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Edsel

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About Edsel

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    ATXaholics Anonymous

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    TN

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  1. The best way to ask a question is to form an example. Addressing the example will tell me all I need to know. A trust receives $12,000 in cash, $5,000 of which is LTCG. The trust distributes $8000 to the beneficiaries, leaving $4000 in the trust. Which of the following would be correct (if any)? Trust reports $5,000 as LTCG income, and $8000 as a pass through deduction to the beneficiaries. The K-1s show $5000 in LTCG for the beneficiares. Trust reports $5,000 as LTCG income but only 2/3 of the proceeds were distributed. $3667 is reported as a beneficiary deduction, but the beneficiaries have only $3667 on their K-1s as LTCG (some 2/3 of the gain). The remaining $1333 is taxable to the trust as current LTCG income. Trust reports $5,000 as LTCG income and $1000 is reported as a beneficiary deduction. The trust kept $4000 of the money, so the K-1s for the beneficiaries report only $1000 LTCG and the trust is taxed on $4000 as current LTCG income. The entirety of this line of questioning depends on the ordering of beneficiary income - FIFO, LIFO, or (moving) average... Thanks in advance for your consideration and comments.
  2. I've been told lawyers advise corporations to incorporate in Delaware. I've often wondered why. I don't see any tax advantages. Are there legal reasons??
  3. Thanks for keeping us updated, CBS. But I'm weary of this whole circus. Wish the whole mess would just go away, or at the very least be settled and done with. Wish the virus would go away too.
  4. Edsel

    NT - mom

    Darlene - we've followed you on the forum from time to time and perceive you to be an excellent lady, and that has an enormous passdown from your mother. Take whatever time you need to help her through this portal. This will not be the same as losing friends and acquaintances - you will not get up after the friends have gone and get back to business-as-normal living. You never get over losing someone this close - the only ease comes with learning to live with it. One thing that makes this easier to accept is it follows the natural order of life - the way God intended it. Members here really care for each other. I'll think of you this fall when I travel to Superior WI.
  5. Thanks Lion - I believe after thinking this through that you are quite correct. No taxable event, but basis is changed.
  6. Edsel

    Deferred Revenue

    Thanks to MaxW and CBS for taking time to address this, but What circumstances (other than cash basis accounting) can force "constructive receipt?"
  7. Looks like the passage from Christian above does in fact sink the ship. In the cases for self-employed individuals, NOL reduces the taxable income for the succeeding year, but not for the purposes of self-employment tax. For some self-employed taxpayers, their SE tax is greater than their income tax, especially if they have children. SE people often don't understand why their taxes are not reduced with an NOL.
  8. A father-son partnership. Father transfers part-ownership of the entity to his son, and for the sake of simplicity, assume the amount is less than the gift tax threshold, maybe $14,000 would be a good amount for purposes of this discussion. Transfer is apparently tax-free for tax purposes. But how about basis? Rules for basis include additions for non-taxable "income" and subtractions for non-deductible "expenses". This is clear from the rules for basis. However, does the above calculation qualify to be included in the basis for both father and son?
  9. I occasionally encounter "deferred revenue" from someone's balance sheet when trying to prepare their taxes. I understand the IRS has a convention called "constructive receipt" which can change this from a balance sheet to actual taxable revenue. What circumstances (other than cash basis accounting) can force "constructive receipt?"
  10. Edsel

    OIH for Minister

    Hi Burke, I can only confirm that FRV in the area they live is $54K, as utilities are included. They moved there 7-8 years ago, and housing prices have tripled. Unless you lived close to a metropolitan area as explosive as Nashville, you would find this hard to believe. A relative of mine sold a house in Nashville 8 years ago for $139,000, and the same house sold six months ago for $400,000. And this was not in an exclusive area like the minister above, this was middle-income neighborhood. Nashville is now the largest city in the state, and I never thought I would live long enough to see it overtake Memphis. If "actual" is entered for less, the difference becomes taxable wages, with no break on the SE tax, since the church has not withheld any FICA.
  11. Edsel

    OIH for Minister

    Thanks for all responses. To my friend Margaret in OH, this "children minister" is married to a high income earner. And their FMV rental value where they live is triple what was only 7-8 years ago. I have chosen not to include the OIH, in part because of the responses on this forum. Practically speaking, very few of the OIH deductions I have seen actually meet all four of the criteria listed in the discussion. Meeting customers becomes eligible only with stretches of the imagination. I generally shut off the OIH if the taxpayer has an office somewhere else, or else is simply not realistic. Should this W-2 have been issued in this manner? I wouldn't have, had the church retained me to do it.
  12. A minister has a W-2 for $53,000, all of which is designated as housing allowance. (FMV of rent in exclusive area of Nashville now approaches $5000 per month, and they live smack in the middle-of-it). There are zeroes in all the wage and withholding section, minister pays own self-employment tax. The church, with knowledgeable CPA members, has issued the W-2 without influence from the preparer (me). A paltry amount of Sch C revenue exists, as this is a children's minister. Expenses far outstrip revenue on Sch C. For SE purposes, this expenses are considerably prorated downward. Minister has a dedicated office-in-home for classroom preparation and library. Can the expenses of the OIH be applied as a deduction for SE tax? It cannot be a deduction for Sch C since it would create a loss...
  13. Illegitimas, I'm wondering about this. Would this apply to corporations who are an entity to themselves? What about a sole proprietorship or an SMLLC where there is nobody but the owner?
  14. Edsel

    New 24 Week Period

    CBSlee you raise an interesting question. For many companies, they have intended to maintain FTEs throughout the 8 week period. Does your comment mean they will now have to maintain FTEs through the 24-week period??
  15. Edsel

    New 24 Week Period

    I believe the passage of 24-week recovery will not help many companies. The very mention seduces the imagination to think that the amount of forgiveness is tripled. Not so. If a company borrows $200,000 and during the first 8 weeks incurs expenses which will qualify for $175,000 in forgiveness. There is only $25,000 left, and at the rate of spending, it will be used up in another couple weeks. The only companies which will be helped by an extension to 24 weeks are those companies who will need the extra time to accumulate enough expenses to forgive their total loan.
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