Randall

Client just informed me he elected S Corp status for his SMLLC which has rental real estate (effective 1/1/17). He has two other SMLLCs with S election which is ok. I thought I had previously advised him not to elect S status for the SMLLC holding the real estate. Can he back out of this and what procedure is needed? Assuming he remains with the S status, how will the 8582 look with the previously Sch E unallowed losses on 8582 and the new pass thru losses reported on 8582 as a new activity?

Why does the letter say send 1040X and write 'CP2000' on top?

But wouldn't the gift recipient's basis be the same as the donor's basis plus what they actually paid?

And don't forget that only the Medicare wages reported on the W2 are the eligible wages for calculating the SEP amount (S Corp owner).

I only go back one year (if there's good reason). I just don't want to bother with it anymore.

Thanks for replies. I was coming to this opinion too.

Yes, beneficiaries get stepped up basis. But does property have to transfer out of trust to beneficiaries to get that stepped up basis? Attorney is wondering if the trust can sell the property, then distribute the money to beneficiaries. I'm wondering if trust sells property, property does not transfer because trust already owns the property. So would the trust itself get stepped up basis without the property being transferred.

I was looking at Reg 1.1014-2 (2) and still wasn't sure it answers my question.

Grantor trust had rental real estate deeded in trust name. Grantor dies. Children to receive property. If property is sold by trust, would they lose stepped up basis? Would property need to be transferred to children first to receive stepped up basis? Then sold by children.

Yes, and even messier. Because the father's interest in the LLC is a trust (grantor). I didn't want them to do the 1031 (because of the father's age) but they said the current tenant wanted to buy the old property and they needed to do it. The children want to sell the properties but are willing to wait out the two years on the 1031 property received. I was trying to determine if they could sell it now and the death of the father and his LLC interest passing to the children would qualify to have step up basis, sell at lower gain and not have the two year look back.

Rich, another twist. It was an LLC who owned the property and did the 1031. Father owned 97.5% of LLC, children owned the other 2.5% All rental activity profit was attributable to Father. Would the LLC be held to the 2 year look back?

Like kind exchange last year involving rental real estate. Property received must be rented for parts of two years. What if owner dies, children receive step up basis and want to sell. Would the sale of the property negate the like kind exchange? Or do children need to hold property and maintain it as a rental for two years so as not to negate the like kind exchange?

My Total Tax Package is only up $116.

This just got weirder. I was preparing amended return (2016 & 2015). Then realized his mother contributed to a Roth IRA for him. Ha. Taking out his W2 income renders him ineligible for the contributions. Sheesh.

I agree jklcpa. Another side question. Household income less than 100%, but was expected to be when applying for insurance on the exchange and credit was available. It seems this would allow an exception for the household income being less than 100%. This exception seems confusing. But if I claim this exception, he not only doesn't have to pay back the credit, he gets an even bigger credit, the excess on his tax refund. Is that right?

There's only a couple of things to add back for modified AGI, Fed exempt interest and nontaxable Social Security. But it would seem these payments would fall into a similar category.

What about the Form 8962. It would seem that this could be added back to modified AGI but there is no place to input it. It seems to be similar to Fed tax exempt interest.

Client has a W2 for $19,500. Fed income tax wh $2415. Paid by 3rd party. Client provides care for person and lives in that house (under something called Texas CLASS). Payments seem to be excludable from income under the Medicaid waiver payments. IRS Notice 2014-7. It seems he should have a corrected W2 and this amount should not be in Box 1 of W2. IRS Q&As regarding this says if W2c cannot be obtained, report amount on 1040 line 7 and the negative amount on line 21 as Notice 2014-7. Anyone else encounter this before? The real kicker. Client had health insurance under mom's plan thru Sept. Then purchased health insurance thru exchange Oct-Dec. If I take out the $19,500 income, the 8962 puts him under the 100% income level and he has to pay back his advance premium. Not too bad for 2016 but it this is the same for 2017, he will get hit on the health ins credit. Would the $19,500 count as his household income even though it is excludable for tax purposes? I can't find a way to show that in the software. Any comments would be helpful.

Looks like he was comparing two levels of product.

What about part time farmers? They always have losses. I suppose they have a profit motive but I wonder if these are hobby losses too.

Got rid of my DOS machine a long time ago. Last year, the Win2000 and WinXP went. This year I'm getting a new W10 machine and the W7 goes. The Win8 will be my backup. Getting older, need to clear out the junk.

Thanks for the article. This is generally what I've been seeing too.

Temporary. 6 months.

College professor went to Rotterdam for 6 months teaching assignment. His home university paid him his salary. I'm wondering about travel expense deduction. Some things I've read indicate travel expenses deductible.

One client has received $6400 in two years in cash distributions. But his capital account showing on the K-1 has gone from $80k to $61k. So I'm wondering how this will play out. Another client had Enbridge for years, received distributions for years. These are treated as return of capital. Eventually he received all his capital back and continued to receive distributions, excess distributions, taxable LT cap gains. He did well with this one. But they are becoming prolific now and I wonder how long this will go before the fallout.