Possi

3 hours ago, Lee B said:

Some timeshares are fractional ownership which can be considered real property. Other kinds of timeshares are not,

so you need to make some inquiries and find out what kind of timeshare your client owns.

 

If it was anything but real property, I don't THINK the 1099S would have been issued. 

I was afraid of special rules for LKE, thinking an attorney had to make it happen, too. 

So, I'll get their original cost and they will have to realize the gain on the sale. 

Thanks for straightening me out. 

11 minutes ago, BrewOne said:

the gain, if any, would only be deferred in a like-kind exchange.

Otherwise, as personal use property--a gain would be reported on Schedule D ($35,174 minus cost), a loss would be a wash (but should be reported because of the 1099-S). 

So, I can report it as a like-kind exchange. Great!

I have never seen this one before! 

Client has a timeshare with Vista Vacation and is issued a 1099S for about $35,174.

They sold to buy a bigger one with Sheraton Flex... but here's the kicker... 

The closing for Sheraton Flex ($64k) shows a credit on line 209a says "Equity Credit from Seller" for $35,174. 

I believe the 1099S needs to be addressed on the Sch D, but I'm not real sure HOW. It shouldn't be a gain since the money went straight into the upscaled timeshare. 

I can't seem to chase this down. 

Thanks for any help! 

Donna
 

1- If nobody is complaining about your prices, you’re probably not charging enough.

2- I tell my clients I don’t strive to be the cheapest. I strive to be the best.

Charge your price and be proud of your work.

5 hours ago, Medlin Software, Dennis said:

The employer knew. Unless the person was commuting somehow, they knew the person was not working in CA. 

Many times, a payroll company takes care of payroll, and it’s not the actual business at all. It shouldn’t be real hard to get the withholding back. Then, have the employee fill out a new W-4 for the state and mark it exempt. 

The employer won’t correct the W-2. They withheld properly as far as they knew. A new tax form needs to be filed with the employer, stating that the employee is exempt from California state taxes.
In Virginia, that form is a VA4. 
There should be a line on the California tax return where you can back out the wages. See if there is one on the California Nonresident return. If it isn’t there, put in a call to California. It will be worth the call. They might have a practitioner priority line, which I’m sure you would know about, @BulldogTom  

In Alabama, it gets backed out on the line for other income.

in Virginia, we file a special form 763S.

Each state is different it seems.

Include a copy of the service members LES. That is the form that determines the state residency. 
 

I hope this helps!

12 hours ago, TexTaxToo said:

Yes, but only to the extent there was a tax benefit.  See Worksheet 2 and the discussion of "Itemized Deduction Recoveries" in Pub 525.

 

Thank you! 

I went to the pub 525 and worked it out. @DANRVANThanks for all your help! 

9 hours ago, DANRVAN said:

And that amount would be the lower of:

-the actual deduction taken for LTC

-total medical deductions below the floor

-total itemized deductions less the standard deduction

-taxable income

10 hours ago, TexTaxToo said:

Yes, but only to the extent there was a tax benefit.  See Worksheet 2 and the discussion of "Itemized Deduction Recoveries" in Pub 525.

 

Ok, so I'm pounding this out now. There was a taxable benefit for the entire distribution. 

Distribution was 15,217.

Actual deductible amount on the 2021 Sch A was 15,487. (expenses $31787- $16,300 floor= 15,487 deduction)

In 2022 the medical expenses were $8925.

So, I start from the entire distribution...2022 distribution 15,217 - 8925 = 6292 taxable income. 

On 2/27/2023 at 5:40 PM, DANRVAN said:

It appears the amount of expense claimed as a deduction in 2021 and reimbursed in 2022 needs to be claimed as income. 

I don’t know how to make this right. Include the total paid MINUS what the 2022 expenses were? 
 

3 hours ago, Possi said:

It's marked as "Reimbursed amount" on the 1099LTC.

Client was paid this amount, $15,217 in 2022 for overall expenses, some in 2021 and some in 2022. She is getting 2022 expenses totaled, but said it's around $8k actually paid by her in 2022.

She paid $8925 in 2022.

It's marked as "Reimbursed amount" on the 1099LTC.

Client was paid this amount, $15,217 in 2022 for overall expenses, some in 2021 and some in 2022. She is getting 2022 expenses totaled, but said it's around $8k actually paid by her in 2022.

13 hours ago, Catherine said:

Sounds like a good candidate for firing.

But before you do, raise the fee! 

I’m sorry, I meant the deductible portion of the expense after the floor was met. 
 

I’m out of the office until Monday, so I’ll look again at the 1099 as soon as I get in. 
 

thank you! 

My clients are MFJ. He was terminally ill in 2021 and had lots of medical expenses. 

We took the deduction for medical in 2021 and the NET expense final deduction was $15,487.

He went to Heaven in January 17, 2022, so there aren't really any medical expenses to deduct for 2022.

His wife received a 1099-LTC showing benefits paid in 2022 totaling $15,216.

Does this become miscellaneous income to her since we took the deduction in the prior year and they benefitted from it, in excess of the payment? 

I think that's what I'm picking up in my research but want to check with the REAL professionals! 

possi

Nothing much more frustrating than being hung up on by someone you don't want to talk to.

My friends, there are your dangling participles for the day... maybe for the year... for you to ponder on... 

You're welcome. 

2 hours ago, TexTaxToo said:

CTC for those residing outside the U.S. is non-refundable, so she would need to have a tax liability to benefit.

ACTC is available as a refundable credit, but requires earned income.

But why wouldn't you include the children to claim RRC for them?

... why? Because I don't know why. I'm fried. Yes, that's why. THANK YOU for smacking some sense in me. 

Client lives in Germany with her German spouse. He is not a US citizen, no SS number, no link to US.

She (client) has a rental that has been BEING RENOVATED for years, and has just now (2021) become habitable and rented. 

Her gross receipts are $13,200, netting a loss. She has no other income.

Since her gross receipts are $13,200 and the property is in MD, she is required to file Federal and MD. 

She has 3 children, 2 of whom have SS numbers. 

She is qualifying for the stimulus payment filing MFS with zero exemptions. 

Am I doing her an injustice by not putting her 2 children with SS numbers on her return? No EIC of course, but what about the child tax credit? 

It sounds crazy that I am even asking this question, but these are crazy times. 

Donna

A client brought me one that had fallen in the toilet. "It's ok, it was clean water."

Um, no. And you get a @RitaB HUG. 

I don't know if this will help the next person or not, but NC does tax disability when it is reported on a W2. 

It was worth a try! 

I have a client with MS on 100% disability. She gets SSI, but my question is regarding the W2 from the insurance company. 

Her disability payments are in box 1 wages, zero FICA, zero fed or state w/holding, box 13 "3rd party sick pay."

VA does not tax this because it is complete and total disability from which she will not recover, even though it is paid on a W2.

She moved to NC and I can't find on the website whether or not this is taxable to NC. 

Help! 

Thanks! 

I know that car salespeople receive "spiffs" on a 1099. In that particular case, it is other income not subject to s/e tax. So, I think it depends on your particular situation. 

6 hours ago, cbslee said:

Does he qualify as a Trade or Business for QBI purposes? If not, stop.

Home office and a Maintenance Shop are two separate issues.

If he does have an exclusive use Home Office then I like the optional $5 per square foot.

As far as I am concerned the Maintenance Shop would have to be a freestanding structure used exclusively for his rental business.

If it was then I would set up a separate column on Schedule E called "Indirect Expenses"  category 8 "Other"

Thank you! 

It would be a free standing structure. I would bet it won't be exclusive use, but I'll ask. He will be honest with me. He's not trying to cheat, just asking. So, I'll get the truth about the usage and go from there. 

He does have the skills to do all the maintenance, and in fact does it all. He is very active in maintaining the properties with no property manager involved. If something happens while he is deployed, he hires out, but that is rare. These are high end rentals, not junk.

I can't say what exactly happens in the workshop. He's one hottie, I know that. 

I don't know if it would be a depreciable asset or used more in line with a home office, simple sq footage use. I would add it to any one of the properties in that way. Under expenses, home office, whatever the measurements are, and then the total using $5 sq ft with a max 300 or $1500. 

That way, there's a cap and no depreciation. 

Does this make sense? 

3 hours ago, cbslee said:

It depends, if the basis was not reported to the IRS then file.

Ir the basis was reported then I wouldn't file.

Interesting. I like the way you're thinking. 

My client has multiple rental properties. He is military, and his rentals are not Sch C, but are Sch E income. Average. 

He plans to build a workshop at his home....  "Since I will use this to work on projects and do repair work for the rentals can I write it off on next year's taxes?"

My knee jerk reaction is "no, and get out of my office, I'm busy...I think Rita has a hug for you..."

BUT, is there any reality to this? Is he able to deduct this in any way?  

What if it really was exclusive use for maintaining the rentals? (I know it won't be, but just for the sake of discussion.)