DANRVAN

2 hours ago, schirallicpa said:

but there was a lawyer involved that told them to stay an LLC and just sell the LLC.)

Sell a SMLLC?  How?

1 hour ago, schirallicpa said:

  New owner had held it with him jointly for years. 

What?!  Is there a relation between the buyer and seller?

1 hour ago, artp said:

So until he died he in effect had control over the assets in the trust. Would need to run this by the attorney to confirm.

Sounds more like a revocable trust and makes more sense.  For sure confirm with the attorney.

20 hours ago, artp said:

died in 2002. Farm continues to operate under the trust

Are there any depreciable assets that could have been stepped up back in 2002?  

Possible 481(a) adjustment?

14 minutes ago, BulldogTom said:

Was it part of the spending package that was rushed through the house last night?

I have not seen any indication that it was.

17 hours ago, artp said:

Farm land from father was put in irrevocable complex trust

Are you sure it is an irrevocable trust?  

17 hours ago, artp said:

They continued to operated the farm until he died in 2002. Farm continues to operate under the trust

Why would they set up an irrevocable trust under those circumstances?  Is there a large taxable estate? 

What happens when wife passes away?

Have you read the trust document or checked with attorney?

Maybe it is actually a grantor trust that has been treated otherwise?  Just doesn't seem right to me.

On 3/20/2024 at 2:23 PM, NECPA in NEBRASKA said:

determine if the payment should be 736(a) or 736(b).

On 3/18/2024 at 12:35 PM, NECPA in NEBRASKA said:

The only assets are a little bank account, land and a commercial building.

Sect 736(a) does not make sense for a rental partnership.  

The partnership should be advised to make a section 734 adjustment under a section 754 election,

Most likely

2 hours ago, artp said:

Farm continues to operate under the trust with

In most cases irrevocable trust are not included in the estate of the decedent as it appears here.  Therefore no step up in basis.

8 minutes ago, Lee B said:

Perhaps you should ask to see a copy of the invoice which should tell you what was done?

On 3/16/2024 at 2:45 PM, Terry D EA said:

Client replaced the septic tank at one of his rental properties.

Sounds straight forward to me.  A major component was replaced.

28 minutes ago, Terry D EA said:

is the possibility of 20 year life for septic tanks. 

If you take the position that it is not part of a building system per Reg §1.263(a)-3 (e)(2)(ii)(B)(2), why would you use 20 years instead of 15?

53 minutes ago, Abby Normal said:

Just replacing an existing system usually qualifies as a repair.

Looks to me like it falls under Sec. 1.263(a)-3(k))(1)(iv)   "Returns the unit of property to its ordinarily efficient operating condition if the property has deteriorated to a state of disrepair and is no longer functional for its intended use"

Depends on state law.

41 minutes ago, Terry D EA said:

still considered a capital expense that requires depreciation? 

I believe it would, unless it falls under the  Sec. 1.263(a)-3(h)); lessor of  $10,000 or 2% basis safe harbor rule.

1 hour ago, NECPA in NEBRASKA said:

I am really confused as to why the LLC is making payments for the loan.

If the partnership made the payment to the former partner it is considered a redemption of his interest by the partnership,  instead of a buyout of his interest by the remaining partners.

5 hours ago, Marie said:

delay of selling cows during a drought.  I believe a farmer has 3 years to replace breeding stock,

If you are using ATX, go to elections and use the tab for "Dispositions, Disasters...". Then use the first option on top of the page.

If you are deferring income from sale of calves due to drought use the 3rd one.

16 hours ago, BrewOne said:

looks like the IRS position would be for 27.5/39

And after considering Reg §1.263(a)-3 (e)(2)(ii)(B)(2) I have to agree.

The thought that a septic tank for a single dwelling rental would be classified as a Building System instead of a land improvement never crossed my mind.

2 hours ago, BTS said:

Septic systems usually last way longer than 15 years. 

and farm tractors last way longer than 7 years, over the road trucks way longer than 3 years.......

I use asset class 00.3 Land Improvements with a 15 year life. 

Class 00.3 includes non-municipal sewers.

A septic tank is part of a sewage system that includes pipes to the tank and pipes from the tank to the perforated pipes in the drainfield.

I  have not seen an authoritative cite to challenge this position.

The fact that a modern cement tank will last longer than 15 years is a mute point for tax depreciation purposes (they will for sure last longer than older metal tanks that were prone to rusting out).

31 minutes ago, Lee B said:

according to The Tax Book:

versus Tax Code. 

I have never been a follower of The Tax Book.  Although I tried it out once.

12 hours ago, jasdlm said:

leave the bank account open to handle any final issues, taxes, etc, and make final distributions to owners, but you can't conduct any more business,

The code is fairly clear on this.  A corporation is in existence if it retains a bank account and is in the winding down process regardless of state law, therefore a return is required.

12 hours ago, jasdlm said:

make final distributions to owners

The final distributions are reportable transactions.

Per 1.6012-2

(1) "shall make a return of income regardless of whether it has taxable income or regardless of the amount of its gross income."

(2) "A corporation in existence during any portion of a taxable year is required to make a return. If a corporation was not in existence throughout an annual accounting period (either calendar year or fiscal year), the corporation is required to make a return for that fractional part of a year during which it was in existence. A corporation is not in existence after it ceases business and dissolves, retaining no assets, whether or not under State law it may thereafter be treated as continuing as a corporation for certain limited purposes connected with winding up its affairs"

When if doubt file it.

17 minutes ago, schirallicpa said:

final return should not have been filed because the bank account was not closed yet.

That is correct.  A corporation is required to file a return as long as it is in existence, whether it has any income, expenses or not.

21 minutes ago, artp said:

Any suggestions? 

Recently had a similar situation.

https://www.irs.gov/individuals/request-deceased-persons-information#transcript

7 hours ago, BrewOne said:

searching for a way to print 1040-ES vouchers for the spouse (with their SSN printed out).

I have never had to to that, but try duplicating the return and switch wife to primary taxpayer. 

Then change husbands SS# to something like 111-11-1111 so the duplicate return cannot be filed by mistake.

Use the duplicate strictly for printing the estimates.

3 hours ago, Patrick Michael said:

The wife could then get out of the new time share by providing a doctor's note.  Sounded good to them until they received a 1099 S for $75,000.  They did not receive any cash in the deal.

3 hours ago, Patrick Michael said:

They have no idea how the company came up with the $75,000 value on the 1099 S.

How can there be a recorded sale if they did not receive any consideration?

They received nothing for their shares?

Am I missing something here?

21 hours ago, Christian said:

large number of toys received over time on Ebay to the tune of over $11,000 worth

The toys most likely did not increase in value "over time".

Therefore basis of gifts would be equal or greater than sell price.

Taxpayer is entitled to making a reasonable estimate.  Unless the toys were collector items, I would accept a reasonable estimate of basis = sell price and call it good.

13 hours ago, Sara EA said:

I plan to retire next year, and the only thing I will keep is trusts and estates

That means you will have more time to share your knowledge with us here!