LindaB

In pub. 561, Determining the Value of Donated Property, it says you need an appraisal for art work valued at over $5,000. In pub. 536, Charitable Contributions, for contributions of property it says it is generally the FMV, and art work is not one of the exceptions. These are from pubs. for 2007 returns, maybe prior years said something different? (Taxidermy property is one of the exceptions for using FMV, the deduction "is limited to your basis in the property or its fair market value, whichever is less. .... basis does not include direct or indirect costs for hunting or killing an animal...")

It looks to me like it is not reported anywhere if the distribution is less than qualified expenses, as you said it is in your case.

There should be some info in Pub. 551, Basis of Assets.

I think Dan went back and edited his answer after I posted mine, his first answer was different and did not show the work.

If the problem of efile is with the federal, could you efile the Maine as a stand alone?

I'm not from Maine but I did go look at the instructions, I also did not see anything about including federal forms with a full year resident return, only with a part year return. I'm sure you would rather have somebody from Maine answer, but at least I can verify that you did not see instructions to include the federal forms. I would be inclined to not send them.

Did the student receive any tax-free financial aid, like scholarships or Pell grants? The total qualified education expenses have to be reduced by other tax-free assistance before you can tell if any of the 1099-Q distribution is taxable. Would they qualify for the Tuition and Fees Deduction, as the AGI limits are higher for that?

tail=8 head=24 body=32 total=64

It seems like it would have to go in the 'additions' part right under where you put the fed. AGI, but reading through the instructions for those lines, I don't see anyplace to put it. Maybe it doesn't have to be added back.

The price of 1040 Office Package went from $664 last year to $704 this year (with software processing or shipping charge), if I did the 10% early discount, I would end up paying a little less this year than last year.

There is a worksheet for foreclosures and repossessions in Pub. 544, 'Sales and Other Dispositions of Assets.' According to that, you would use the $20,000 as the sales price (lesser of FMV or debt canceled). There should also be ordinary income from cancelation of debt of $36,000 ($56,000-$20,000), I don't know why they said a 1099-C wouldn't be issued--maybe it will be in 2008. I would go ahead and report the sale on 2007 return.

Did the taxpayer get a 1099-A or C for the foreclosure? According to the figures you have here, debt canceled of $257,952 and FMV of $139,000, there should be income of canceled debt of $118,952. You should figure the basis of the property. The sales price is the lesser of the debt canceled ($257,952) and the FMV ($139,000). Using the FMV for sales price, if his basis is (just guessing here) $260,000, there would be a capital loss of $121,000. Was this the taxpayer's main home before he rented it in the middle of last year? From pub 908: "Determine your liabilities and the fair market value of your assets immediately before the cancellation of your debt to determine whether or not you are insolvent and the amount by which you are insolvent." As jainen said, you would figure insolvency twice, if he had two debts canceled. So again, did the taxpayer get a 1099-C for the foreclosure, or just one for the Visa?

Here it is, "Gee, talk about a day late and a dollar short ! No insult to you, Linda, but if you've been on the 'other' ATXCommunity board, you know that we've been busy all season, and we're providing the help that CCH refused to offer all year. I doubt if many of us will bother to come back here, especially since William is gone." KC

You didn't say what the $3000 of expenses are--could they be related to the pasture rent on the sch. E instead of the patronage dividend on sch. F? Another possibility is that form 4835 should be used instead of one of these schedules. KC is right that you need to find out how the client is involved with the farm and what his plans are for the new property.

There is some info. on page 177 of pub. 17 for rural mail carriers, also instructions for form 2106. I'm not sure what is in box 32, is it 'qualified reimbursement'? If so, it should be set up like an accountable plan, and therefore not included in wages on the W-2. If his actual vehicle expenses are more than the qualified reimbursement, then the total expenses go on form 2106, and also the reimbursement. If the actual expenses are less than or equal to the qualified reimbursement, do nothing. Rural mail carriers cannot use the standard mileage rate.

I can't tell for sure from this, but are you NOT including on the MA return the wages he earned in the other two states? I don't know about MA, but if he were a resident of MI and worked temporarily in other states, he would be taxed in MI on all of his income.

This is correct, you do a part year return for each state, and only include on each the income earned in that state. You should not have any credits for taxes paid to another state.

In the inst. for form 982 it does say that a taxpayer "can have only one principal residence at any one time." In a tax tips from IRS it said that this exclusion is only good for a taxpayer's principal residence, and not for a second home. This doesn't exactly address your situation, but I'm inclined to think that if the TP used the 121 exclusion of gain on the first house, then he was saying that the first house was his principal residence, so he couldn't turn around and say that the second house was his principal residence for the cancelation of debt. You could also look at insolvency and check box 1b (form 982) if the TP was insolvent, that would probably be more beneficial. I couldn't find on the form any requirement to add a statement proving insolvency, just check box 1b and include the amount on line 2.

I just quickly read through the instructions for form 982, and it looks to me like you just put it on form 982, and NOT also on line 21. It looks like you just mark box 1e and then put the amount of 'discharged indebtedness' on line 2. You may want to read through those instructions more carefully, to make sure your client qualifies for excluding this canceled debt.

According to a worksheet in pub. 544, you would use the smaller of the amount of debt canceled or the FMV, for the sales price. I would use the $180k for the sales price and $170k adj. basis and exclude the $10k gain.

Are you using the input tab for the Sch. D? Why do you say you cannot list all the stocks? Transaction type is not Personal Sales (8), it is (1). If you use (8), losses will not be allowed.

Taxpayer sold a house in 2002 on land contract. The house belonged to his mother, she gave it to the taxpayer and his wife in 2000, and they sold it in 2002 to the taxpayer's sister. The tax preparer who did the 2002 tax return said the taxpayer's basis in the house was zero, since his mother had given it to them. The gross profit percentage on the form 6252 is 99.45%. The first year I did the taxpayer's return was for 2005, by then he was divorced. He and his ex-wife split the income from the land contract and the property. I told him the basis in the house would not have been zero, that I could amend the 2002 and following years, but he didn't want to because it would have involved talking to his ex-wife. In Feb. 2007 the taxpayer gave his half of the property to his sister, for $10, when his half of the principal balance was $38359. Besides showing the two months worth of interest and principal payments on his 2007 return, what do I need to do? Do I show this as a sale on Sch D? His half of the basis from the original installment sale is only $211 (working back from the gross profit % and the sales price). Thanks for any help, I'm having a hard time thinking about this.....

Was any of the 40 acres tillable? Or was it swampy wetland, or forest? You might find out through a local farm bureau, feed mill, etc. if there is a real estate person who specializes in farm land, you might get some ideas there what the land itself would have been worth. I assume that prime farmland would be worth more than swamp. Also, is the house a 400 square foot shack or a 4000 square foot really nice place? That could give you an idea if most of the purchase price was for the house or the land. (I too live in SW lower MI)

Thanks, Pacun.

Thanks, OldJack