DANRVAN

" A man a plan a canal Panama." (I had an accounting professor that was a palindrome junkie.)

I was going to eat a bowl of ice cream and go to bed, but In recognition of the 7th Birthday of the community, I am going to eat a second bowl. Thanks to everybody who keeps this board going!

Without looking it up, I can tell you that the assignment of income doctrine places the tax burden on the owner of the property that produced the income. The land is the property and the timber is the income. That is no different than a farmer trying to gift crops to his children. The standing timber could have been gifted by a deeded cutting right but that was not the case here. Another factor is control and mom held it. She decided when and how the timber would be cut and to who and for how much it would be sold for. Then she had buyer pay the kids for the proceeds that she alone was entitled to (unless I missed something in the post). The only thing she transferred was the proceeds from the sale. As I recall, there is a supreme court decision regarding assignment of income that said something like the fruit belongs to the tree which produced it. Good night.

For a trust, I believe the charitable deductions are taken to determine taxable income and are not passed through to the beneficiaries.

It would be interesting to know how mom's tax preparer is going to handle the "assigned income". You can't gift the income and retain the property that produced the income. So unless mom transferred the land or deeded the timber cutting rights, the income is hers.

Just curious why a 1099 vs W-2.

You need to help your client decide whether there will be a greater benefit by going forward or back with the NOL. There are all sorts of possibilities. For example there could have been lower tax rates in the previous two years due to capital gain or offsets by tax credits. Higher rates could be expected in the future due to lower depreciation deductions. On the other hand, consider the time value of money (cost) by waiting for future tax benefits of a carry forward.

A 1099? Parent's office? Are the parents partners or sole proprietors? If so then child's wages are not subject to social security. Are you preparing taxes for the child but not the parents?

It's great to see a family get along so well with each other.

Capital gains are included but do not include any gains from land, grazing rights etc. That should be spelled out in the instructions to Schedule J or Pub 225.

If it should have been reported on 4797 in 2012 and doing so would save $5,000 this year, then why not amend 2012 and extend 2013?

That is an interesting twist. They are making monthly payments like a lease with an option to buy but not living in the house. Do they have a contract?

I believe that originally would go on form 4797.

I agree, 1/2 of the basis went with the exclusion.

I don't see anything in the regs that would require the gain to be recognized.

If he comes home to sleep then no deduction.

If you are talking about unrecaptured 1250 gains they go on 4797 and flow to the K-1's.

This was a return rolled over from 2012. My first thought was maybe the auto-save was turned off but it was still on. I don't know what caused it, but I put a sticky pad reminder on my monitor to save often!

This happened after I updated. The program closed as I was preparing to print. When I reopened, the data was gone. Auto save was set for 5 minutes and at least that amount of time had passed. Luckily it was a simple return and it only took 10 minutes to put the data back in.

This really sounds twisted. Her name is on the deed but not on the mortgage? And they were splitting the rent 50/50? And now she lives on the property? So maybe the $20,000 was for his future loss of income?

It would be treated as a reduction in the property basis if the development right decreases the FMV. Rev Rul 77-414, 1977-2 CB 299.

Look at the substance of the transaction. It looks to me like the purchase was made for the education of the taxpayer's child and for no other reason.

From what you are saying it sounds like short term. The clock starts ticking the day he purchased them.

Yes, that is where she loses out on the deal, paying more than her share of tax.

Yes, I will. Client will pick up the return and mail it off today.