GingerM

"He had to pay broker's fees to rent an apartment.   Would this be deductible?"

Is his office in his home? If yes, then a portion of the broker fee may be deductible.

I only use when needed. I do check the 3rd party designation box on each return.

I contacted the legal department of WK yesterday via email. They did reply - they recommended calling the 800 # and looking at the articles.

Do we need to contact each client to let them know this happened? For tax year 2018 only or previous years, too? ATX only or payroll/1099 clients as well?

Thank you again. I learned alot from all of the comments made. My client will be meeting an attorney next week. 

3 hours ago, Lion EA said:

So father "rents" home from son for mortgage payment cost only, so probably less than FMR. Then father sublets home on the open market. I take it father is not your client? If so, he has US-sourced income and must file. If son is your client, he has related-party issues in renting to his father for below FMR. I think that means he cannot claim losses, right? And, please tell them to work with a lawyer versed in rentals and NRAs.

Interesting take on the situation - I hadn't considered a sublet. The father is not my client.

Thank you all for your help.

1 hour ago, Evan S. Golar said:

"Father never lived in the home"  Really? In your opening post you say "he began renting the home late last year".

Which is it? Seems like the facts you present contradict each other.

Did he pay the rent for the son who lived in the home?

Then he's gifting money and perhaps a gift tax return is due if he exceeds the annual exclusion.

Yes your client needs to report the rental income.

The home was purchased as an investment and a place for his other son to live in while attending college and did not charge his son rent. He began renting it to an unrelated party. It is difficult to have a mortgage on real estate in the US when you are not a resident alien. That is why the loan and deed are in my client's name.

1 minute ago, DANRVAN said:

Sounds to me like client is the owner of home purchased with gifted money.  Maybe intent was to someday quit claim deed to father?  Is father now living in house and covering  mortgage?

Father has never lived in the home but his other son has. Buying real estate in the US with a mortgage is difficult when not a US citizen. I will ask about the quit claim deed.

As explained to me by the son. Father is not a citizen making purchase of real estate difficult in US. Property is titled in son's name and money gifted by father to pay mortgage. My client does not live in the home but his brother did until it became a rental. The lease is in the father's name and he receives the rent. He still gifts money to my client to pay the mortgage.

Deed and mortgage in my client's name. He is a resident alien. His father (a resident and citizen of Brazil) "technically" owns the home. He "gifts" my client money to cover the mortgage. The father began renting the home late last year. I believe my client needs to report as a rental on his tax return. Am I correct?

Wondering if they were hacked.

I called and a recorded message said the same - "unscheduled maintenance". I wasn't aware of a FB page. I will check that out.

47 minutes ago, BulldogTom said:

If you were in CA, they would be tracking that exchange and be looking for the gain to be paid to CA from the original deferral.

Tom
Modesto, CA

Thank you. I will research to see if NY has clarification.

You are correct Abby Normal however, my question is regarding the states. NY tax should only be paid on the original gain not the current gain, correct? That is how it would have worked if the gain had not been deferred in 2011.

Client sold rental property that was purchased in an exchange. The original property was sold in NY in 2011 and all gain was deferred by replacing with property in AZ using a 1031 exchange. Do I allocate the gain on NY to the original gain? The gain will be about $1M - $740,000 from the NY sale and the rest on the AZ property.

I had a similar situation earlier this year. I explained the differences between F8919 and Sch C. My client decided to pay both halves so Sch C was filed. This was NOT eligible for S199A.

I have never done this but what happens when you click line 12 "check for real estate professional" at the top of the schedule e data input screen?

I have that grateful the client kept the paperwork!  

There will not be a replacement property - they are cashing out. The property being sold was the replacement property. Form 8824 was filed several years ago.

In all my years of practice I have never handled the final sale of a property obtained through an exchange. Until now. Is it really this simple? 
740,000 value of replacement property 
(740,000) deferred gain 
0 basis 

The gain is the taxable sales price less closing costs.

ATX has stated they are working with IRS to resolve this issue on the other community board.

IRS defines net earnings as income less expenses. If less than $400 you do not have to file. This cannot be correct. If I have a 1099 for $10,000 and expenses of $12,000 by definition of net earnings I would not need to file. And yet, because the 1099 is more than $400 IRS would send a letter. Am I correct?

Thank you for your reply. I just finished the Sec 100A with Final Regulations course at Compass Tax. EXTREMELY helpful and I learned a lot. 

I am so confused on where shareholder wages play a part in QBI. 

1120S K1: V 121,482 W 1,180,664 (officer and employees) X 78,663

Form 1040: Do I use the amounts from the K1? Do I adjust for the owner W2s somewhere? There are 2 owners.