Randall

Good timing for me on this post. Was just asked about this by a client. Does not pertain to his 2013 return.

Just a few more to go. Have been contacting clients the past week who I think will owe and getting them to send in payments. Like Jack said about Ohio, here in No. Ky., the local business returns want their own extension and an estimated payment. That's always a pain, but it's nice when the actual return is completed and they don't owe much and there's no penalty.

I gave up. I don't want to bother with refilling myself. You used to be able to shake the cartridge and get a couple more days out of it. Now you're lucky to get 10 pages. I just buy new ones and pay. Even the new ones don't last long. They practically give away the printers so they have to make their money with the cartridges.

I'm not seeing anything that death is an exception to exclude COD from income. 1099-C is marked Federal Student Loan. But I still don't see death as an exception. Just wanted to ask in case I'm missing something.

Danrvan, no formal contract, just a personal informal 'typed' summary of what they are doing. But even that has inconsistencies. That is why I was wondering if this should be reported as income of some sort, even if just 1040 line 21, or just added to contract price when sale takes place. If sale never takes place, it could be considered gifts, with double spouses, keeps it under the annual exclusion.

More info now. Did not sell half interest. He and wife live in house. So called sale was to daughter and son-in-law. Now I'm wondering if it is even a sale. Buyers are going to obtain financing and purchase whole house at market value($455k). The agreement (personal) is for 'buyers' to pay 'sellers' $1336 per month until they obtain financing to purchase the house. I'm wondering if this is even an installment sale and not even a sale yet. But I'm wondering how to treat the $1336 received by buyer (my client). Could it be other income (sort of income for holding rights) or just deposits until financing is obtained and the real sale takes place. Or even gifts? I'm concerned not to blow client's personal residence exclusion. Basis is about $160k.

Client sells half interest in his residence. Not been used as rental, just personal residence. Client continues to live in the home as his personal residence. I don't think the sale can qualify for the exclusion since he continues to live there. I think the sale of the half interest goes as capital gain as you would normally treat an installment sale. In the future when and if he sells the other half, that half would qualify for the personal residence gain exlusion (all other requirements being met). Any thoughts or comments on this situation are appreciated. Just wondering if I'm missing anything.

Fine but if they have positive cash flow, they're going to want cash distributions. So you're back where you were the first year. And putting in the W2 makes it ordinary income instead of LT Cap gains.

It may appear to be a loss, but there could actually be a repossession gain to be reported. Look up repossession gains. Simply, it could be all money previously received minus the gain previously reported. Then basis is recalculated. Face value of remaining loan minus uncollected gross profit on that amount, plus repossession gain plus cost to repossess.

There will be a 1099-R. Hopefully, they'll have the gross distribution and taxable amount shown. They should have tracked basis in contract. Hopefully client has kept all annual statements just in case. If the policy is old and has changed insurance companies thru mergers, etc, the insurance company may not be able to provide a good historical statement.

I agree with KC. If it's a real loan, ok. I see a lot of loans from shareholders to the corp. But from the corp to the shareholder? These things never go off the books.

I wonder why we track it too. Once it goes to zero, it becomes meaningless on the return and makes no sense.

Did you update to 13.5? I didn't get a chance to and they sent a notice they took it down because of some problems.

Distributions on K-1, no 1099. Basis tracked. Distributions in excess of basis, long term cap gains on 1040.

W8 is ok for latest QB. I have QB 2014 accountants version. QB 2013 worked fine with W8 for me too. Can't say about older versions of QB. As with all software, you need to update eventually. I recommend clients update QB at least every 3rd year. They don't.

Right joanmcq. But she said she started a new S Corp too. She needs a face to face with her CPA to sort this out.

As others have said, if you're an S Corp, the money received goes thru S Corp, then distributed to you. As old Jack said, see your CPA on how to handle this regarding the tax reporting. NOT just straight to 1040 line 21.

If I were the buyer (or advisor of the buyer), I wouldn't buy the corp, just business assets, name, goodwill, no liability (especially payroll), etc. Form my own corp or LLC.

Thanks. That was my first thought too.

I see the old TD F 90-22.1 form has been replaced by FinCen 114. ATX says this form must be filed online only and is not available in ATX. They did provide a link for instructions. That took me to a website called BSA E-Filing System. Has anyone done this? Should we as tax preparers enroll as filers on this system or just direct our clients to this site to do it themselves? Form 8938 is still required to be filed with 1040 but has a higher threshold requirement than the FinCen 114.

Thanks. I just saw that too.

Did they eliminate the age limit to claim EIC? I thought you had to be under 65. ATX is calculating EIC for my client, age 65 with a disabled child dependent.

Thanks. I thought it should just be additional rent. No installment sale, still collecting rent and sale isn't stated, just potentially. Aggreement states additional payments to reduce future sales price.

Client rents house. Tenant is paying additional payments toward potential purchase. Payments will lower future sales price. Payments are forfeited if tenant doesn't purchase home. My question: Are these payments reported by client (landlord) as additional rent, other income, or postponed and booked as deposits. I couldn't find something on point about this, general reference to conditional sales contract. It doesn't seem to fall into the category of installment sale. I don't think he can hold the money as deposits or whatever. It seems it would just be additional rental receipts or other income. Then in the future, the sales price would just be lower.

Just the usual for ATX. Slow.