DANRVAN

I am not sure what you are asking Max. Are you saying the distribution is greater than the basis?

LATEST FORM AICPA: We are calling on the Department of the Treasury to immediately give taxpayers an extension of the April 15th filing deadline — and we need your help. Please email Treasury Secretary Steven Mnuchin today at [email protected]. To save you time, you can copy and paste this draft email: Dear Sec. Mnuchin: Treasury must act immediately by extending the April 15th filing deadline to July 15th. Unfortunately, the important payment relief that was announced Tuesday and formalized in today’s notice does not apply to the filing of tax returns and does not reflect the real-world difficulties tax practitioners and their clients are facing. Cities across the country are having to shut businesses down because of the coronavirus pandemic, and it is impossible for every taxpayer and their tax adviser to prepare returns in this environment. Nearly 60% of all taxpayers turn to a tax practitioner to prepare and file their tax returns, and individual and business tax filing deadlines are fast approaching. We need immediate action. We understand that these are uncertain and challenging times for the Treasury Department, and the CPA profession wants to help the system function well. To do that, we need payment and filing relief together. Thank you for your work to guide the country through these difficult days. You may also want to copy your Congressional delegation on your email. You can find your U.S. Senators’ and Representatives’ contact information at GovTrack.com. Thank you for adding your voice to this important call for tax relief clarity.

The relief gives taxpayers 90 extra days to pay their tax, but they must apply for a an extension of time to file after April 15th.

Practitioner Priority Service Hotline?

Since Oregon is tied to the IRS in regards to filing and payment dates, I think we will hear soon that ODR will follow.

That is a whole different situation based on facts and circumstances.

They are not really that different. The client posted it one way and we know it should be some thing different in accordance to tax law. And if they chose to call it a distribution instead of a wage per rev rul 74-44 and case law, I will not sign it and perpetuate their choice for noncompliance.

Tom I believe it goes beyond that. We have a responsibility to prepare a complete and accurate tax return. If a client posted a $40,000 piece of equipment as supplies would you report it as such? Or a $5,000 family vacation as business travel? Rev rul 74-44 and case law clearly indicate we must consider whether a reasonable salary has been recognized; regardless of how the client / bookkeeper has posted it.

Case law has been firm in recharacterizing distributions as wages, following rev rul 74-44. I would ask why this client came to you. Is he shopping for a preparer that will do it his way? In the case of Grey, independent contract services paid to the the sole shareholder of S-corp CPA firm were recharacterized as wages subject to payroll taxes. My question is this, can you sign a return and call it accurate knowing that a payment that should be classified as a reasonable salary has been declared a distribution or contract services?

Unfortunately the crisis started in a country where there is no free press and strict government control. https://www.wsj.com/articles/chinese-doctor-who-issued-early-warning-on-virus-dies-11581019816

Off the top of my head, I do not see a problem. Obtain EIN for estate. Fill out 8855 using EIN for estate in part one and for trust in part two. For tax purposes I believe the trust is now part of the estate, so trust assets do not need to be transferred to estate.

Are you saying the attorney obtained an EIN for the trust or for the estate?

Sorry my misunderstanding, the IRS can close the account related to the EIN but cannot cancel the EIN. Have you filled out form 8855?

The question I have Sara is whether the position of the agency reflects the application of tax law. I am not familiar with title 19 process, but isn't there a five year look back period? (not that makes any difference in tax reporting) There is no question in my mind how the gain/basis would be treated if the sale occurred after mother's death; or if one sibling sold future interest to another while mother was living in the house. But it raises a question when house is sold while mother is alive and goes into assisted living. There could be a case for calling it either a completed gift or claiming a sale of remainder interest. If so, then I would look at the most favorable position for the client that can be supported.

Tracy Lee, How do your numbers turn out on form 8962 by following the instructions? How does column A compare to B?

That does not sound right, at least in the case of my client couple. The amounts reported on their individual 1095 A's are the same. Column B appears to be the SLCSP for each individual, not for the couple combined. In fact, to input according to the instructions, column B is less than Column A (as combined). Therefore they are liable for a repayment instead of a credit since B is about 1/2 of A. The difference is about $4,000 to the client. In looking at 1095-A's for other clients, B is higher than A for them when a single 1095 A is issued to a couple. I checked to see what the SLCSP should be according to https://www.healthcare.gov/tax-tool/#/premium-tax-credit. The amount I came up with for the couple is slightly higher than 2x the amount reported on the 1095 A for each spouse. So in this case, it appears either the "destructions" are wrong, or the amount reported in column B of the 1095 A the for each spouse is wrong.

Thank you for pointing that out, I am about to work on a return with that situation.

Max, as I understand your post the attorney has obtained an EIN for the estate but you wish to make the 645 election for the trust to become the estate, but if you do that the estate will end up with two EIN's. The IRS has a process for canceling EIN's that are not needed, so you could cancel the EIN obtained by the attorney. Try a search for "cancelling EIN".

AICPA specifically asked that the that Excess deduction on termination become an above the line deduction. There has been no response one way or the other.

Agree with Judy that you need to find out how that allocation was determined.

If mom was still living in the house when it was sold, and continued to live in the house after the sale, that would be a cut and dry a case of remainderman interest sold; such as when one child sales future interest to a sibling. But when mom moves out I believe the question of completed gift to daughter comes into play.

Revenue rulings and tax courts have held that there is not a completed gift while donor parent lives in house rent free and assumes rights and burdens of ownership. As I follow the time line of this post, father died while mother was still living in house. At that point there was not a completed gift so mother get's one half step up in basis. Then it appears mother moves out, daughter takes legal ownership of house and sales the house in her name. At that point, it appears gift to daughter is completed so mother's basis becomes daughter's basis. If that is the case daughter would also get the 1/2 step up in basis.

Thank you for sharing grandmabee.

That is correct, they retain their character as capital losses but only pass through in the final year of the trust or estate. The NOLs go into the excess deductions bucket in the final year and are currently not allowed under TCJA.

I agree, you nailed it!