EricF

Tax reform made a change for farm machinery to have all machinery that is new to the taxpayer, even if used in the past by someone else, to a 5-year life.

Qualified property comes into play when the taxpayer's taxable income is over the threshold of $315k on a joint return or $157.5k on a separate return, and the deduction becomes limited to a percentage of W-2 wages or a percentage of qualified property plus a percentage of W-2 wages. Qualified property is the unadjusted basis (before any depreciation or Sec. 179 deduction) of depreciable property in use at the end of the taxable year. Fixed assets used in the computation are those whose depreciable life is still in effect. For this purpose, an asset 10 years old or less is considered to still be in its depreciable life. There are special rules for assets that came into the business through a 1031 exchange or where there is a Section 743 basis stepup in a partnership. Most taxpayers don't have to worry about the special rules.

Glad you found a way to fix it. I have had to do the same thing with EF Info forms that ATX sometimes thinks is 2019 rather than 2018. The parade, by the way, is likely the Patriots Day parade held in Boston on Monday, April 15. With Massachusetts and Maine observing that day, and DC observing Emancipation Day on Tuesday the 16th, MA and ME get an April 17 deadline.

1040 ES is not electronically filed with the IRS, so why should ATX care what the form or instructions for the vouchers say?

That's not the way it works for me. If your software is making you do that and you're sure you're getting the right result, fine. But at upper income levels, whether in the phaseout range or above that range, you will get a different QBI deduction if it's a service business rather than a regular qualified business.

Yardley CPA, check "qualified business" but not "service business" on the Activities tab. The QBI should flow from there to the Net Qualified Business Income tab for your activity, and then to the QBI Deduction tab for your activity. All QBI from all activities is summed up on the QBI Deduction Summary tab and the deduction is computed there. The number on line 6 on that tab flows to Form 1040 page 2.

Today's update has the 1040 comparison. It looks pretty good.

Yes, ordinary income from sales add in, but not Sec. 1231 gains or capital gains.

Sounds like you got it, except: 1. The services trade or business tab is used only for Specified Service Business. Farms are not on the list of Specified Services, so it should follow the normal rules, and nothing would appear on Services tab. P.S., you're not trying to use that for the W-2 income, right? W-2 income does not qualify as QBI. 2. If your client has adjustments to income, such as 50% of self-employment tax, self-employed health insurance, or self-employed pension, you must reduce the amount from Schedule F by those amounts and enter the net amount on the Activities tab of the 199A Worksheet.

Part I is Sec. 1231 gain or loss, with gain treated as capital and loss treated as ordinary. Part II is ordinary gain or loss. Part III is property sold at a gain where depreciation has been claimed, with potentially different treatment for past depreciation claimed.

The safe harbor can apply for 2018, and the contemporaneous records requirement will not apply to taxable years beginning before January 1, 2019. Since the safe harbor statement requires a signature, it needs to be attached as a PDF.

I do not believe ATX has provided an aggregation option in its Sec. 199A Worksheet, nor an automated aggregation election, so I think we will need to do the work on our own. I suggest working up your own aggregation of trades or businesses separately in an Excel spreadsheet. Choose which of the aggregated businesses you wish to report the numbers from the aggregation on the Activities tab of the Sec. 199A Worksheet. Enter the aggregated QBI, W-2 wages, and unadjusted basis on the line for that business. Do not check the other activities included in the aggregation as Qualified Businesses, and their numbers will not be separately included in the QBI calculation as if they were not being aggregated.

See my detailed instructions in the pinned discussion QBI INFORMATION - Law Analysis and possible ATX entry tips

The statement must be attached to the return for the year in which the safe harbor is applied.

I agree that the regulations are worth being familiar with. However, this latest release does not provide additional information about rental property or REIT dividends. This information was in the regulations released earlier.

I couldn't find it in ATX, so I guess you would have to add it as a blank statement. The statement is simply that the requirements in Section 3.03 of Notice 2019-07 have been satisfied. The statement must be signed by the taxpayer, or an authorized representative of an eligible taxpayer or Relevant Passthrough Entity, which states: Under penalties of perjury, I (we) declare that I (we) have examined the statement, and, to the best of my (our) knowledge and belief, the statement contains all relevant facts relating to the revenue procedure, and such facts are true, correct, and complete. The individual or individuals who sign must have personal knowledge of the facts and circumstances related to the statement.

Treasury released corrected Section 199A regulations today. In my view, the edits are very minor with no substantial changes to what we have been working with. If you have excess section 743(b) basis adjustments, you may want to review the changes to make sure you are applying the latest calculation method. https://www.irs.gov/pub/irs-drop/td-reg-107892-18-corrected.pdf

From the Form 1040 instructions, page 24, the SSN can be obtained by the due date of the return, including extensions. If the children are eligible for SSNs, they should apply right away, and the client should file an extension if they don't receive the SSNs by the due date of the return.

Yes, I did. The support person said she would pass it along, and didn't know if they were already working on that change for the next update.

I neglected to say that, as in past years, the minimum franchise tax is $200. That has not changed. The annual report fee is no longer paid to the North Carolina Department of Revenue on a tax form. Filing with and paying the North Carolina Secretary of State is the only option for paying the annual report fee.

The calculation of NC franchise tax for S corporations has changed, effective for 2018 returns paying 2019 franchise tax. (North Carolina franchise tax is always prospective.) The former law applied a rate of $1.50 for every $1,000 of taxable value. The change is to have a $200 franchise tax for taxable value up to $1 million, and $1.50 for each $1,000 over $1 million. The ATX returns are not applying the new rates, so if you want to file an S corporation return, you need to compute and override the franchise tax in box 5 on page 1 of Form CD-401S. I have contacted ATX support and asked them to pass the information to the developers.

For the following discussion, I assume that the taxpayer remains a U.S. citizen while she is a Canadian citizen. To be able to take the foreign earned exclusion on Form 2555, the taxpayer must meet either a (1) bona fide resident test, or (2) physical presence test. Under the bona fide resident test, the US taxpayer must be a bona fide resident of Canada for a full calendar year. She can apply first in 2019, and if she does, her bona fide residency period can extend back into 2018. If you need a full 2019 to qualify, you can request special extensions to file the return by January 31, 2020. Under the physical presence test, the US taxpayer must be outside the US for 330 days out of a 365-day period. If she is in Canada not returning at all to the US, you can probably find such a period beginning in July 2018. You would need to extend her return until after the qualifying 365-day period ends in 2019. If the taxpayer doesn't meet the qualifications for income exclusions, she can claim tax credits on her US return for Canadian taxes paid.

From Publication 970, Can You Claim the Deduction? Generally, you can claim the deduction if all of the following requirements are met. Your filing status is any filing status except married filing separately. No one else is claiming an exemption for you on his or her tax return. You are legally obligated to pay interest on a qualified student loan. You paid interest on a qualified student loan. I think your response is right if the student is the only person legally obligated to pay the interest, but if the parent is legally required to pay, and does pay, he meets the requirements.

Input of the numbers is simple, but deriving the numbers is the devil in the details. Section 199A income - You have to adjust the ordinary income from the business by items on Sch K, such as charitable contributions made by the business and the Sec. 179 deduction. Section 199A W-2 wages - There are numerous methods for coming up with the number, but I think the easiest one producing the largest number is Box 5 of Form W-3. Section 199A unadjusted basis - You can't use assets older than 10 years old unless they are still being depreciated. You have to include only depreciable assets. If any assets are in the business through like-kind exchanges there are special rules, and if a partnership has increased basis through a Sec. 754 election you can't use that.

You have to use the interest tracing rules. If you refinance for a higher amount, you will need to know how to treat the additional borrowing. The refinanced amount up to the amount of the old loan that was refinanced continues to be treated in accordance with what the old loan was used for.