DANRVAN

You don't have to put the GP on line 10 unless for services performed for a trade or business. The GP is not subject to SE tax for the same reason. I haven't ran across this situation before, but would consider making a special allocation on the K-1s. For example, if total net from 8825 was $55,000 before GP of $15,000, then manager partner would be allocated $25,000. That is GP plus 1/3 of net less GP. The other two partners would report $15,000 each. That would reflect the economic reality of the situation. All reported on line 2 of K-1. I disagree with deducting GP on 8825 as that will distort the income reported on the 1065. As you noted, a line 10 entry will create an ordinary loss issue and SE income. See instructions for line 10.

That's funny. You should write a book!

Depends on facts and circumstances. Trains 12 -16 hours a day? How much was his income vs. expenses? What source of funds did he live on?

LLC's are a creation of state law and have nothing to do with income tax status. For tax purposes an entity is either a sole proprietor, partnership or corporation.

There are certain improvements that do not increase the fmv of the house. My guess is the $16,000 include more than what is on the list. Rev. Rul. 87-106, 1987-2 CB 67 -- IRC Sec(s). 213 1. constructing entrance or exit ramps to the residence; 2. widening doorways at entrances or exits to the residence; 3. widening or otherwise modifying hallways and interior doorways; 4. installing railing, support bars, or other modifications to bathrooms; 5. lowering of or making other modifications to kitchen cabinets and equipment; 6. altering the location of or otherwise modifying electrical outlets and fixtures; 7. installing porch lifts and other forms of lifts (Generally, this does not include elevators, as they may add to the fair market value of the residence and any deduction would have to be decreased to that extent. See section 1.213-1(e)(1)(iii) of the regulations.); 8. modifying fire alarms, smoke detectors, and other warning systems; 9. modifying stairs; 10. adding handrails or grab bars whether or not in bathrooms; 11. modifying hardware on doors; 12. modifying areas in front of entrance and exit doorways; and 13. grading of ground to provide access to the residence. .

I received quite a bit of information on this topic during the week including observations by CHECKPOINT. At this point, it sounds like IRS will accept and process refunds if box is left blank. However, taxpayer might later receive a letter inquiring whether they had HCC. At that point IRS might attempt collection. It was noted that IRS will have limited tools to collect other than offset of refunds. IRS has also stated no knew regs will be issued until the new Treas. Sec. takes over. My position is to keep the client informed and involved in the decision to check the box or not. Written communication will be kept on file. I need to cover my tail, but at the same time client has the right to be informed of the situation and possible outcomes. My advice will be to hold off on filing for another 30 days and see what happens.

The issue would be allocating expense (property taxes etc.) between the forms. Especially if CRP is subject to SE tax. If farmer is on SS then no SE tax.

I believe there is a BIG on the partnership interest that will be recognized when the land is sold. In the case of "The Ringgold Telephone Company v. Commissioner (T.C. Memo. 2010-103)" the question was not whether there was a BIG from the partnership interest held at the time of conversion. The argument was over the valuation of the partnership interest. Both parties agreed there was BIG.

Reg 1.1213-1(e)(1)(iii) is the authority, it refers to "capital expenditures" for medical purposes. It doesn't say anywhere that the capital expenditure must relate to your personal residence. Capital improvements to make a vehicle handicap accessible and to allow a handicapped person to operate it are also deductible. The purpose of the improvement must be for medical and not personal purposes. If the improvements on the vacation home were made to allow access by a handicapped person and not for the personal enjoyment of the whole family, then they should be allowed.

I ran into the same issue. Elected ADS for 5 and 7 year and then tried to elect SL for 15 year but it was grayed out in global settings. So I manually changed the 15 year to SL in the asset entry for each asset, then manually selected 15 year SL on the Elections statements. Everything came out okay! I keep permanent depreciation schedules on Easy-ACCT business system and numbers came out the same.

Yes, sounds straight forward to me, assuming the roof replacement resulted in a loss. It should flow through the K-1 to the estate along with additional depreciation from 743(b) adjustment.

I have some more thoughts on this. How much did your client pay for the property? Was the property rented before the deal on April 1, 2016? If so, for how much? About how much should the property rent for? You mentioned a tax value of $15,000. Do you mean that is the value for property tax purpose? Relax, you will get through this!

He might benefit from electing out of capitalizing preproduction cost through Reg. 1.263A-4. He would then use alternative depreciation per 168(g)(2).

Not sure what you mean by that.

That's where the real estate lawyer comes in. In substance, it I agree with Ron, looks like an installment sale poorly drafted by without legal or tax advice. So what exactly is the option available for exercise by the tenant?

Treat it as a repo on installment sale.

No, it does not sound right. I believe it has to be either a lease or a purchase, but can't be both at the same time. Whether it is a lease or purchase depends on the facts and circumstances including: -intent of parties -payments are above fmv of rent -who bears rights and risk of ownership -who pays insurance, property taxes -is renter building equity -property can be purchased by exercising an option that is nominal compared to the fmv of the property.

Not enough information given. Did section 1038 apply to repo? (Sounds like it did). If so basis equals: (1) basis of note at time of repo (2) + gain recognized on repo (3) + repo expense see examples at Reg 1.1038-1

I am leaning towards thesitefactory.com, they have a specialized format for accountants and taxpo's, looks like it can be easily customized and cost $16.25 per month. Looks like a good starter kit for now.

Thanks for sharing that Lion. One thing I notice on your home page is that the tabs on the top are hard to read. Maybe it is my screen, but the tabs are almost shaded out in the dark green border.

The student is subject to FICA whether working as employee or contractor since obviously worked on a regular continual basis, despite the fact he was trying to earn tuition. There are a few exceptions I am aware of including 4 year med student, that doesn't seem to be the case here. Also some exception for foreign students. The only option is challenge the university with SS-8.

Thanks for the info Catherine, your website looks great!

Thanks for the info Lion, I didn't see a price on their website, can you tell me about how much it runs?

Thanks for the info FDYN.

I am going to set up a website, can anyone here give me some ideas on a source? Thanks for any suggestions you might have. Dan