DANRVAN
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Posts posted by DANRVAN
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37 minutes ago, Christian said:
depreciation to his income for 2022 taxing it at his regular tax rate
That is correct. The unrecaptured section 1250 is a capital gain which can be offset by capital losses, but taxed at a maximum ordinary rate of 25%.
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On 4/17/2023 at 5:59 AM, mcb39 said:
never been questioned by the IRS since I have known them.
But that doesn't really mean anything.
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On 4/17/2023 at 5:59 AM, mcb39 said:
came to me with the Carryover loss already established and I don't know the particulars of the story
Personally, I would want some general verification (documented) before I put a $200,000 carryforward on a tax return; it could come back to bite you if disallowed.
Catherine mentioned the possibility of a 33% drop in the market value, but it is also likely the previous preparer did not know the difference between an allowable loss and a partial gift.
It should not be very difficult to document a significant drop in market value given the date of inheritance vs date of sale.
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On 4/18/2023 at 8:59 AM, BulldogTom said:
Taxpayer had a tool shed built for his construction business. Pretty big
It is either classified as nonresidential real property (most likely); or falls under "Asset Class 15.0" which includes assets used in the construction industry with a 5 year depreciation life.
Asset Class 15.0 would be a sure thing if the shed was portable and moved from job site to job site. Otherwise it could be argued that the structure is attached to the land by it own weight and for an indefinite time period.
On 4/18/2023 at 8:59 AM, BulldogTom said:I see 20 year and 15 year options,
15 year life would fall under Asset Class 00.3; Land Improvements which are also permanently attached to the land. The shed does not qualify as an improvement since it is a building with walls and a roof.
A 20 year life is not appropriate under Asset Class 01.3; Farm Buildings.
On 4/18/2023 at 8:18 PM, cbslee said:a 7 year life.
That is what I use for Concession Stands and Food Kiosks
In that case I would use 5 year life under Asset Class 57.0 for assets used in "Distributive Trades and Services".
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On 4/13/2023 at 5:25 PM, tax1111 said:
For a new business to make s election, the 25% test option is not available right?
Yes, since they do not have a base period to meet the 25% test.
On 4/13/2023 at 5:25 PM, tax1111 said:means they can only elect calendar year, or 9/30-11/30 fiscal year end?
Yes, Sept, Oct, or Nov year end.
Is there a reason for choosing another year end date?
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6 hours ago, mcb39 said:
she inherited a $600,000 house from her father and sold it for approximately $400,000 just to get rid of it because it was standing empty.
That raises a couple possibilities.
(a) The house could have been overvalued by $200,000 or
(b) The house was sold for less than FMV and the difference should have been reported as a gift.
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7 hours ago, jasdlm said:
. I know I'm tired, but why is ATX not recapturing all $30k in the current year.
7 hours ago, jasdlm said:1250 property.
1250 gains are treated differently than 1245 gains and not subject to depreciation recapture in year one of installment sale.
1250 is sort of a hybrid, taxed at a maximum capital gain rate of 25%, thanks to the strong lobby arm of the real estate industry.
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On 4/13/2023 at 11:46 AM, Catherine said:
could not find specific confirmation
Code section 1014(a).
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2 minutes ago, mcbreck said:
Just an idea.
They need sound legal advice; as well as tax advice.
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2 hours ago, Christian said:
His wife the appointed executrix.
She has a duty to file the final tax return and pay the taxes for the decedent; whether she files jointly or separately.
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1 hour ago, BulldogTom said:
If the stock was held only in his name, she gets full step up,
Not in every situation, it could be considered marital property for estate purposes (and divorce) depending on how the stocks were acquired, or where the source of funding to purchase them came from.
For example, if he bought the stocks using money he earned while they were married it is considered marital property. In that situation wife has an ownership right.
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50 minutes ago, Pacun said:
inherited stock, you start wearing the shoes of the deceased. Meaning, no step up basis
You "step into the shoes" of the decedent for assets producing income in respect of the decedent, IRD. IRD includes such items as: installment notes receivable, IRA accounts,....... investments in annuities.
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2 hours ago, Margaret CPA in OH said:
And how much could he have contributed in 2021 and still have $$? Hmmm... Something funny here.
Parents gifted the contribution?
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On 4/7/2023 at 2:20 PM, Margaret CPA in OH said:
for a new graduate not making a lot of money.
So that must mean he either contributed more than $6,000; or contributed up to $6,000 but his earnings were less than contributions?
I am not following this part either for new grad note making a lot of money.
On 4/7/2023 at 2:20 PM, Margaret CPA in OH said:new graduate not making a lot of money.
So assume he did not earn $xxx,xxx and hit the income limitation.
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I am not
On 4/7/2023 at 2:20 PM, Margaret CPA in OH said:. He says in July he realized that he was overinvested in the Roth and asked the advisor to make the overage a 2022 contribution.
I am not following the sequence of events here at all Margaret.
On 4/7/2023 at 2:20 PM, Margaret CPA in OH said:It means the 10% penalty of about $250 for a new graduate not making a lot of money.
But I am almost certain the penalty applies only to earnings in the case of a Roth. $250 does not sound like 10% of earnings to me.
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51 minutes ago, DANRVAN said:
gain or loss is determined at six months from DOD
or date of disposal if within 6 month.
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On 4/7/2023 at 7:52 AM, BulldogTom said:
Just to follow up and clear my thinking,
The TCJA eliminated NOL carrybacks and permitted NOLs to be carried forward indefinitely. The CARES Act changes those rules temporarily by permitting NOLs incurred in 2018, 2019, or 2020 to be carried back for five years to the earliest year first and suspending the 80% taxable income limitation through 2020.
This is all spelled out in section 172. There are special rules for farming.
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8 hours ago, Pacun said:
guess no much interest in crypto
I have not had any practical experience, but that is about to change with new client last week.
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To clarify, the alternate 6 month valuation is an election per section 2032 made with a timely filed form 706.
In order to use the alternate valuation date, the value of the gross estate must have decreased since the date of death. Therefore an appraisal must also be made at DOD to determine if there is a decrease in value. The only practical purpose for the election is to decrease the amount of estate taxed owed.
When the election is made, any assets disposed within 6 months of date of death are valued at date of disposition; all other assets are valued at 6 months from date of death.
If the section 2032 valuation is used, then the basis for gain or loss is determined at six months from DOD.
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12 hours ago, TexTaxToo said:
I believe the option to use the FMV at 6 months after death only applies to the estate tax. For the step-up in basis for capital gains, you must use the FMV at the time of death
But per the uniformity of basis rule 1.104-4 the basis to the estate passes to the heir.
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On 4/8/2023 at 7:59 AM, BulldogTom said:
If the sale is further out than 90 days, you should have an appraisal done for DOD valuation.
Depending on how far out the sale was from DOD, I might get an opinion from realtor to see if there was a significant change in real estate market since DOD.
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5 hours ago, Christian said:
He actively manages them but in doing his own returns last year mistakenly deducted more than the $25,000 loss deduction.
The proper way to correct this would be to file a 1040x.
5 hours ago, Christian said:I suspect the Service will note this and send him a correction notice disallowing the part of the loss over $25,00 and refiguring his liability.
I would not count on that.
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On 4/8/2023 at 10:38 AM, Pacun said:
I think you can use the basis: FMV at the time of death or an appraisal 6 month later
You can elect to use the alternative valuation at 6 months after date of death per section 2032 if the value of the assets has decreased since date of death; and if an estate tax return is filed.
Section 2032(a)(1) allows the use of value on date of disposition if the asset is disposed within 6 month from date of death.
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4 hours ago, BTS said:
Lists equipment value (150k), inventory value (50k),
Inventory does not qualify for sect 453 and depreciation on equipment is subject to recapture in the year of sale.
If equipment was fully depreciated then 150,000 for equipment and 50,000 for inventory would be recognized in the year of sale.
Tax Worksheet (Sch D(1040)
in General Chat
Posted
So you have two rental properties on Schedule E, one that was sold (A) and the other with a disallowed loss (B).
On 4747 input did you specify the sale related to property A?
On the Schedule E input sheet for A did you check the box that it was a complete disposition of a passive activity?
Those steps should net the loss on B against the gain of A.