DANRVAN

2 hours ago, cbslee said:

In my state of Oregon it would take legislative action, signed by the governor to make this change.

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

41 minutes ago, BulldogTom said:

It is no different than worker classification.  

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

20 minutes ago, BulldogTom said:

Those are the easy ones.   The transaction happened and was just mis-coded.   Or the transaction is not deductible by the company.

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.

35 minutes ago, BulldogTom said:

If they choose to ignore the law, it is not for us to force them to do so.

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.

3 hours ago, BulldogTom said:

we are not paid to do the bookkeeping, we should not be doing their bookkeeping.

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.

On 3/14/2020 at 12:46 PM, Small Bsiness Solution Cen said:

I took on a new client that has two small businesses. I am fighting with them over their 

I would ask why this client came to you.  Is he shopping for a preparer that will do it his way?

On 3/14/2020 at 12:46 PM, Small Bsiness Solution Cen said:

can I issue a 10-99-MISC at the end of the year or will it carry over onto the K-1?

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

18 minutes ago, Max W said:

And that depend if it can be done successfully as there is already a Trust bank account,

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?

37 minutes ago, Max W said:

The IRS does not cancel EIN's. 

Sorry my misunderstanding, the IRS  can close the account related to the EIN but cannot cancel the EIN.

Have you filled out form 8855?

12 hours ago, Sara EA said:

The state will absolutely calculate the value of the remaining life estate and count it as an asset should she apply for Title 19. 

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.

On 2/20/2020 at 4:02 PM, Tracy Lee said:

I need to enter two 1095-A statements for a married couple

Tracy Lee,

How do your numbers turn out on form 8962 by following the instructions?

How does column A compare to B?

On 2/20/2020 at 4:33 PM, gfizer said:

Both 1095 A forms should have the same amount in Column B so you use that amount (don't add the two forms) for column B of 8962.

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.  

On 2/20/2020 at 4:21 PM, gfizer said:

Enter the amount from column B of only one Form 1095-A—do not add the amounts from each form.

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

9 hours ago, Max W said:

Deceased had a revocable living trust.   The way I understand it is that the Revocable trust makes the 645 election file as a 1041 estate.   However the attorney for the trust obtained a EIN for an Administrative Trust.  Does this kill the 645 election?  Is there any remedy?

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".

1 hour ago, jklcpa said:

AICPA asked again for clarification of deductions for beneficiaries. 

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.

12 hours ago, TKTax said:

inclined to use Medical Assistance 70/30 split.

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

11 hours ago, jklcpa said:

The remainderman of a property with a life estate can sell a property before the life tenant dies if both agree and sign the transfer documents.

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.

2 hours ago, Abby Normal said:

Capital losses passes out to beneficiaries and are not part of the 2% excess expenses deduction.

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.

3 hours ago, Patrick Michael said:

I believe I have done my due diligence in explaining it to the client and it's then up to the IRS and/or client to determine the relationship.

I agree, you nailed it!

19 hours ago, schirallicpa said:

There is a loss on the rental so is a distribution applicable?

The only time a loss is passed through is in the final year of a trust or estate.  However,  under current tax code there is no benefit since it is 2% misc deduction.

16 hours ago, gfizer said:

The parents receive their income in the same time frame as any paper filed return

Thank you for your reply.

2 hours ago, grandmabee said:

I have done that in the past with no problem.

Do remember how long the process took?

Thank you for your reply.

2 hours ago, schirallicpa said:

  Who reports 

Was there a distribution made to the beneficiary during 2019 or with in 65 days after the year end (per the 65 day rule)?