DANRVAN

It is deductible if he expected the job to last less than one year and his expectation was to return home after the job had ended.  There is plenty of case law to support this.

21 hours ago, Marie said:

  He gets to keep using?  Can he sell to the new buyers?  

I haven't seen that situation addressed before. 

I don't believe it is a transferable credit.

Also not aware of any provision of tax law that would prevent carryforward by original owner.

15 hours ago, Abby Normal said:

Doesn't ATX require the 1310 to create the efile?

It should not and seems like it has worked in the past.  

If not it is a programming error.  I have one coming up and will find out.

It goes to the living sister filing the claim on 1310.

2 hours ago, Catherine said:

but if you DO have a court-appointed person, paper file only. 

The court appointed PR does not have to file 1310 with an original return, but instead attaches a copy of the appointment to the return.  

ATX has a link to attach it to e-file.

15 minutes ago, ILLMAS said:

TP put in over $160K to fix up the rental property

 Does TP currently have any ownership in property?

16 minutes ago, ILLMAS said:

TP increase their basis by the buyout money if the haven’t paid it yet?  

Not unless there is a legal and binding contact / note.

17 minutes ago, ILLMAS said:

TP took over parents zero basis investment property,

Why do parent's have zero basis?

Sounds like this transaction would be a partial sale / partial gift since the fmv is greater than the consideration given.

10 minutes ago, jklcpa said:

I wondered about this too and checked and found that Drake actually has a spot to enter an IP PIN for a dependent.

So I checked ATX and there it is.  Great!

1 hour ago, BulldogTom said:

if I have the code and documentation on my side.

How do you plan to circumvent 162(a) in regards to disallowing deductions incurred before the activity became functional?

17 minutes ago, TaxCPANY said:

Per IRC Sec. 195

I don't believe 195 would apply unless the rental activity rose to the level of a trade or business.  That was not indicated here, OP mentioned passive loss offset by profit of other rentals.

On 3/22/2021 at 8:42 AM, ILLMAS said:

12-25-20 (Friday) payroll was paid on 12-23-20,

But for a semi weekly depositor, the Wednesday and Friday liability would both be on the following Wednesday, so I don't see an issue here.

2 hours ago, jasdlm said:

I personally would add the $11,700 to the basis and depreciate.  It was part of the cost of putting the property into use for the first time.

Interested to see what others would do.

That sounds right in this situation.

1 hour ago, schirallicpa said:

I was hung up on the fact that the tractor would have been shown as a income on 4797 on his personal but the estate takes it at the FMV.  

Is it actually going through an estate or reported on the final joint return by surviving spouse?

2 minutes ago, cbslee said:

the legal ramifications of a business/tax scenario which would potentially affect my client's business and personal financial well being.

Agree, but was referring to the post here in regards to legal advice on operating agreements, forming LLC....etc.

4 hours ago, Lynn EA USTCP in Louisiana said:

Despite no income, there are expenses.  Yes, a partnership return should be filed for calendar year 2020

And NOL carry forward from operating expenses from the day business opened.

23 hours ago, cbslee said:

received a letter from the IRS telling them that had to file as a Partnership

That would depend on facts and circumstances, there are a list of factors looked at by case law.  

For instance the joint venture could have risen to the level of a trade or business providing services to to the tenants. 

In some cases joint ventures are preferred by real estate investors.  For instance they can 1031 out of their fractional shares where as their interest in the partnership are not eligible for 1031.

On 3/26/2021 at 2:44 PM, Lion EA said:

Either way. Will one keep the spreadsheet or other records, collect rent, pay the bills (please open up a separate bank account), etc.? And, if one performs all the administrative duties, how will he be compensated? Will decisions be made by all four? What happens in a tie? What happens when one wants out? Or, the others want one out? I suggest an operating agreement even if they don't form a partnership. And, liability insurance.

Those are good points, but be careful to distinguish between management advice and legal advice.

On 3/26/2021 at 2:39 PM, grandmabee said:

do they have to set up an partnership?

No they do not.  Co ownership and rental of real estate property does not meet the definition of a partnership per case law,  unless an attorney talks them into filling forming an LLC.

Your role is to inform them of the cost and tax filing requirements, the decision is theirs.

There is no reason to file 3115 in that situation.  Just amend 2019 and go forward.

On 3/19/2021 at 12:56 PM, GraceNY said:

Last year, he worked from his "home office"  3 days a week starting in March and through the end of the year performing virtual sessions for clients in the mental health area.  Also, used the "home office" to schedule and confirm appointments, respond to business related emails, billing, etc

Sounds like that was his principal place of business;  and he did not conduct substantial admin or management duties from the 2nd location.

If that is the case he can also deduct travel to second place of business.

1 hour ago, taxn00b said:

They didn't take depreciation for the entire time they had the rental property. 

And you are claiming on 3115 code 107.

Never too late to file but penalties and interest will apply.

1250 is sort of a hybrid, taxed at a maximum capital gain rate of 25%, thanks to the strong lobby arm of the real estate industry.

The recapture should show up near the bottom of the tax worksheet for Schedule D.

36 minutes ago, RitaB said:

I think IRS is sending a lot of incorrect letters

I have seen a few.

35 minutes ago, ILLMAS said:

Tuesday or Wednesday date as the check date and not Friday

The penalty is calculated on the date the liability is reported on 941 vs the date of the deposit. 

Since they are semi weekly, a Wednesday payroll liability is due the same day as a Friday payroll, which is the following Wednesday, so that won't make any difference.

You need a copy of schedule B to figure out what is going on. 

Report sales price = basis ?