DANRVAN

Max, it looks to me like you could be dealing with a sale of the warehouse by the S-Corp; instead of a sale of the S-Corp stock. If it was a sale of the stock, then I don't see why the final K-1 would show the sale of real estate. If it was a sale of real estate by the S-corp, then you need to compute gain or loss on the liquidation of the S-corp.

Earned income includes SE income reduced by the deduction for 1/2 of SE tax. The gain or loss from sale of business assets does not factor in.

For a married coupe, their exclusion is $312,400 since they lived in the home for 15 months (5000,000*15/24).

I have used ATX for 20 years for all types of forms: 1040, 1065, 1120, 706....without any issues. QBI and 3115 are no problem. I have no problem with input time. I use my left hand to navigate with the mouse and keep my right hand on the number key.

Not if you also show as a disposition in the same year.

The 4797 input tab will take care of it.

I started my own part time practice in 1997 using Intuit Pro Series; I hated it. Then out of the blue in fall of 2000 an ATX demo show up in the mail! I have been using it ever since. I can't remember the last time I had to call support.

I do not see any reason why the S corp partners would be treated differently than any other partner in regards to basis. The rules for tiered partnerships do not apply here since the lower tier partners are Sub S.

As cbslee stated, the assumption of the loan should be treated as a sale of the business. What type of business assets were taken over by daughter and who is responsible for the loan if daughter also bails out?

My sympathy is with you Darlene, your Faith will see you through, Dan

Terry, you need to review section 121(b)(5) which reduces the exclusion by a ratio determined by the amount of time the residence was held for nonqualified use after January 1, 2009 Note the exception under 121(b)5(C)(ii)(I) for the 5 year period beginning after the last day the property was used a personal residence. This means that the exclusion is fully allowed in the situation you described. In that situation the exclusion would be reduced by the ratio of nonqualified use. For example, tax payer owns house for ten years (purchased after January 1 2009); rents out the first 8 and then uses as residence for 2 years before selling. The exclusion is reduced by a ratio of 8/10. But in your case there is not a reduction in the exclusion since the nonqualified use began after the last day it was used as residence per 121(b)5(C)(ii)(I).

I looked at a 1041 with depreciation. It flowed to LIne 9 of the K-1 with code A for depreciation. 179 is allowed for grantor trust since the grantor and the trust are treated as the same entity for income tax purposes. If the attorney has confirmed that the trust is treated as a grantor trust for tax purposes, then section 179 should be allowed.

For a grantor irrevocable trust, I believe it depends on the language of the trust. As far as depreciation goes, it is a separately stated item on the K-1 and off the top of head don't recall how it flows with ATX. For some grantor trust there are options for filing a less than complete 1041, not on top of my head either.

Karla, sounds like you need to explain to them that in this situation with 50/50 partners, GP does not change the amount of taxable income at the partner's level. While the GP is reported as income to the partner, an equal amount is recognized as an expense by the partnership and passed through to the partner. For example, if partnership income / loss is zero, $100,000 GP will reduce it to $(100,000). Then each partner will report $50,000 GP and a loss of $50,000, which nets out to zero on their K-1's. They can also call it a draw with zero effect on taxable income to partner. So then you have two separate transactions to record, the loan from uncle and the GP to partners. What they need to be concerned about is how GP or draw will effect capital accounts.

$150,000. The transfer from Zel is a part purchase and part gift of Zel's basis of $75,000 ($15,000 + $60,000).

Tom , the OP said paid to take care of mother and did not mention paying for her living expenses. There is not enough info given to discuss support, caregiver's husband could be earning $xxx,xxx. If the payments are strictly for her efforts in taking care mom, then it is not excluded under the code. As mentioned, a written agreement would be helpful.

https://www.irs.gov/businesses/small-businesses-self-employed/family-caregivers-and-self-employment-tax The IRS takes the position that there is not a trade or business if the taxpayer only cares for a single family member, therefore report as other income. In Q-3 there is SE tax since taxpayer "operates a sole proprietorship adult day-care business for multiple clients, including her grandmother".

I can see a case for SE but also a case for other income. She did not quit her job to take up a new profession like the doctor that became a lawyer. She is not really working for the siblings. They recognize her need for financial support but that does not make it employment or a business. It is more like unemployment income since they are compensating her for wages she would have otherwise earned. In regards to the suggestion of Max of gifting, I suppose there could also be a case for that depending on the facts. For instance if after she quit her job and took care of mom for awhile, sibling got together and said this is not fair and voluntarily started kicking in $$$$.

I don't see how you can call it a gift regardless of how favorable it would be to the client. A gift is given without the expectation of anything given back in return. In this case siblings are paying client with expectation that she will take care of mother in return. It sounds like she has informally or formally entered into a caregiver agreement with siblings. "You take care of mom and we will pay your $$$$ per month". I would not report it on Schedule C since she is not in the trade or business of being a caregiver. If she does not have a written agreement, it might be in her best interest to get one.

That should have read 2002-39.

As Max pointed out the form is 1128. In your case you will complete the section asking for a ruling request. You must also attache a statement explaining the legal basis for the change in fiscal year. The form also refers to the user fee. Your research should have taken you to RP 2009-39 which emphasizes the need for a business purpose; and the reality that permission is granted "only in rare and unusual circumstances."

Off the top of my head I will say that you need to prove there is a business purpose for change, other than to save a bunch of taxes. Also the short year has to be annualized. Have you tried researching this procedure? There are special forms to file and possible user fee.

Case law looks at the origin of the claim to determine if it is related to the trade or business of the taxpayer (or in this case rental activity) and therefore deductible. If the origin of the claim is instead related to personal actions of the taxpayer, the deduction is not allowed. So it depends on facts and circumstances.

Welcome to our board Dhawk. I have not used ATX for mixed use vacation homes but hopefully someone here can help you.

That is a good point. One of the factors in rr 72-86 is that the director expects compensation for his work. I would also lean towards SE tax based on the information provided but would have a few more questions to ask.