DANRVAN

On 4/8/2021 at 12:57 PM, tax1111 said:

has capital gain from US stock sales. He needs to report it on federal return but does not need to report the gain on his NJ 1040NR based on the sourcing rule,

That sounds right but I can't say for sure how it works in NJ.

For an Oregon citizen living abroad and qualifying for the Earned Income Exclusion, his Oregon based investments are not taxed by Oregon.

11 hours ago, jklcpa said:

do I have a distribution of the $10K FMV and an $8K gain not recognized entered as an M-1 entry?  Is that where this goes?

There is no entry for fmv, just show distribution at BV.

The distribution is reported on K-1 at book value, basis to the partnership immediately before the distribution.  IRS suggest, but does not require FMV on K-1.

2 hours ago, GGRNY said:

.  As a thank you, here's $50k!  

Wow!

2 hours ago, GGRNY said:

Gift?  Other income?  NEC subject to SE tax? 

A case could be made for either of those; but I would lean towards other income.

She was not in the business of  "offering to help out" and did not have a profit motive that would subject her to SE tax. So I see an argument against NEC.

There is certainly not an issue of an employee gift vs bonus here. 

However, while there is an element of gratuitousness,  the payment was in recognition of her efforts for the company in charge of the winding down process.

Since the payment was made in recognition of her efforts; at a minimum I would call it other income with out further research.

1 hour ago, Hahn1040 said:

The original purchase was all cash.  several months later he got a mortgage.  So it was not a refi.  There was no original mortgage

Your original post said a "few months"  later; so I assumed the 90 day window of Notice 88-74 was met.

If that were the case I would deduct as qualified residence interest on 1041.

13 hours ago, Hahn1040 said:

  Further complication is that the mortgage was transferred to the mother's name while the condo was owned by the estate. So the 1098 has her social security number.

The estate has legal ownership and obligation;  therefore entitled to the deduction for interest it paid.

Sounds like you have  a plateful.  Starting off with the final paycheck, in a perfect world that would have been returned.  Then a new one would be issued for the net amount due to the estate or beneficiary. 

The gross would be reported as S.S. and MediCare wages; withholdings would be made accordingly.  

The final wages would not be included on line 1 of the W-2 and a 1099 misc would go to the estate / payee.

At this point, I agree it would be simpler to square up on the final 1040 by backing out the final gross pay as a deduction on Schedule 1 of 1040.

Then report the net on 1041. 

11 hours ago, Hahn1040 said:

So they had to go through the courts to be able to sell it.

Was the sale under the ein of the estate or SS of beni's?

11 hours ago, Hahn1040 said:

they decided that he should get a mortgage and pay Grandma back about half of it.  The mortgage interest was never

So it sounds like the transaction was a partial sale / partial gift.

I don't understand why the mortgage interest was not claimed (disregarding any limitation of itemizing).

11 hours ago, Hahn1040 said:

Further complication is that the mortgage was transferred to the mother's name while the condo was owned by the estate. So the 1098 has her social security number.

So was mom the beneficiary?

12 hours ago, Terry D said:

But, it looks like 2019 needs amended with a 3115 to correct the depreciation.

3115 is not an option in this case because it is a math or calculation error instead of an accounting method change.

Keep in mind that 3115 is not a catch all for depreciation errors.

10 hours ago, Lion EA said:

If it was only one wrong year (2019) you can amend. Two years or more means an accounting method and a 3115 to change

If this was in fact an accounting method change instead of a calculation correction, you could waive the 2-year rule under REV PROC 2007-16 and make a 481 adjustment in year two.  

I just had a case where there was a greater benefit to take the adjustment in year 2 rather than to amend for year 1.

3 hours ago, Possi said:

so he can get a reduced exclusion on the gain, recapture not withstanding

I am not following you in regards to "a reduced exclusion" since the 2 out of  5 year rule was met.

If you are referring to the Nonqualified Use Ratio of 121(b)(5)(B); that would not apply here since the house was converted from personal to rental.

The Nonqualified Use Ratio would only apply if the conversion was from rental to personal.

$1,734.65 by May 31.  I will put it on a card and get $26 cash back.

36 minutes ago, Corduroy Frog said:

I suppose the honest answer to

And to be honest with you, my concern is that you might be practicing in an area beyond your qualifications if you are preparing K-1's.

In the AICPA that is an ethics question.

23 minutes ago, Corduroy Frog said:

there was nothing in Box 14,

If box 14 was blank how did you arrive at -$30,000?

edited: didn't realize you were talking about the other partnership.

7 hours ago, Corduroy Frog said:

**The K-1 from the partnership shows Self-employment income of -$30.000.

12 minutes ago, Corduroy Frog said:

but it leads me to believe the total subject to SE should be $136,469,

Why would you subject your client to $120,000 SE income from the partnership regardless of the CCA? 

Do you understand the basic concept of SE income from a partnership?

The fact that the partner was allocated a $150,000 loss and a $120,000 GP indicate the partnership correctly allocated -$30,000.

If you were to follow the  CCA the negative $30,000 SE income would be suspended.

I have filed a couple with no issues.

2 hours ago, Abby Normal said:

understate the withholdings or estimated payments

I am not crazy at all about filing a return that is not correct in that regard either.  IRS might take longer to sort it out than a paper file.  

1 hour ago, Possi said:

The same IRS site indicated that if it was a new job, the site of the source of income became his tax home. 

Correct, if it was a new job for an indefinite period.  Sounds like that was the source of confusion.

28 minutes ago, kathyc2 said:

Actually, the support test doesn't really apply, since payments from state do not count as child providing over 1/2 of their own support. 

and you pass the support test for qualifying child.

5 minutes ago, BulldogTom said:

is the weekend travel from the temp location to home and back again a deductible expense?

Yes, that is clearly supported by Revenue Ruling 93-86 and case law.

Revenue Ruling 83-82, 1983-1 C.B. 45, provides that, for purposes of the deduction for travel expenses under section 162 (a) (2) of the Code, if the taxpayer anticipates employment away from home to last less than 1 year, then all the facts and circumstances are considered to determine whether such employment is temporary. If the taxpayer anticipates employment to last (and it does in fact last) between 1 and 2 years, Rev. Rul. 83-82, 1983-1 C.B. 45 provides a rebuttable presumption that the employment is indefinite

4 minutes ago, Possi said:

As his only job, temp or not, that became his tax home.

Not correct, how do you support that position?

2 minutes ago, cbslee said:

If it's new job known to last 4 months when he was hired, I think he dead in the water.

Not at all, it is temporary vs. indefinite since he took the job knowing it was going to last 4 months.

If on the other hand he had taken the job not knowing if it was going to last for over a year, it would be indefinite instead of temporary.

There is lots of case law to back this up.

54 minutes ago, Catherine said:

The software companies largely insist on the 1310

So are saying ATX (or other software) will not e-file with an attached PR certification unless you incorrectly fill out 1310?

Seems like I have done this before without the 1310.

I prefer not to file an incorrect 1310 and would go with paper file if no other choice.   I have one to prepare soon.

7 minutes ago, Possi said:

expected to last 4 months. So, it's not a temporary location for his present job. It is his new job. 

It is temporary if expected to last less than one year and does in fact last than one year, per Revenue Ruling 93-86

3 minutes ago, Possi said:

n this case, although temporary, it has become his main place of business since it is his choice to take a new job away from home, and it is his only job. 

Right??

Not in the case Tom presented.  Your tax home does not change when the job meets the IRS definition of temporary.

3 hours ago, Possi said:

For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants.

Your post does not tell how long the job in Milwaukee was expected to last, or did in fact last.  Also whether he expected to return to Chicago  for employment after the Milwaukee  job ended.

18 hours ago, kathyc2 said:

Am I correct that the money received from state does not count as child providing own support?

It is support not provided by the taxpayer.

18 hours ago, kathyc2 said:

Since it was over 1/2 year they are entitled to CTC?

I believe once you get past the support test you follow the qualifying child rules for CTC and stimulus.

16 hours ago, cbslee said:

The IRS when it defines temporary with respect to a job, it means for an indefinite unknown period of time .

HOLDING Under section 162 (a) (2) of the Code, as amended by the Energy Policy Act of 1992, if employment away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary in the absence of facts and circumstances indicating otherwise.

per Revenue Ruling 93-86