DANRVAN

5 hours ago, schirallicpa said:

But how do I do the next 2?

Duplicate the entire file, then rename it xxxxxx 2ND QUARTER.  

Then make sure you delete the first quarter data in the second file and start fresh with the second

Now you have a new file to work with that has not been accepted; and a record of the first that has been accepted.

4 hours ago, Lee B said:

a Universal Life Policy that generated Dividends

3 hours ago, BulldogTom said:

stop making payments because the earnings took care of the premiums. 

The dividends are considered a tax free return of dividends; any excess is taxable.

But in this case did the dividends offset all the past premiums paid?  If he has been receiving taxable dividends that would be an indication. 

2 hours ago, Terry D EA said:

The called the broker and were told nothing was distributed.

Then he needs to ask why a distribution was reported.

2 hours ago, BulldogTom said:

 1099R shows distribution fully taxable

Box 1 should show the total distribution = amount received.

Box 2a should show the taxable amount, box 1 less basis (premiums).

If

2 hours ago, mcb39 said:

My Priest

I am curious if he is a Roman Catholic Diocesan Priest.

Our diocese has payroll procedures for individual parishes to follow.

On 2/2/2024 at 9:58 AM, gfizer said:

Thoughts?

I answered your question on another thread, but will give you more details from my experiences.

If your client wishes your assistance in this matter you need to make it clear how you will go about doing this.

 Most likely you will need to send a letter on his behalf to the church explaining why they should treat him as an employee instead of an independent contractor.   You will also need to inform them of the requirements to file all federal and state employment reports as well as workman's compensation coverage.

You will also explain the issue with the housing allowance.

In my most recent experience after going back and forth, the client told me to go ahead and fix it on Schedule C.

It depends the facts and circumstances. 

Is it a sporadic activity vs trade or business conducted on a regular basis?

Four times a year for three years most likely will not pass the sporadic test.  

 I don't think you will find an authoritative cite to treat it other than SE.

18 hours ago, Dave T said:

It is a 3 year term and they meet quarterly.

2 hours ago, Medlin Software, Dennis said:

. If I were the employee, and it cost me anything for the error, even to pay a preparer to get the fix done

11 minutes ago, Medlin Software, Dennis said:

Why would a preparer get involved with their client's employer

Your second statement contradicts the first.

1 hour ago, Medlin Software, Dennis said:

If I were the employee, and it cost me anything for the error, even to pay a preparer to get the fix done (extra time to report.back out, or push for proper W2), I would be billing my employer.

Easy for you to say.

I have been able to help some, but on others spent hours trying to resolve cases that have gotten nowhere.  

1 hour ago, gfizer said:

they are going to issue a 1099-NEC for the total amount paid, showing both the salary portion AND the housing portion as non-employee comp.

If that is the case then you will need to report it on Schedule C and then back out housing allowance.

Your client probably does not want to go the SS-8 route.

1 hour ago, Medlin Software, Dennis said:

start with the person who is in charge of finances, or better yet, the paid accountant/tax preparer for the church. If there is more than one clergy person,

But that can take a lot of time an energy for someone who is only getting paid to prepare a tax return.

I have been down that road before,  finally threw my hands up and fixed it on Schedule C.

You really have to give the son credit for carrying out the "will" of his mother, even though it was not in her "will".  Otherwise he could have personally received a benefit as an heir to her estate.

17 hours ago, Catherine said:

that the paperwork to direct the custodian to send $X to the church does qualify as a written directive.

I would go with that and claim the charitable deduction up to the amount of total income received by the estate.

Also consider electing accrual accounting and short first year to match deductions against income.

above post was duplicated and deleted

2 hours ago, schirallicpa said:

My issue is the fact that the treasurer has been filing these no-tax 941s for it for a few years

This is their problem not yours!

3 hours ago, schirallicpa said:

But will do other pastorial duties for the church.

If they are treating him as an employee then you should as well.  I would not want the liability of making that determination for a number of reasons.

They need to issue a W-2 and any state report.

5 hours ago, schirallicpa said:

has been filing 941 for several years but no withholding and no tax. 

Since he is dual status there would not be any fica or m.c. to withhold.

2 hours ago, Margaret CPA in OH said:

asking how the minister files her/his return and whether this person filed Form 4361.

But that really has no bearing on how the church report his wages.

Since he is dual status he reports on Schedule SE unless he has filed Form 4361.  The church does not withhold for fica regardless of the 4361.

13 hours ago, mcb39 said:

have one business that files two separate Schedule Cs as a Qualified Joint Venture.; 

 If they are not operating as an LLC they are a QJV under section 761(f)(2)

10 hours ago, mcb39 said:

Instead of a Partnership return.  Maybe this is only allowed in Community Property States.

If they are an LLC and if held as community property they can rely on rev. proc. 2002.69 and elect out of filing  a 1065.

It is basically a two prong test depending on whether they are an LLC or not:

-if not an LLC go to sec. 761(f)

-if an LLC go to 2002-69.

6 hours ago, BulldogTom said:

Why do people make their estates beneficiaries of their retirement accounts

Sounds like she did not have a named beneficiary so it went to her estate.

6 hours ago, Catherine said:

there was a large-ish 1099-R paid to her estate.

And without a charitable contribution under section 642(c) the estate will likely have taxable income.

7 hours ago, BulldogTom said:

could you argue that the paperwork showing the attempt to make the contribution was an addendum to her will? 

A legal question.  I could not sign the 1041 and take the charitable deduction without a legal document.

6 hours ago, Catherine said:

I know the contribution came out of the estate accounts. That could be counted as money not paid to him. 

And not deductible by the estate as either an income distribution or a charitable deduction.

Unfortunately sounds like son was acting without any sound legal advice.  Most likely it could have been resolved before son made the donation from the estate funds.

18 hours ago, Catherine said:

Does that count as a per-will/per-trust/per-paperwork donation,

I don't see how.  Sec.  642(c)  clearly states that the donation must be made  pursuant to the terms of the governing instrument.

18 hours ago, Catherine said:

Instead her son gave the amount she wanted them to have from the estate funds to replace what they did not get from her IRA.

Legal issue.  Was there an attorney involved?

If son was heir he could have made the donation personally after receiving funds from the estate.

Not interested, this forum works just fine.

1 minute ago, jklcpa said:

planning question for the project that will most likely be completed in 2025.

I forgot to mention an exception that you are probably aware of;  that would be if under a master plan approved by the government entity pre TCJA.

On 1/26/2024 at 9:35 AM, jklcpa said:

This will be an apartment complex in an SMLLC.

Sounds like a  tax planning question, better than coming to you after the fact.

On 1/26/2024 at 9:35 AM, jklcpa said:

Are these rebates considered taxable income because of the exception under the TCJA sec 118(b)(2), meaning this would be taxable income

The intent of TCJA was to eliminate the federal tax subsidy of state and local  development incentives.

Yes you are correct.   

It is gross income per section 61.

1 hour ago, mcb39 said:

I guess it won't hurt to file a zero return with no activity.

per 1065 instructions: 

Who Must File Domestic Partnerships Except as provided below, every domestic partnership must file Form 1065, unless it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes.

On 1/26/2024 at 9:35 AM, jklcpa said:

An actual rebate,

Is this a property tax rebate?

16 hours ago, cpabsd said:

From my perspective, the buyer owns everything as of the date of the sale

And after giving it more thought I am changing my initial answer.

Part of the note was used to purchase the Consulting fees so they need to be booked as a prepaid expense.   Then I would recognize them over the life of the agreement rather than an allocation of the principal.

3 hours ago, cpabsd said:

Should the consulting amount be categorized as a prepayment of services

Yes it needs to be booked.

17 hours ago, cpabsd said:

Or can I allocate the $345,000 over life of seller employment agreement for new owners which is 4 years?  

I suppose that could be an option, but if the life of the loan is also 4 years with equal payments it should work out about the same.

The issue I see in this whole deal is if the seller is actually providing a service?  Otherwise, it could be reclassified as Goodwill by the IRS and subject to 15 year amortization instead of a short write off.

1 hour ago, Lee B said:

t will be interesting to see how the seller and their accountant react.

I wonder what kind of tax advice the seller received on this which resulted in $345,000 in SE income.  But with a $2 million plus gain it might not mean much.  Maybe he will max out from other sources.