DANRVAN

They would then have to rise to the level of a trade or business per section 162 as determined by case law.

Yes, forgiveness of non-business loan is a gift, whether it be to son, daughter, charity or next door neighbor.

Put full depreciation on Schedule F of spouse (a), then back out 1/2 and override same amount for spouse (b). Or as Abby Normal suggested, report 100% income and expenses for spouse (a), then allocate 1/2 as a single line entry to spouse (b).

In that case I would consider filing form 1065. In a similar situation, I worked with the attorney to back date the effective date of capital contributions.

That sound right if the property is held outside of the partnership. Any 1099's received?

Thank you for the reminder Judy.

That is not right. The server's reported tips are reduced by the amount paid to the bartender. The bartender in return reports his share. That is explained in pub 531: "If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Don't report to your employer any portion of the tips you receive that you pass on to other employees. However, you must report tips you receive from other employees." Also see RR 76-231.

If she eventually sales or closes the business, the loss in value could be a 165(i) loss.

That is a big consideration. There might be such a back log that an e-filed 2020 return might get processed sooner!

I believe that is the route you would go. You would reduce the 2020 beginning inventory to prevent a double deduction per rev rul 77-94. Your post brings up an important consideration for 2019 tax returns that have not yet been filed.

Whether it is a schedule F or C, I use a spreadsheet to make the allocation and then input each schedule, takes a minimal amount of time.

Understand your concern, but active participation will not be disallowed solely on the fact that a fee was paid to find a renter if the owner was otherwise involved in the day to day management of the property. In regards to the finders fee, the property owner could still be active in the process of selecting tenant, negotiating terms of lease....etc.

If you are already deducting the expenses then it might be immaterial to make a minor allocation.

Is the yard normally used personally or is it also available to the apartment renters and related interest and property taxes deducted on Schedule E?

I disagree. What grounds would the IRS have to classify a one time payment to find a renter as a management fee? A management fee is paid to third party to oversee the day to day operation of the rental on an ongoing basis. There is not enough information given here to address those issues which are based on facts and circumstances.

First I would ask if it is an ordinary and necessary expense. Assume it was or client would not have paid it. Then as Gail suggested look at the life of the lease to determine if the transaction created a future benefit and must amortized per 1.263(a)-4 (b)(iv) and exceeds the 12 month rule under paragraph (5) of the reg. The last step is to see if it falls under the $5,000 de minimis exception per 1.263(a)-4 (e)(4)(iii). That being the case it looks like you are good to deduct it.

There are a some options which can lead to very different results in the amount of income reported to the partners. The interim closing method is the default method where the books are basically closed upon entry and or exit of partners. As an alternative, the partners can chose to use the proration method where an allocation is made based on the number of days each partner held an interest for the year. Also there are exceptions which allow for use of any reasonable method under certain circumstances. See reg 1.706-4 for details.

As Sara pointed out, it is most likely deceased mom will be under the filing threshold. In that case there would not be any concern about a cp 2000. But if there was a concern you could report it and a back it out on mom's final Schedule B. Also agree with Sara that if the dividends are the only income from estate there is no need for a 1041.

I don't see any reason to decline the engagement.

Way to late for 645 election. The election would have to be made for the due date of the initial short year beginning in the year of death, regardless of whether or not a return was required. Why would you need a legal opinion? The point was how much interest and penalties would a request for abatement involve. If the trust received income by constructive receipt, then it had income for tax purposes.

My point is, the tax preparer has a duty to file a complete and accurate tax return, regardless of legal battle between trustees, officers, partners, spouses ..etc. Okay so we go ahead and file for 2019, the estate is closed; legal and accounting fees are paid; and all the money is distributed. Then a letter from the IRS turns up with a demand to file for 2016 that nobody happened to mention before. Now who are the fingers pointed at? It is not going to be me unless I have found a case law exception for constructive receipt due to failure of fiduciary duty and have been compensated for it. As joanmcq mentioned, the sibling have been fighting since 2008, so don't expect anything to change in that department. Some could be in it for the battle and could care less about the money.

Is this an ongoing operation? Would client recognize a capital loss from liquidation of the corp that could offset the gain from the rental? I do not practice in a community property state so could not tell you off the top of my head. My guess is that the rental and the corporation stock would still need to be under the ownership of the same spouse for a valid 351 transfer. I don't think gifting is appropriate in this situation, but would not say for sure without researching the issue.

There is still a transfer between two separate entities, resulting in a deemed sale unless it is structured under section 351. In that case, even if there was a valid 351 transfer, the liability assumed by the corp is considered boot and taxable under section 357(b)(1). Section 357(b)(1) kicks in where there is either a tax avoidance or a non-business motive. In this situation there is obviously both.

The issue is there are two separate legal entities involved; the taxpayer and the corporation. The transfer of the rental to the corp would be a taxable transaction unless it is done under section 351. Section 351 is most commonly used with the formation of a corp where the shareholder transfers assets in exchange for 80% or more of the stock. I don't think that will work in your client's situation.