DANRVAN

I have not seen any authoritative cite to confirm that. Reg 1.104-1 (c) states: “Section 104(a)(2) also excludes damages not in excess of the amount paid for medical care (described in section 213(d)(1)(A) or (B)) for emotional distress”. As referred to, sect 213 allows a deduction for medical expenses paid by the taxpayer for his family. Where does it say affected members of his family must be included in the suit?

Be sure to get a POA and ask for a hold on his account when the notices start coming in.

I would refer that question to a financial advisor.

For a balance due of $27 I would not sweat it.

It would take a Private Letter Ruling to grant an extension of time for the rollover; and to show reasonable cause for a uniformed decision. I think they might have a case. I researched and filed a PLR several years ago and found a lot of favorable cases where mental capacity was compromised. My case was a surviving spouse who inherited husband’s funds, she was granted an extension of time to make the rollover from the date of the ruling.

Stop the check, otherwise it might be awhile before gets his $4,300 back.

Maybe I jumped in to soon. Damages specifically for medical expenses related to emotional distress should be excluded.

Are you saying the amounts related to medical expenses resulting from emotion distress are excluded from the taxable settlement? That doesn't sound right to me. I believe the Emotional Distress must result from physical injury or physical sickness to meet the exclusion, not the other way around. Sounds like in this case emotional distress was caused by mental harassment from employer. If instead, the client got physically sick form chemicals used on the job, and the sickness led to emotional distress, the amount related to emotional distress would be excluded.

I have a retired couple that had one installed with the promise of tax credits, but will never receive the benefit because of their low amount of taxable income.

The tax code does not define the term “installation”. In fact, the credit is specifically allowed by the code for “expenditures” made during the tax year. Section 25D(e)(8) states that an expenditure is made when the “installation” of an item is completed. It does not state that the asset must be place in service, (as is the case for depreciation), only installed. However, in the case of the “business energy credit” under section 48, the credit is specifically allowed as a percentage of the basis of “property place in service” during the year. So in the case of your client I do not see and issue in taking the credit.

Is the Church paid to put on the funeral? Or compensated for paying pastor and other employees? From what I have seen, it is customary for the funeral home to pay for the pastor, musicians etc. as part of the cost of providing the funeral.

How come your Church is paying instead of the funeral home? I have a funeral home client and take care of books for my Parish, have never seen it done that way.

Boot reduces basis, recognized gain increases basis.

Since the assets were held in trust at death of deceased beneficiary, there is no step up in basis upon his death. The beneficiary’s do not have any current legal ownership or rights of the trust assets; they are only entitled to distributions. Beneficiaries do have not basis in a trust; so there cannot be a step up on their death. Even if the house had been distributed out of the trust to beneficiaries, there would not be second step up as governed by the Uniformity of Basis Rule. There is a difference. The shares of stock represent legal ownership, the holder has a right to transfer. Beneficiary of a trust cannot transfer interest.

LLCs cannot be shareholders of S Corps, but S Corps can be members of an LLC. If the best structure for each entity is a Sub S, then each should have own ein, payroll..etc...keep them independent of each other!

There is not enough information to make any suggestions here. Reference is made that two parties are involved in each business, but a Schedule C is filed for each. How are each of the parties involved in regards to capital investment, asset ownership, time involved and compensation? There are concerns if husband is involved in business which also rents property owned by him. Was the property solely his to begin with? Was there a bonified business purpose if wife transferred any ownership to him? What are the long term plans and succession goals for each of these business? How interrelated are the businesses and how much profit from each. I would refer any legal concerns to their attorney.

Glad that worked out for you Judy! I have also used Checkpoint Research for years; and have been very satisfied with that as well.

I subscribe to RIA Checkpoint Learning 'Premier Package" which allows access to hundreds of webinars and self-study courses for an annual rate of about $300. A great value for quality courses. Oregon CPAs are required to report 80 hours every two years. You must take at least 24 hours a year. 20 hours of carryover are allowed but cannot be applied to the 24 per year minimum. Also must include 4 hours of ethics which come with the RIA package.

I wonder if just by coincidence he is looking for a new tax preparer? As others have mentioned there is a high bar for raising a gambling activity to the level of a trade or business; and allowing deductions that would otherwise go on schedule A instead of C.

A delicate situation for sure. Easier said than done, but I believe all clients should have a backup plan in the event they are no longer able to handle their financial affairs. In your situation, I would arrange a meeting with both Mr. and Mrs. Longtime Client. Send a letter addressed to both, so he is likely to see it. Then when you meet and Mrs. brings up the refund question for the umpteenth time, you can gentle say something to the effect “as we have previously discussed your refund was received last May (or whenever).” Maybe Mr. will pick up on the repetitive cycle you are going through. The goal of your meeting is to find out who you should contact if both become incapacitated and bring husband on board. Hopefully he is not on the same medication; and you can persuade them to obtain a durable power of attorney.

That would be true if a beneficiary (non trustee or executor) on her own accord (but not necessarily a Honda Accord) decided to travel across several states to wash the windows and polish the brass monkeys, with the idea her efforts will increase her share of the sell price. In that case then deduction would not be allowable per § 20.2053-1(b)(2)(ii)(B) since the following is not true "The nature of the claim or expense is not related to an expectation or claim of inheritance.".

"Legal and accounting fees, taxes, etc. are specifically allowed by the Code" Agree with you on that, for example legal fees are deductible per 20.2053-3(c). Then when you scroll down, to 20.2053-3(d)(2) the following is stated: "Expenses for selling property of the estate are deductible to the extent permitted by § 20.2053-1 if the sale is necessary in order to pay the decedent's debts, expenses of administration, or taxes, to preserve the estate, or to effect distribution". But keep in mind the instructions are not all inclusive. In this case, it appears the travel cost in an ordinary expense allowed under 20.2053-3(d)(2). I believe the answer here is also yes per 20.2053-3(d)(1) " Expenses necessarily incurred in preserving and distributing the estate, including the cost of storing or maintaining property of the estate." Cost of travel was for preserving and maintaining assets, so why not?

There are two acceptable method that I am aware of; interim closing in regards to the deceased on date of death, and the proration method. The proration method is not allowed for extraordinary items such as the $500,000 loss you referred to. Therefore the allocation is made on date of ownership under either method. See reg 1.706-4 for details.

I misunderstood you the first time, thinking you said she could not be reimbursed by estate. However, I do not see why the estate would not take a deduction for an allowable expense paid for and reimbursed to the executor; regardless of whether he/she is also a beneficiary. What if he/she paid for legal or accounting fees out of pocket? Are you saying the estate can reimburse but not take the deduction if she is also a beneficiary?

at 11:59 pm eastern time Tuesday 11/22/2022.