the vouchers in case they want to change the payment amount.

I prefer to put in the amount so there is no question about what they need to pay.

18 hours ago, Corduroy Frog said:

experience with the coupons has been very bad due to the clients.

Never any bad experience.  They get vouchers, envelopes, and a payment schedule.

5 minutes ago, Christian said:

If I reported a single figure I fear it may increase the possibility of getting increased  IRS scrutiny.

The purpose of the worksheet is to help you determine the net amount on line 2, it is not part of the tax return.  The IRS is not watching for an itemized list.

As far as that goes, you can just over ride line 2 of schedule SE.

3 hours ago, Christian said:

I am down to line 11 and need two more lines

Since it is just a "worksheet" you don't need to itemize anything.

Just put in the total expense and move on.

1 hour ago, jasdlm said:

and phone all my clients who have estimated payments reminding them of the same.  Clients love it, and it's a 'touch' in the off season time.

That is also my practice.

In this case the client will continue to mail in his payments on a quarterly basis.

He has a daughter that lives close by with a POA that will assist him.

Thank you for all your replies!

23 minutes ago, jklcpa said:

I really don't want that level of responsibility for clients' payments.

That is my concern as well.  

This couple have been long time and loyal clients.  She has dementia; he is still sharp at 89 but slowly declining.

He can decide which way to go on this.

18 minutes ago, schirallicpa said:

I have quite a few clients that use direct debit.  Never had any problems

That is good to know.  It seems like the auto pays should go into the IRS system and generated there on each payment date.

25 minutes ago, BrewOne said:

has worked fine with the few clients I've tried it

Do know if there is a way to confirm that the payments have been made without looking at bank statements or online banking?

I am considering direct debits of estimated tax payments for some older clients.

Has anyone here had any issues using direct debits for that purpose?

It seems like there has been some discussion here before but my search came up empty.

Thank you for any comments you might have!

3 minutes ago, jklcpa said:

Are these revocable or irrevocable living trusts?

2 hours ago, mcbreck said:

It obviously isn't required but you can do it that way.

I take that to mean they are revocable trust and reporting on 1041 is optional.

On 3/30/2024 at 9:25 AM, Tracy Lee said:

Where might I find the facts on this? 

RR 89-51 involved a similar situation where the use of a vacation home was donated to a charity:

"Neither A nor B is entitled to a charitable contribution deduction. The gift of the right to use property is not a deductible contribution"

16 hours ago, artp said:

portion of those gains to the beneficiary and have part of the gains remained and taxed in the trust

Why would you want to leave the capital gains in the trust?

Normally there is less tax if the capital gains are taxed to the beneficiary instead of paying capital gains rates at the trust level.

If the trustee is allowed to include the capital gains in DNI, then trust will take a related income distribution deduction and basically pay tax on the remaining amount.

1 hour ago, mcbreck said:

tax returns while alive because their attorney set it up that way.

1 hour ago, mcbreck said:

It obviously isn't required but you can do it that way

I question why that would be the best practice considering the extra expense of filing a 1041 and K-1 when there are alternatives.

What is the net benefit to the client after the extra reporting cost?

On 3/30/2024 at 9:25 AM, Tracy Lee said:

show him in black and white how this works

Refer to Reg 1.170A-7 (a) for a transfer of less than entire interest in property.

4 hours ago, TAXMAN said:

TP's have a living trust

4 hours ago, TAXMAN said:

Trust is filing a 1041

Why is the the living trust filing a 1041 while the grantors are still alive?

4 hours ago, BulldogTom said:

but only pay them straight commission on their sales.   Is this proper?

yes

4 hours ago, BulldogTom said:

sometimes salesmen get special rules.

There are special rules, but not off the top of my head.

1 hour ago, ETax847 said:

sch 1 worksheet?

At the top of the worksheet and line 2.

1 hour ago, Marie said:

He doesn't intend to replace, can he defer the income from the excess cows to 2024

Not for breeding stock, the only option is to defer the gain by replacing them.

As WITAXLADY pointed out, breeding stock qualifies for schedule J.