Jump to content
ATX Community


  • Content Count

  • Joined

  • Last visited

  • Days Won


About Edsel

  • Rank
    Advanced Member

Profile Information

  • State

Recent Profile Visitors

1,128 profile views
  1. Edsel

    4797 - Capital Gains Portion

    Thanks Max & Gail. Gail, you're correct, there is depreciation, and it affects 4797 income, but does not affect LTCG. Max, I think you're telling me that the $5K loss will be allowed on Sch E, and thus will not have to be added to basis.
  2. Facts: Tom bought a rental house in 2013 for $140,000, and this cost includes improvements. Sold in 2017 for $200,000 contract price. Other factors: Closing costs $11,000, and Disallowed loss from Form 8582 $5,000. Basis is thus some combination of $140,000 and $11,000 and $5,000. Without focusing on the rest of the 4797, what is the LTCG portion attributable to this sale? a) $60,000. $200,000 minus $140,000 original purchase price plus improvements. b) $55,000. $200,000 minus adjusted basis of $145,000 ($140K + $5K in suspended losses) c) $49,000. $200,000 minus adjusted basis of $151,000 ($140K + $11K in closing costs) d) $44,000. $200,000 minus adjusted basis of $156,000 ($140K + $5K + $11K)
  3. Edsel

    Microsoft to charge monthly for Windows 7 updates

    They don't care. I have Microsoft 7 and will refuse any updates, so they'll have to shut me down. Use of the "cloud" enables big software companies to essentially charge "rent" to their users. Gone are the days when they sent you a CD and you installed it. Control has transferred from the user to the provider. Mass resistance or somehow an economic boycott is the only tool of organized users. Without an organized network of users, they will continue to steamroll us.
  4. A customer is depreciating some $25,000 in Leasehold Improvements. Customer paid for them, but they are such an integral part of the building that he cannot own the property. Deterioration of the neighborhood has been occurring. The last straw came when the landowner rented to a Tatoo Parlor in the unit next to them. Taxpayer will be moving in October. Question: How is the loss on the leasehold improvements reported? Fully depreciate the remaining value in the leasehold improvements account. Loss is disguised as depreciation expense. Write off the remaining book value with a 4797 transaction, showing zero for the selling amount, and reporting original value and accumulated depreciation on other lines. ??? (your guess is probably better than mine)
  5. Edsel


    Realistic movement toward relief. It won't happen unless money is involved. The government's "do not call" list failed because there is no enforcement money. Report these numbers to the Federal Trade Commission and see what happens: NOTHING. If there were only a modicum of enforcement money slapping a few dozen fines of $10,000, calls would dramatically reduce. Is there a money motive arising to a force big enough to do something? Maybe. It is the cell phone industry. The last thing they want is for their customers to NOT answer their phone. Charging by the minute means less money for them if people curtail their cellphone usage. But again, so many cellphone situations exist nowadays where they are NOT billing by the minute. Sorry, but corporate greed rules. There has to be a collective fruitless cost involved for the robocalls to stop - if this can happen they will stop. There has to be a return on investment for cellphone companies to create enough mayhem by enlisting the enforcement agencies, who themselves must profit by action. Sometimes the "greedy capitalist" side of me surfaces.
  6. Edsel

    Earnings and Profits

    Yes - new corporation and you have directly answered the question. The determination of dividends versus return of capital is made at the end of the year when E&P are calculated. Thank you.
  7. Edsel

    IRD Question Father & Daughter

    No tax free exchange. C corp is new, and awaits further capital contributions which have already been made as of this writing. Thanks, Judy.
  8. Edsel

    IRD Question Father & Daughter

    The discussion thread confirms the IRD factor and methodology. My best answers for the specific handling of the above questions are: 1. Asset Balance $30,000. 2. Basis in loans is $18,000. 3. Capital balance added to equity is $30,000. The capital investment pumps out capital gains to add to income just like it pumps out interest.
  9. Edsel

    Earnings and Profits

    Mortimer puts $400,000 into a C Corp. The assets are quite cash-producing, and by 12/31/18 Mortimer withdraws more cash than the corporation has profits by $10,000. However the corporation's fiscal year ends on June 30th, and by year-end the corporation has produced $50,000 in profits and Mortimer has withdrawn only $48,000. Which of the following is true? Mortimer has invaded equity by $10,000, reduces his capital balance accordingly prior to year-end, and is able to claim non-taxable return-of-capital on his 1099-DIV of $10,000. The calculation of Earnings and Profits ignores the calendar year and must wait until year-end, and E&P are $50,000 prior to Mortimer's withdrawal of $48,000. Capital balance is unchanged from the original $400,000, and there are Retained Earnings of $2,000.
  10. Some years ago, father purchased land for $60,000 and sold it for $100,000. He carried the note which provided for interest and principal on a monthly payment. While he was alive, he collected $70,000 in principal and $35,000 in interest over the course of several years. Father dies and leaves the note receivable to daughter. There is $30,000 remaining in principal, and since the profit margin was 40%, he had to recognize $28,000 in capital gains while he was still alive. Since unrecognized installment sale income is taxable to the recipient, there is another $12,000 in capital gains yet to be recognized in the hands of the daughter. If remaining loan plays out as scheduled, what is true among the following statements? Asset Balance is $30,000 or $18,000? Basis in the loan is $30,000 or $18,000 or $12,000? If daughter transfers the loan into a C Corp (whether intelligent or not), the capital balance added to equity is $30,000 or $18,000 or $12,000?
  11. Edsel

    $500,000 NOL

    Ha! Guess what? Drake is inconsistent from 2013 to ultimately 2018, and technical support can't deal with it. So yes - a pen and ink returns, no fewer than 5 of them. Catherine and DanRVan: You'll be deliriously happy to know this. Yes, I am required to know what I'm doing, inside and out, during the process.
  12. Edsel

    Clock for 2013?

    We cannot file or amend a tax return and claim a refund for 2013 as it is beyond the SOL. However, 2015 is still within the SOL. If 2015 has a NOL, can it still be carried back to 2013 and an amended return filed for 2013?
  13. Edsel

    $500,000 NOL

    Thank you so much Judy. I have Drake, but the numbers aren't flowing because of taxpayer identity. I'm having to populate 2013, 2014, 2015, and 2016 in Drake although they were prepared by someone else. Some returns list the husband first, others list the wife, plus the husband died during the time interval. Very complicated returns, prepared by 2 CPA firms and a tax lawyer. Now ME. Thank you for specific answers.
  14. Edsel

    $500,000 NOL

    OK, please let me get down to specifics. None of the research material presented to me, nor the instructions, nor Pub 536, tell me how to enter the sense (+ or -) of the line items on Schedule A. For example: Sch A Line 1 Net Operating Loss Enter as a positive or negative? Sch A Line 3 Nonbusiness Capital Gains Enter as a positive or negative? Sch A Line 6 Nonbusiness deductions Enter as a positive or negative? Sch A Line 7 Nonbusiness income other than capital gains Enter as a positive or negative? Sch A Line 12 Business capital gains without regard to ยง1202 Enter as a positive or negative? Sch A Line 16 Sch D, line 16, loss Enter as a positive or negative? Sch A Line 23 DPAD Deduction. Enter as a positive or negative? Sch B Line 3 Net Capital Loss Deduction. Enter as a positive or negative? Sch B Line 5 DPAD again. Enter as a positive or negative? Sch B Line 6 Adjustments to AGI. Enter as a positive or negative? Sch B Line 7 Adjustments to Itemized Deductions. Enter as a positive or negative? Sch B Line 8 Personal Exemptions. Enter as a positive or negative? (I believe positive on this one) I realize I'm admitting my own ignorance here, but nowhere in the instructions nor pub does it disclose how to enter these. I was looking forward to seeing an example from Judy's link, but it has a blind link that doesn't work in my browser. The Drake link tells me how to navigate but nowhere does it answer the questions above, and Drake is inconsistent from one year to the next. One of these sources was gracious enough to tell me Sch A Line 25 must result in a negative. Thanks in advance to anyone willing to immerse themselves in the questions above.
  15. Edsel

    $500,000 NOL

    Judy, how do you know all this stuff?? If I tried to learn all this my brain would explode from overload. Thanks, Edsel