DANRVAN

8 hours ago, T. Reynolds said:

The business sells online products. 

4 hours ago, T. Reynolds said:

The business has not relocated, just the owners. 

1 hour ago, T. Reynolds said:

No brick & mortar or employees in State #1.  Partners don't travel to State #1 and no manager in the state.

Partners perform business activities from their home in State #2.  

Sounds to me like they are now conducting all their business activity in state #2 and should re-register there.

From what I am following in this post, a disallowed passive loss carryforward loss was dropped in 2016.

The property connected to the loss might be sold and free up suspended losses.

Even though 2016 is closed for refunds or assessments; It my understanding that the closed years can be amended to bring a carryover forward to an open year. 

12 hours ago, artp said:

she provided more the 1/2 cost of home

Looks like she should meet the three HHH test:

-unmarried on 12/31

-paid over 1/2 cost of keeping up a home

-and had a qualifying person live with her for more than1/2 of the year.

2 hours ago, Possi said:

In 2022 the medical expenses were $8925.

So, I start from the entire distribution...2022 distribution 15,217 - 8925 = 6292 taxable income.

As long as total expenses exceeded the reimbursement, the only amount taxable should be the 2021 tax benefit which was reimbursed in 2022.

Also you mentioned the taxpayer was deceased, so sounds like IRD possibly reported by his estate on form 1041.

1 hour ago, Possi said:

Actual deductible amount on the 2021 Sch A was 15,487. (expenses $31787- $16,300 floor= 15,487 deduction)

In 2022 the medical expenses were $8925.

I think you are missing part of the equation.

What was the actual amount of LTC expense reported on 2021 schedule A?

47 minutes ago, Possi said:

So, I start from the entire distribution...2022 distribution 15,217 - 8925 = 6292 taxable income.

Frist you need to go back to 2021 and compute total itemized deductions less standard deduction.

The 2021 tax benefit would not be greater than that amount.

1 hour ago, DANRVAN said:

-taxable income

On second thought, I need to retract that statement regarding taxable income and crawl into my hole for the night.

Negative taxable income in the prior year would reduce the tax benefit from the deduction in the prior year.

So I believe the amount recognized would be the lower of the first three items stated above; reduced by negative taxable income.

1 hour ago, TexTaxToo said:

Yes, but only to the extent there was a tax benefit

And that amount would be the lower of:

-the actual deduction taken for LTC

-total medical deductions below the floor

-total itemized deductions less the standard deduction

-taxable income

3 hours ago, WITAXLADY said:

o if the farm is now an S corp and the individual is no longer a farmer but a Shareholder

The wages he receives as a  shareholder/employee do not count as gross income from farming and therefore do not count towards the special estimated tax payment rules of section 6654(i) for farmers.

3 hours ago, WITAXLADY said:

If he does not have all his stuff together - can he make a payment 3/1 and that is good?

Even if he met the estimated tax exception for farmers, he would have to either make his estimated payment by January 15th; or file and pay by March 1st.

It appears the amount of expense claimed as a deduction in 2021 and reimbursed in 2022 needs to be claimed as income. 

6 hours ago, Dave T said:

Yes, I was working through it but it doesn't seem to calculate a carryover yet it seems as if it should.

 

 

I don't see why not.  Looks like line 1 should be negative 2,870,  Then lines 2,5, and 8 should = 2,000.  As those numbers should appear on the 2021 worksheet.

Most likely he has purchased capital stock in a section 521 coop.  Would be treated as an investment in any case.

2 hours ago, cbslee said:

For years I have dealt B with whom I have a working relationship. I would prefer not to work with either A or C

Hope that works out for you.

1 hour ago, BulldogTom said:

Should I just start with the 990 EZ?   So that I am used to it when 2025 comes around?

If average is $50,000 or less for 2023, 2024 and 2025 you would not need to file.

Instead of practicing for a return that may or may not be filed, why not spend time instead with a 990 CPE course?

I would also keep in mind the practice returns will likely become public information posted for viewing on the IRS EO lookup website.

18 minutes ago, Abby Normal said:

 

I do this because I want to keep the assets in the tax software. It's way too easy to forget about that old depreciation many years down the road.

If only ATX had a 'removed from service' date field so this could be more easily handled.

That is one of the reason I keep most depreciation schedules on a separate program (EasyACCT) so I am not relying on ATX for permanent records.

23 hours ago, cbslee said:

ask all 3 members to sign a letter designating one of them to be the "Partnership Representative."

As an extra incentive, you can inform them that if they fail to designate a "PR",  the IRS can appoint one for them under reg 301.6223-1.

The PR does not have to be a partner.

If you haven’t already done so, you need to inform your clients of the BBA audit rule implications.  Then let them decide whether to make the election or not.

Partnerships with trust as partners cannot make the election, but an election can be made if the partner is an estate of a deceased partner.

I prepared a generic letter that included the following:

For partnerships that elect out of the BBA audit rules, any IRS audits will be conducted at the individual partner level. Any resulting assessments will also be made at the individual partner level. 

If a partnership makes a valid election out, the applicable statute of limitation for assessment of tax will be determined at the partner level and is further determined separately for each partner. If the election out is not made, the applicable statute of limitation for assessment of tax is instead determined at the partnership level.

It might depend on his future intentions.  Does he plan on renting out the property?  Does he have any other business that will use the buildings?

13 hours ago, Abby Normal said:

And the bill to date is about $500 for just talking about this.

"Corrupt? Incompentent? Or both?"  Maybe both, be curious to see how he justifies $500 on his invoice, if  he prepared the K-1 he should take responsibility for it.

13 hours ago, Abby Normal said:

I advised to send a copy of the K1 showing the 90.20 in response to the IRS notice, explaining that it was entered wrong by the IRS.

All of this could have been avoided by efiling that 1065.

I agree with all of that.  Also a call to TPP hotline might even solve it.

2 hours ago, GLGACCT said:

If TP wants to file a final return, is the income fully taxable to the beneficiary via K-1 as the estate is terminating regardless of the $600 threshold or do you override the return inserting the $600 exemption even though the exemption is not allowed in the final year, but the return is under the $600 threshold

If you are going to file a final return with income under $600, then should probably go ahead and report on K-1 and show as an income distribution deduction.  That will result in a complete and accurate tax return whether required to file or not.

14 hours ago, mcb39 said:

Also included are some Volunteer grants.

I believe a "volunteer grant" is a donation from a company a volunteer is employed with - to a charity the employee volunteers for.  The org. uses it for it's charitable purposes;  it is not disbursed to the volunteer as in the case of OP.

1 hour ago, Sara EA said:

While you don't have to file the 1041, if there are probate and legal fees that are substantially more than the income and can benefit the beneficiary, go ahead and file.

Excess deductions on termination.

The 2020 Treasury reg. made that possible after TCJA took it out.  There is an allocation process to follow.

Probably not if gross less than $600.  

On 2/9/2023 at 9:01 AM, GLGACCT said:

On a final return the income would be passed to the beneficiaries via a K-1 and the exemption of $600 will be lost.

Still no need to file since gross is below $600, and net further reduced by legal and accounting fees.

And most like there is not any capital losses or other tax benefits to pass through on K-1s.

8 hours ago, mcb39 said:

Many Government and Public Assistance grants are not taxable.  See Quickfinders; Page 4-5.  Also included are some Volunteer grants. 

As I understand OP, grant was made to a charitable org which then divided it up among the volunteers.

While grant was not taxable to the org, I can’t see where the distribution of the grant to volunteers would be non-taxable if it was above and beyond a reimbursement.  The IRS rules are strict in such matters.

I would be curious in how the org. classified the distribution to the volunteers on form 990.

1 hour ago, WITAXLADY said:

Amend? - Claim as other income?

Most likely, although it could go several different directions depending on facts and circumstance as well as dollar amount.

I would be curious as to how the org. reported the distribution to the volunteers; sounds like more than a matter of reimbursement of expenses.

1 hour ago, WITAXLADY said:

Only expenses would be miles..

I think that would only apply if put on schedule C.

Without any further information I would go with other income on 1040X.