Kea

Living in TX I don't do a lot of state returns. Client has a (federal) tax-exempt municipal bond mutual fund. The fund has income from almost all 50 states. Are there any states that will require an tax return to report non-resident muni interest? When filing a resident tax return, a state will usually treat the income as taxable if the muni interest is from another state. But will other states require you to file a NR return? Thanks

Thanks DANRVAN. I really do appreciate all your help. I was able to get the return completed & e-filed.

It only applies to the one partner (the estate), not to the partnership as a whole. Similar to the 754 asset depreciation not being on the 4562. (I hope that makes more sense)

That makes sense. I was just thinking of the 13w as a "catch-all" for the impacts of the 754 election. Since the 754 asset is only a partner sale, should it show up on the Form 4797 for the 1065? Or just the manual inputs on the K1? I really appreciate all your help on this!!

Thanks DANRVAN. That works for me. I setup the 754 assets as “unassigned.” Then I can manually input to K1 line 13 w. For 2018, 2 of these assets were sold. There was $0 basis at the partnership level. So when I recalculate the adjusted gain/ loss, I assume that justs adjusts the amount on 13 w. I’m feeling more comfortable with the Section 754 election. Now I just have to better understand what the software wants. Thanks again.

Thanks. That sounds like it should work. I've had no trouble using ATX to track separate depreciation schedules for clients that have Schedules C & E It seems the Section 754 depreciation would / should flow to a separate Form 4562. The one that was prepared last year has everything on one Form 4562. Is there any requirement for them to be remain combined for 2018? I think it's cleaner to keep it all separate.

Follow-up to this topic from last year. I took y'all's advise and passed this off to a much more skilled preparer. The partners opted to do the Section 754 election for the 2nd deceased partner. I've reviewed the completed return and now have a better understanding of how this was done. I would like to prepare the future returns. At this point, I'm trying to recreate the 2017 return in my software, so that I can roll it over to 2018. I've been using TaxAct for the last few years. I have not been able to determine how to enter the 754 assets so that the depreciation flows to the estate K-1 (only) and does not affect the ordinary income or anything else on the return. I've called tech support, and no luck, (yet - I'm sure they are busy). At this point I am trying it in an ATX demo. While ATX gives me more options for assigning assets, I've not found how to make them flow to Sch K1 Line 13w. After re-reading this thread, I'm wondering if the best way to handle is to just enter all the assets as "unassigned" and then manually put the total on 13w? Any suggestions? Thanks!

I've put the question to the new heirs to see if they want the election. I told them to consult their own tax preparers. First years depreciation will be in the $3000 range diminishing to around $1500 in later years. Then this gets divided by the 3 siblings. The other partner is OK with either decision. Thanks for all the help. I may have more questions later.

I admit I'm not looking forward to this. I think I've set up a mental block for myself.

Thanks SaraEA. I'll look at these articles and see if I can wrap my head around it.

Hi everyone. I haven't been around much lately since I stopped taking new clients (& new tax situations). I'm now to the point that the only returns I do are for family. I'm currently working on my only partnership return which I picked up around 2011. Partner "A" died in 2009 and his 50% share passed to his daughter "D". Partner "B" continued preparing 1065 return for another year or so. "B" did not make any adjustments to the inside basis. I've prepared individual returns for "D" taking stepped-up depreciation as unreimbursed partnership expense (UPE) the whole time. [Thanks for all the advice I received on this board!] Fast forward to 2017 and Partner "B" passes away. This 50% share is still held by "B's" estate. When the estate is settled, that portion will be held by "B's" 3 children. I would like to do the step-up basis inside the partnership now -- to make things easier in the long run. Is doing a Section 754 election the best way to go at this point? If so, does anyone have any suggestions for references on how to do this? If I do the 754 election, does that only affect "B's" share of the partnership? Or, is there a way I can now move "D's" outside basis back inside? I don't mind continuing to track the depreciation for "D" separately - it's already set-up. However, I don't want to do that to "B's" children. I don't prepare their returns and I just want to make everything as simple as possible for them. Thanks so much, Kea

I'm trying to retire, but still have a few clients who won't let me. The last couple of years, I have taken RV trips during tax season. But, alas, the computer goes with me.

Agree. I explained that to the client. So it seems he did use it personally while waiting for new clients. Depreciation was already recaptured (and taxed) in 2014. Not sure that it's an issue that I didn't adjust the basis in 2015 since the depreciation was $0 either way. The income & tax implications are small but I just want to make sure it's recorded properly. Thanks

Lookig for the best way to handle: Client purchased $500 software for his Sch C business in 2013. In that year, he assumed it would remain 100% business. Took Sec 179 (vs 3 yr amortize). In 2014, business use dropped to 40% & depreciaton was recaptured. The basis should have been adjusted manually for 2014, but I didn't (did not have any work in 2015, so business use was $0 -- I didn't even think about the recapture.) Now for 2016 business use is 40%. Do I just override the basis now & contine deprecian for its last year? Or, do I remove asset & expense remaining basis under de minimus safe harbor regs? Thanks

I got a "Donald shared 'Tax return Filing' with you" email today. I did open the message, but did not open the dropbox link. I do not have a client named Donald and suspected this to be a scam. Is this the same message you got today?