DANRVAN

and the concept of a pass through entity vs a fully taxable one.

Not true. Stock could have been purchased, inherited, or gifted. That is important because distributions in excess of E and P are are subject to capital gains and offset by basis. Those statements show a lack of understanding that a basic course would cover. That is correct, I assumed cash basis.

Yes, Section 1402(e)(1), and form 4361, basically says the objection to public insurance because of religious principles is in respect to his or hers service as a minister. In other words, they are declaring opposition to SS for wages as a minister only. Our Roman Catholic Diocese strongly discourages Priest from taking the exemption. By signing 4361, he states that he is opting out for religious rather than economic reasons. I had a retired farmer in a similar situation, also worked part time as a school bus driver, I explained it and he signed. End of story.

I hope this is not a real client situation you are working on without basic knowledge of corporate income taxation. Dividends are taxable to the extent of E & P, excess is return of capital offset by stock basis. Depending on how the transaction is structured, the entire liquidating distribution could be a payment for shareholder's stock.

How do you convert any those to cash without generating income?

and you paid a license to use those programs that are still on your computer.

In that case it is not a gift. One of the elements of gifting is intent. This is obviously not a transfer made out of affection, gratitude....etc. A gift must be a unilateral transfer with no strings attached, meaning there is no action required on the part of the donee. In this case there is a condition that the property is willed back to the donor by the donee.

Do you know that for sure? She gets a $250,000 exclusion off the top from the sale of the house while he pays on 100% of the gain from his extra share of the investments. She got her share of the assets as negotiated and related basis, it is now a done deal. Some pre-divorce tax planning might have resulted in a better tax outcome for her. They could have wrote a 121(d)(3)(B) exclusion into the settlement (and that might have been more to his advantage than hers), but to late to buy that ticket since the train has left the station.

Gross income test applies to qualified relative but not to qualified child, so it depends.

Sounds to me like they only think there is a form to complete.

A moot point now, but instead of filing PF for two years they could have filed form 8940 to receive retro recognition as a Public Charity. Sounds like they need some sound advice on the difference between a Public Charity and a PF. For a PF they need to be aware of the minimum distribution requirement, self-dealing rules, serving a charitable purpose among other concerns. Maybe a reason why they are changing tax preparers? By their choice or were they fired?

I can't think of any reason unless they plan to pay scholarships.

I have never found an appraiser who will put a value on a fence, even for large estates with miles upon miles of fencing. It is a good faith reasonable estimate following AICPA standards. Otherwise clients are missing out on allowable depreciation. On the other hand, I have seen buyers (non-clients) put values way beyond what the actual replacement cost would be.

For the above post my bill was about $900. My job was to trace out the fences on a map and determine the length on a spreadsheet. Then input the estimated cost per foot. The client then rated the various sections of the fences on a scale of 1 to 10, where "10" would be in new condition and "1" would be in total disrepair. The overall rating gave an estimated value of about 50% the cost of a brand new fence which was $93,000.

Farm and ranch fences are specifically listed under asset class 01.1 and are 7 year GDS. Keep in mind these are pasture or range type fences, not corrals which are 15 year property. New ones are made out of steel post and wire, and that is not cheap. Neither is labor cost which varies with the terrain. Fences are often overlooked and I have used 3115 several times for that purpose. You need to reduce that basis of the land for the amount allocated to the fencing. The client needs to make an estimate of the value at time the property was acquired considering: the condition, age of the fence, and replacement cost at the time. You also have to consider partial ownership of boundary fences in some cases. The last one I did came out to $93,000 which was about 1/2 the replacement value of about 10 miles of fence. That was for a relatively small parcel of property. This is right up my alley because I also do fencing as part of my other work. I am starting on a couple mile project next week!

And you can drive home the point that preliminary tax planning would have saved time and confusion.

Without knowing all the facs, It might have been less complicated if they had assumed his share of liabilities instead of borrowing money to pay him cash; which he then used to pay off his share.

That is a good point, however the remodel is treated as a separate asset for depreciation purposes. 3115 is your friend, use it.

At this point do you really have a choice but to extend? Looks to me like you need to call the clients in for a meeting after 4/15 and document their intent. Explain that for tax and accounting purposes there is really no reason for the partnership to continue with the remaining husband and wife. Does the contract take into account that the assumption of selling partner's share of liabilities by remaining couple is consideration paid to him? I have worked with attorneys that have gone back and rewrote agreements to fit the actual facts. Unless there was a compelling reason for the remaining couple to continue as a partnership, I would suggest a liquidation of the partnership followed by a transfer of the assets at the individual level Okay, so a loan was taken to buy retiring partner and was secured by the building which is owned by partnership? Retiring partner was cashed out with a check from partnership? If that is the case and remaining couple wishes to continue as partnership, treat it as a redemption as dictated by the facts.

That is how I pay our personal estimates.

I prefer to put in the amount so there is no question about what they need to pay.

Never any bad experience. They get vouchers, envelopes, and a payment schedule.

The purpose of the worksheet is to help you determine the net amount on line 2, it is not part of the tax return. The IRS is not watching for an itemized list. As far as that goes, you can just over ride line 2 of schedule SE.

Since it is just a "worksheet" you don't need to itemize anything. Just put in the total expense and move on.

That is also my practice. In this case the client will continue to mail in his payments on a quarterly basis. He has a daughter that lives close by with a POA that will assist him. Thank you for all your replies!