DANRVAN

1 hour ago, jklcpa said:

So do you agree that if the spouse is not required to file a return, therefore spouse has no income or not? Or are you thinking the taxable social security benefit may be between $1 and $4?   That would be the only possibility of the spouse living apart all year in OP's case where the spouse has only SS benefits being collected, wouldn't be required to file, and yet still have some "gross income."

If the spouse living apart had gross income of $5 or more then he or she would need to file.

It appears to me that 1.161-1 states that Gross Income does not include non-taxable social security income,

So if spouse in OP has non-taxable social security as only source of income, then the extra deduction should be allowed as I see it.

22 minutes ago, BulldogTom said:

It is like a movie that you have never seen before and you don't know for sure how it will end.

Yeah a real cliffhanger!

I wish somebody who has "read the book" will tell us how it's going to end.

2 hours ago, jklcpa said:

. Don’t include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2022, or (b)

Then it goes on to say " If (a) or (b) applies, see the instructions for lines 6a and 6b to figure the taxable part of social security benefits you must include in gross income."

From there lines 6a and 6b will determine the amount of SS included in gross income.  I  interpret that to say the non-taxable amount of Social Security is not included in gross income.  

That appears to agree with the definition of gross income per § 1.61-1 per my last post.

7 hours ago, Randall said:

I was looking at that.  But thinking 'taxable' ss.  Thanks.

Hold on until you read 1.161-1.

§ 1.61-1 Gross income.

(a) General definition. Gross income means all income from whatever source derived, unless excluded by law.

That seems to say the excluded amount of SS is not included in gross income!!

48 minutes ago, jklcpa said:

What's also interesting is the "gross income" test in the 1040 instructions under who must file where it says to not include social security here:

 I think that is actually referring to the non -taxable portion of Social Security income.

23 hours ago, WITAXLADY said:

How does he get to keep the same name he has established???

21 hours ago, DANRVAN said:

I think that depends on how he registers with the state, IRS does not care.

Your state probably does not care  either.

I had a similar situation with an Oregon client that went from partnership to sole proprietor and kept the same business name.

 They track the business by identification number not the name.

per 151(b) 

"if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer"

sec 61

(a)....."gross income means all income from whatever source derived"

On 3/21/2023 at 1:09 PM, Randall said:

Spouse only has SS and does not file

I believe SS is gross income as defined by section 61(a).

So it looks to me like a no go. 

3 hours ago, Randall said:

According to 1040 instructions and Parker general analysis, this appears appropriate.  I couldn't find a reference in Parker to Code or Regs. 

What is your source for claiming this deduction?

6 hours ago, Bklyn1_241 said:

trust that has it's own EIN.  How would you report this?  Does the trust need to file a tax return separately?  Would you include the income with the TP personal return?

 Most likely  the trust will need to file a separate tax return if the income is $600 or more.

6 hours ago, Bklyn1_241 said:

Would you include the income with the TP personal return?

That will depend on the type of trust and distributions from the trust to the individual.

Depending on facts and circumstances, the trust might claim an income distribution  deduction and  prepare a K-1  for the individual.

1 hour ago, WITAXLADY said:

wait!! How does he get to keep the same name he has established???

I think that depends on how he registers with the state, IRS does not care.

Unfortunately since the business has become a new entity, it cannot use the ein of the former partnership.

On 3/21/2023 at 1:09 PM, Randall said:

another $1400 for spouse.  ATX has let me enter the info and calculates the additional std ded.

I agree with Pacun. That does not sound right or possible. 

So your are saying ATX is showing a standard deduction of 15,750 on line 12?

If so, I believe you should uncheck the box to make it 14,350 as that is the amount that should be allowed.

Does anybody here use a voice over text software that you would recommend? My mouth is way faster than my fingers when it comes to typing.

I am looking for something that is downloaded; not web based.

Thank you for any ideas you might have.

On 3/17/2023 at 2:49 PM, Catherine said:

Is there any reason I cannot take these expenses at the federal level for the estate income return? 

If federal form 706 has not or will not be filed, you should not have any limitation to claiming them on form 1041 for the estate.

Are you filing a "1041" at the state level?

Oregon basically follows the federal code for estates; so you cannot claim the same deductions on both OR-706 and OR-41.

Off the top of my head, I can not thing of any deduction that would be allowed on both federal forms 706 and 1041; no double dipping!

21 hours ago, Gail in Virginia said:

From what I recall, I would think the depreciable basis would be the lesser of the adjusted basis in the house (cost + improvements - previous depreciation) or the fair market value

From what I understand, that rule applies if the property was not previously used in a trade or business.

Per reg 1.167(g)-1 

In the case of property which has not been used in the trade or business or held for the production of income and which is thereafter converted to such use, the fair market value on the date of such conversion, if less than the adjusted basis of the property at that time, is the basis for computing depreciation.

5 hours ago, Terry D EA said:

Start with 27.5 years or use the remaining years left?

I don’t think there is any authoritative answer to your question, but I believe you should pick up where you left off in the past; including cost and accumulated depreciation.  That way you will have a record of accumulated depreciation if the property is sold in the future.

By using the remaining depreciation life, your client will receive a larger deduction per year than if you start over with 27.5 years.

As for as the improvements go, I would list them separately and begin depreciation on the date the house was put back in service as a rental.

Cherry for me please, alamode!!! 

On 3/11/2023 at 3:59 PM, Tracy Lee said:

a significant settlement for the principal home that was destroyed in the California Paradise fire.

See section 121(d)(5) for details.

1 hour ago, G2R said:

overriding because the LLC transfer occurred mid-year.

To be correct you should override to show 1/2 year for 1065 and 1/2 year on schedule E.

1 hour ago, G2R said:

Does the LLC basically steps into the shoes the partners wore prior and continue on the same depreciation schedule?

Yes.

1 hour ago, G2R said:

IRS doesn't just see this large asset vanish without explanation?  

IRS is not tracking it!

1 hour ago, G2R said:

capital accounts of the partners are the depreciated basis of the property

Partners basis is the basis of assets contributed.

1 hour ago, G2R said:

original cost and accumulated depreciation taken

As of date of contribution to partnership.

9 hours ago, artp said:

His only solution is to build a storge shed and do a roof mount installation.

You probably won't find a black and white answer in the code, but there appears to be a justification for claiming structural components. 

If you were to build a separate structure with the sole purpose of accommodating the panels I think you would have a strong case.

But if the structure served another significant purpose; then I believe it becomes a question of how much (if any) of the cost could be allocated to the installation of the panels. 

25D (d)(2) "(2)Qualified solar electric property expenditure.

The term “qualified solar electric property expenditure” means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.

25D (e)(2)Solar panels.

No expenditure relating to a solar panel or other property installed as a roof (or portion thereof) shall fail to be treated as property described in paragraph (1) or (2) of subsection (d) solely because it constitutes a structural component of the structure on which it is installed.

2 hours ago, cbslee said:

With down payment in 2022 and the balance of the principal in 2029 would you handle this as a Installment Sale?

I would take a look at it both ways.

It looks like using the installment election your client would recognize about $2,000+ capital gain in 2022; and $18,000- in year 2029;  vs recognizing gain of $20,000 in 2022.

How would the extra $18,000 effect 2022 income taxes?  Any capital losses or $0 percent capital gain bracket to consider?

38 minutes ago, schirallicpa said:

given voting rights to partners based on their expected usage.

Limited partners are given limited voting rights.

They are limited to voting on certain issues, but not on the day to day operations of the company.

That should be spelled out in the partnership agreement.

23 minutes ago, Pacun said:

auto expenses for construction people was ordinary and necessary

For sure, hauling tools and materials.

25 minutes ago, Pacun said:

. Actual expenses are $25K in gas and maintenance plus 5K in car insurance. I told her that without depreciation, we are almost to the amount claimed but she wants to see the charges, which we are highlighting for her.

Sounds like your client might be a ahead to use actual mileage in that case. 

25 minutes ago, Pacun said:

She wants logs

Are the vans left overnight at place of business, then driven to and from job sites?   Maybe taken home at night for security purposes?

Are there any maintenance records etc. showing odometer readings from beginning of year to end of year?

Just some thoughts.   Helpful or not, good luck!

On 3/5/2023 at 10:54 AM, schirallicpa said:

he SCorp Taxpayer sold assets in installment sale in 2021.  All of the 453 reporting and pass-thru worked fine. 

Now - the SCorp wants to close up and report a final return for 2022.

On 3/5/2023 at 10:54 AM, schirallicpa said:

The shareholder should be able to continue the deferment over the term of the note.  But what are the mechanics of reporting that?  

Too late to do anything at this point unless the Corp wishes to recognize gain on the distribution of the installment note to the shareholder.

The distribution of the installment note to the shareholder is a taxable event to the S-Corp; unless they meet the exception under sect 453(h)(1).

In order to meet the 453(h)(1) exception, the corp. must adopt a plan of liquidation before the installment sale is closed.

Then there is a 12 month time period to compete the liquidation.