DANRVAN

I am not sure I completely understand the situation. Was the 2018 and prior years completed correctly? If so then you do not need a 3115, just amend 2019. You can also amend any other open year independently.

7.

I had clients make the decision to receive a ranch as gift vs inheritance while remaining parent was still alive, even though they were well advised on the loss of step-up-basis. It was century plus operation that had been handed down from generation to generation by gift.

Hopefully they signed up for the $10 Audit Protection Plan

They usually hear from a another farmer or rancher who says "my accountant told me I can deduct my personal housing and groceries by forming a corporation".

None of my clients have taken the housing exclusion as shareholders or partners. I did the research, explained the process and let them make the decision.

I have researched this before. It would depend on facts and circumstances. There has been favorable case law for shareholder-employee farmers and ranchers, Johnson and Grant to name a few. In those cases, residing on the premises was key to the operation, therefore the housing was deductible by the corp. and excluded by the shareholders. In other cases the exclusion was denied, usually because there was not a strong business connection or agreement. In regards to partnerships, courts have been less favorable to partners with larger interest and more favorable to partners with minor interest, as in the case of Armstrong. (That came from recent research for a farm partnership; son holds a minor interest and housing is provided.) In may cases, the property was transferred to the corporation. However, reg 1-119-1(c)(1) specifically says that leased property is considered part of the business premises and used the example of cowhands herding cattle on leased range for their employer. So it appears that property leased form shareholder to corp would meet the "business premise" requirement of sect 119 while keeping real estate out of the corp.

No, it cannot be changed once the return has been filed. The only option now is to recontribute the distribution (in whole or in part) if the funds have not been spent. The amount recontributed will be treated as a tax free rollover, then the 2020 return can be amended to exclude that amount from taxable income. You can find details in notice 2020-50 and sec 2202 of the cares act.

I believe he as a duty to pay off debt of decedent including back taxes regardless.

Depending on fact and circumstances, I would probably get a legal opinion on that.

https://www.irs.gov/irm/part5/irm_05-005-003#idm140006924976240 5.5.3.6 (09-17-2020) Notice of Federal Tax Lien "..................If the NFTL is recorded on an assessment made before death, it attaches to assets owned by the taxpayer and follows those assets into the estate or the hands of the transferee. The Service's priority position with respect to those assets, is determined based on the date of the filing of the NFTL before the taxpayer's death". "If the NFTL is recorded on a post-death assessment, it would not reach any property that passed to heirs automatically at the time of death (non-probate property), but it would reach any probate property in the taxpayer's "estate" at the time of the assessment"

I question whether the 3rd part would have the competence or act in the best interest of the client. The last full blown audit I worked on involved a 1040X refund for a new client. The previous CPA had overstated his taxes due from a 1031 exchange and some overlooked deductions from his ranching operation. How far would $10 go on that?

That is optional but not necessary if form 706 is otherwise not required. You just need documentation of how fmv was arrived at. Correct, there is no need for a 709 either.

Sara EA is correct, IRS can levy any asset that is part of decedent's estate.

I would not advise a client to sign up for it.

You should be able to input as nonresidential in ATX and claim section 179. Another possibility is the small taxpayer safe harbor. You are under $10,000 are you also under the 2% threshold?

There can also be extra record keeping, such as when the pass thru entity is accrual and members are cash basis. The whole idea is to save tax preparation cost by filing at the entity level vs individuals, so there has to be some cost analysis.

cbslee said it politely. I will be more direct. Please don't be offended, but you are potentially getting in over your head and not acting in the best interest of the client. In fact, it is a violation of AICPA code of ethics to practice in an area you do not have the competence or experience in. Filling out the forms is the easy part. You need a thorough understanding of partnership accounting principals. You also need an understanding of partnership tax laws from creation to liquidation and the wide realm of possible transactions in between such as partner death, admissions, sec 754 elections, inside vs outside basis, guaranteed partner payments vs draws,....................................................

?? Oregon has been connected to federal on bonus depreciation since 2011.

I am also seeing that. Also waiting to find out the status on a resubmission. I believe there is a 5 day grace period for a rejected return to be considered timely filed.

Without documentation that half of gain went to ex, then you have no choice but to report it. Then amend "if" he can prove it later on. You do not want a late filing penalty hanging over your head.

Agree with that. However if a return is filed, a future tax preparer can at least get a transcript and find out what went into the bucket.

Yes case, law has ruled in his favor.

Per 1.152-2(d), "The relationship of affinity once existing will not terminate by divorce or the death of a spouse." That was applied to Duncan in TC 2014-56 in allowing taxpayer to claim step-children as qualifying children.

That would have been under the technical termination rule prior to 2018, which was repealed by TCJA. But even then, the "new" partnership would retain the ein of the old under a technical termination.