Edsel

Agree. It sounds like the gain occurred between the time of the established basis when consummated on the W-2, and the time these things were ultimately sold. And it should be a LTCG if the lapse was longer than one year.

For (obvious) Fresno State Tom and others: I often try to talk clients OUT of creating a 529 plan. The 529 plan was created by banks and financial institutions to appeal to loving and ambitious parents when there are other risk-free options available. Little Johnny is 2 years old, and parents (perhaps with delusions) look ahead 16 years and see a grown-up Johnny with a cap and gown walking off the stage as valedictorian. So they start a 529 plan with a smiling banker friend. Johnny is not the valedictorian, in fact he is a high school dropout with a joint in his mouth and dresses like a heathen. Presto! The situation Tom talks of has come to pass. Instead: create an UGMA (or UTMA) under your state law, put the money in an aggressive investment account under the kid's social security number. Don't tell Johnny you have funded the UGMA. Johnny has to have $1050 in unearned income before he has to report anything. My guess is that this will not happen until he is over 14 (unless there has been voracious funding). When he is 18, the risk is gone and the gifts may be retracted or used for education without any risk. All the accumulated income has already been taxed, thus there is no explosion of taxable earnings. There is never a tax on cumulative income, since the income in earlier years has been taxable all along, but below filing thresholds for the most part. It is amazing how financial institutions lure people into tax-deferred vehicles, when the taxpayer believes in his own mind the income is tax free. Tax-deferred vehicles are not tax-free, and as often as not, when they become taxable, the tax bracket is higher than when the deferral occurred. Tax-deferred accounts such as IRAs, SEPs, and 529s also lose the tax benefit of capital gains which can occur within the account, and the "gains" ultimately suffer the fate of ordinary income. Nowadays capital gains can be taxed at zero (up to a point). The same argument applies to the classic scheme of investing in US Savings bonds for children and when they mature - instant slug of taxable interest. Recognize the interest as it is earned instead of lump sum, while the kid is too young to incur taxable income. Fresno State Tom - more than you asked for, and perhaps more than you cared to read...

A very familiar problem. Taxpayer doesn't want to pay for a competent appraisal, so he ends up with a half-baked, quick-and-easy number that is free. Most of these guys have been told they needed one, or maybe they haven't. The result is the same -- they're not going to pay for one. "Free" is worth every penny. Commonly used is a realtor's appraisal (almost always too high) or tax assessment (almost always too low). To answer the question (and to reference Danrvan's observation), the appraisal should be consistent for all purposes (except alternate value arising from farming usage). Ongoing consideration is the three-year statute of limitations when an estate, trust, or personal return is filed. IOW, after three years, the IRS will not attempt to adjust the value no matter how ridiculous. I believe we can assume that the taxpayer cannot change the appraisal for purposes of an amended return after 3 years either.

Rich, I expected this kind of banter when I posted, and knew there would be numerous dislikes and thumbs down. My position doesn't change. Be happy that the noise-makers are on your side.

Thank you Judy. Your knowledge and willingness to take the time to share is commendable.

I shoulda waited to post this, or simply tacked it onto the other thread (which has somewhat degenerated). I had the appointment and now have another perspective on just how complicated this has become: Facts: Couple's AGI is $95,000. Some 10-12 years ago, they did pay $120,000 for the home. FMV of the home just before the accident was $250,000 (not at all unusual in Nashville area). Insurance proceeds were $170,000. Same scenario as the example below. However, to spice up the problem, taxpayer lost contents, replacement value $50,000. Original cost was $35,000. Since the furniture was not new, FMV had to be less than cost. FMV was $25,000. Insurance company replaced 80% of the "depreciated" value, or $20,000. NOW, what is the casualty loss/gain, and how is the loss/gain to be reported and taken? Our first thought is to calculate the real estate and the contents as two separate calculations. However, remember that it is ONE casualty event, and not TWO. If we are to report two events, the 10% throwout will have to be applied twice. If this is only one transaction, the aggregate numbers are: Cost: $155,000. FMV immediately before the casualty was $275,000. Insurance reimbursement was $190,000. According to this the "gain" is $35,000. Is this even correct? and if so, does the gain qualify for sec. 121 exclusion? Judy, you're good and are invited to the "reply" party along with anyone else who cares to offer an answer.

Sorry Judy, I didn't realize this was a vote for some kind of star. I didn't really expect a chorus of support from anyone, especially wimmin folk. Obviously, I'm not trying to win anything - wouldn't know what to do with it anyhow. I'll stay out of "star" threads hitherthence.

Beth, I'm not going to defend for a split second your hand-wandering client, but I'm getting weary of society trying to find the latest and greatest persecuted group to make news about. This stuff has been going on for centuries, and although that doesn't make it acceptable, it will continue long after society/press has moved on to yet another persecuted group. It has been my observation that 75% of female population has at some time experienced lewd behavior from men, and the other 25% wish they had. I wonder how most of them would feel if men in the workplace started ignoring them. Of classic irony are the sanctimonius "me-too" women on TV awards shows half-dressed in low-cut and high split clothing. Either suck it up or if a guy "accidentally" does something, resort to an "accidental" slap in the face. This has usually worked for years and years. From an old-school, politically incorrect guy who is out-of-step with the times. NON-VOITNG POST

Gail, if this is a one-man show, I would totally forget about any tax obligations to Tennessee.

Thanks to all. Not surprised, as this is what I learned long ago in my foggy memory. Makes me wonder why the 4684 asks for "Fair Market Value immediately before the Casualty".... any idears?

This is a minimal amount, and the crew was probably not in the state to create a requirement. However, in a multi-state allocation, if the S-corp created a payroll in Tennessee, or accounts for destination sales in its allocation, there could be a requirement. Additionally, Tennessee would not require a K-1 to non-residents since Tennessee does not recognize S corps. Even if Tennessee were allocated some money, under no circumstance would any shareholder be required to file a Tennessee return, as there is no personal tax here. However, the allocated amount would require a C Corp Tennessee return (it's called a Franchise and Excise Return), as this state does not recognize tax-free S Corporations.

Situation: Taxpayer's AGI in 2017 is $110,000. Taxpayer purchased house in 1995 for $120,000. House was totally destroyed in 2017 by fire. Insurance reimbursed $170,000. Fair market value immediately before the fire was $250,000. Home will be replaced at a cost of $275,000. Question: Which of the below describes the situation Gain is $50,000, computed at $170K minus $120K. The gain will be added to the basis of new home. Loss is $80,000, computed at $250K minus $170K. The loss will be subtracted from the basis of new home. Loss is $80,000, computed at $250K minus $170K, but the loss becomes a tax preference item for AMT. None of the above. I realize this may seem like an elementary question to some of you, but I'm really not ready to read the 150 pages of code, regs, or pubs that apply. Thanks in advance - Edsel

I have always thought SSI was non-taxable. Even so, if a recipient receives non-taxable SSI benefits, will (s)he nonetheless receive a SSA 1099 anyway?

Did the deduction for tuition get revived in the extender bill that passed earlier this month?

Hi Rich, $4333/mo is too high (probably at least 2X), even in Nashville. Looking for deductions.

Sorry, Illegitmas, not looking for the "official" IRS Pub, but interested in finding deductions to relieve this ridiculous SE liability. Thanks for responding though...

I have a W-2 with a ridiculous (in my opinion) Housing Allowance for a Minister. $52,000. The church is in wealthy suburban Nashville and has numerous CPAs available to be on the staff issuing W-2s. I'm assuming they are all competent. The "Taxable" income on the W-2 is only $3105.00. What sort of expenses are allowed to be deducted from the Housing Allowance for SE tax purposes? I'm assuming all professional expenses, mileage, etc. but I'm wondering if any true housing occupancy expenses are allowed as well. I've seen some large Housing Allowances, but nothing like this.

I have a client with a half-dozen rental properties. Proceeds from HELOCs were used to fund many of these. I have been deducting the interest on these HELOCs against rental income, and believe it has been proper to do so. I'm told HELOCs are not treated kindly with the new tax law. However, do the new restrictions apply to HELOCs used for businesses? What if a couple of the HELOCs were used for business but were collateralized with the personal residence?? Please address the question on its face value. It is easy for one to let the imagination run wild and wonder whether it was wise to borrow this much money and how this could turn into a horror story. Keep in mind that in booming Nashville, a home may be worth 3X to 4X of its value 15 years ago.

I am a long-time member of the TTB board, and it was maintained by great people for long time. TTB is a great family-owned company and I buy their products every year. In the last couple years, some of the new people are downright rude, ugly, and hateful with their responses. Many of the favorite people on this forum are refugees from TTB and are now free from the scowls and sarcastic statements that happen over there. The TTB board has rules about personal attacks, but the remarks are so truncated and generic that really nothing can be done with them. I hope none of those people find out about this board. If so, I would support getting rid of them.

More and more documents are not being sent to clients, except via electronic means. Seems like no one wants to go to the trouble to print out, stuff, and pay postage. If this causes problems for anyone else, they don't care. The rest of us are told to "move into the 21st century electronic age - this is the new world." God forbid they should print these out so I can look at them. I'm getting so sick and tired of clients scrolling through 350 pages of telephone messages to find 1098s and 1099s, inquiring at a website and having to ask the wife if she remembers the password, and having to look at a screen with partial information. Had a new return tonight and spent three hours with them. This could have been completed in half the time. I billed them for the full 3 hours, much of which was spent waiting on them to dig up information from electronic sources. They didn't have the first document, not even their W-2s. I told them how to save on my hourly fee next year. I'm so sick of this I've decided not to give breaks on my time.

Is it possible that on a joint return, one spouse can claim the AOTC and the other claim the Lifetime Learning Credit?

If indeed I have a vote, I would vote in favor of listing mortgage insurance along with all other expenses for home office percentage. Just because it is not allowed on a schedule A anymore doesn't mean it isn't an expense. You can't deduct insurance, utilities, repairs, etc. either on a Sch A but they are allowed to apply a percentage for home office deduction.

"This Fall, Fire 'em All!!" Idiots!!

Of course. I'm not sure that is the same as the ACA registration # the insurance company has to furnish with the 1095-A.

First Return - but it is a paper return. So many hooks and snags preventing e-filing, plus insurance company told taxpayer they were NOT going to issue a 1095 before March. The exchange policies require a policy number under the exchange, so no way ANYONE (Drake or anyone else) was going to allow e-filing. The customer, totally disgusted, and I agreed to file a paper return. They owe $$ so no refund is held up.