Jerry W

I have a client whose 9 yr old daughter received a structured settlement from a car accident. One of the items of the settlement included an amount given to her father, my client, for allocated loss wages and medicals costs during her stay in the hospital. He did not receive a 1099. After researching this income-I believe it is not taxable. So my question is: Do I disclose this information on his return by filing a 8275

or do we try to sort out wages from medical and report wages as other income?

Lloyd,

I believe pages 31 and 32 of Pub. 525 may answer your question.

Jerry

I have a potential client who appears to be tax preparer shopping.

She purchased her mother's home about 10+ years ago for $1 and allowed the mother to remain living there. They executed a "Life Tenancy Agreement" (LTA). Dont know who paid the bills but the client didn't live in the house with her mother. In 2009 the mother passed away and they subsequently sold the property and now she wants to know what is her basis in the property.

My interpretation is that since she purchased the property for $1 it was actually a gift and the $1 is her basis. Therefor all but $1 of the proceeds from the sale of the property will be a realized gain.

She claims that she has consulted four CPAs and called the IRS twice and has received mixed answers.

She maintains that since there was a LTA in place, the property was the mother's residence and that the address was listed on the death certificate, the transaction should receive a "stepped-up" basis as of the date of death similar to if she had inherited the property. She claim's the LTA is the key to this.

I can find nothing to show that her position is valid. Does anybody know if the facts here (LTA , mother living there, address on birth cert.) support her claim?

Thanks

Property rights are generally determined by state law. I'm not familiar with "LTA". In our state (Tennessee) when property is transferred but the transferor retains property rights (occupancy, rent etc) during his/her lifetime, the transferee has a remainder interest. IRC Section 1014 addresses this.

Hope this helps.

JerryW

Catherine,

According to IRS, they want you to use the most current version of Form 656. I believe this is the March 2009 revision.

Merry Christmas,

JerryW

I can understand the lack of clarity as to whether the sales tax deduction applies only to new vehicles. It may be another "back door" way that IRS gets to the conclusion that it applies only to new vehicles. A "qualified motor vehicle" from the House Bill of January 9, 2009 provides this definition:(D) QUALIFIED MOTOR VEHICLE.—The term ‘qualified motor vehicle’ means a passenger automobile (within the meaning of section 30B(h)(3)) or a light truck (within the meaning of such section)—

“(i) which is acquired for use by the taxpayer and not for resale after November 12, 2008, and before January 1, 2010,

“(ii) the original use of which commences with the taxpayer, and

“(iii) which has a gross vehicle weight rating of not more than 8,500 pounds.”.

Section 30B(h)(3)refers to "ALTERNATIVE MOTOR VEHICLE", which seems to refer to "new" vehicle.

Typically confusing language.

Thanks to all for the birthday greeting.

JerryW

I have been working on this one and going in circles. I would appreciate anyones thoughts!

My client abandoned their home (Prior to doing so they purchased another home where they now live) In August of 08 their home was foreclosed upon and they received a 1099-C. The figures on the 1099-C are as follows:

Box 2 amount of debt canceled $393,534.71 (of which I verified from lender's statement to be the actual amount owed at time of foreclosure).

Box 7 FMV of property $416,748.00 which exceeds the amount canceled. My client challenged the FMV value as other homes in same condition and size are selling for less than $200,000.00 but the mortgage company says they will not change the value.

My question is that because they are claiming the fair market value is more than the amount cancelled, do my clients have to include the cancelled debt as income? It seems to me that by the mortgage's own admission the property has more than paid the former debt.

Again I want to emphasize that my client's year end summary clearly shows that the total amount due on this loan at time of foreclosure was in fact the $393,534.71. So therefore adding the box 2 and box 7 would be incorrect. By the way I am absolutely sure of this as I have every closing doc, ect... from the time they purchase the home, all of it's refinances, ect... up to the day of the foreclosure.

Second question: If there is no cancellation of debt for my clients to claim, how do I handle this 1099C? Do i ignore it other than reporting the sale or do I need to do something else to show IRS that we have acknowledge the info?

Thanks to all who may respond!

Deb!

Deb,

This link may answer your question.

http://www.irs.gov/irs/article/0,,id=179073,00.html

JerryW

Sorry Jerry, I have been out of town and just now saw your post. Form AL40NR cannot be efiled. If he is filing both a part-year and a nonresident return, both the total personal exemption and the dependent exemption must be claimed on the part-year resident return. No exemption can be claimed on the nonresident return. In Alabama, social security, defined benefit pension plans, and government retirement is not taxed and does not have to be reported; so he may not have to even file an Alabama return. If I can be of further help, let me know.

Gene

Gene,

Thanks for your reply. I think I figured it out. The AL40 provides for allocation based on part-year resident. I was simply misreading the instructions.

Thanks again,

Jerry

I have a client (MFJ) who moved from AL to TN May 31, 2008. They have wages of $81.00, total interest income of $8255.00 and pension of $15184.00. They also have SS which per AL instructions is not to be reported. The instructions seem to say I must file both AL40 and AL40NR plus Schedule B,CR,DC. The AL40 shows no tax while the NR shows $78.00. When I piggyback the AL return for efiling, it shows only the AL40 as the filed form. Is this correct? I may be missing something. The client has not TN filing requirement.

Could you comment on this AL return?

Thanks,

JerryW

That's correct. Deduction for 179 does not reduce partnership income since it is passed through to the partner(s). On the other hand, section 179 deduction for a schedule c is taken into account in arriving at the net income for SE.

JerryW

Back when this string was going, Kerry emailed some of us the pdf factory software.

I somehow managed to delete mine and now I want to install it on antoher computer.

Does anyone have a copy they can email to me?

Thanks

John,

Send me your email address and I will send the pdf factory setup file.

JerryW

Does anybody use an Internet Fax Service? I would be interested in the site, your experience and how it works. Thanks for the help.

Mike

Mike,

I use Trust Fax for receiving. I send everything from my computer. Based on my monthly receive volume, I get by with the $4.95 plan, including a toll-free number.

Here's the link: http://www.trustfax.com/free_trial_30day.a...CFRUdsgod7XLPjw

Hope this helps.

Jerry W

My guess is that it depends on the organization's tax exempt status and whether the 501© section permits deduction. I took a look at Guidestar and could not find "Union's Health & Welfare fund". That seems like a generic name. There are several union organizations that have health & welfare funds. If you can be more specific with the name, I can check further.

Jerry W

I took another look and found that most on the union health & welfare funds are 501©(9) organizations in which case contributions are not tax deductible. Hope this helps.

Jerry W

Are Union members contributions to the Union's Health & Welfare fund deductible?

My guess is that it depends on the organization's tax exempt status and whether the 501© section permits deduction. I took a look at Guidestar and could not find "Union's Health & Welfare fund". That seems like a generic name. There are several union organizations that have health & welfare funds. If you can be more specific with the name, I can check further.

Jerry W

I believe may take the $735.00 to offset the income, then depreciate the remaining $2365.00.

Jerry W

You may use any five digit PIN except all zeros. This should satisfy the software.

Jerry W

I believe KY is piggyback only for 740 full year, can't efile non-resident or part-year 740NP.

Bill

I thought that might be the case but wasn't sure. Thanks for the confirmation.

Jerry W

I have Fed 1040 plus State returns for NC, SC, VA and KY. Created EFile with NC piggyback to Fed. Also created State only for SC and VA but can't create KY. Any ideas why KY EFile won't create.

Thanks for any ideas.

Jerry W

I efiled 1120S's for two different corporations. Both were accepted but no DCN is showing in Efile Manager. Is this normal, or should I be concerned.

Thanks,

JerryW

client sold the assets of a business allocated $300 goodwill, $500 inventory $100 fixtures $600 leasehold.

My question is,is the sale of the lease ordinary or capital gains?

Pub. 544 may help answer your question.

Jerry W

Use 1099-R. If the taxable amount is not already calculated, use the bottom part of 1099-R to figure.

Jerry W

Folks, you know that I do like some 'chatter', jokes, etc. here, and from time to time contribute a joke, puzzle, etc. But I have to say that as the work load gets heavy, I'm finding it a bit hard to find time to read the board for all the clutter of posts that really do not contribute anything but a 'yeah, I agree' or a run-on of a joke that has already gotten old. Please, could we cut it back just a little bit? I'm not saying it does not have a place, it does. But too much of anything spoils it.

And especially, with all the sarcastic meaningless replies to sincere questions. Please, if you don't like a question, just skip it, OK?

Thanks, you're doing precisely what a moderator should do. Right on!

Jerry W

Hello Everyone,

I remeber when I worked at a gas station, had one W2,

and did my taxes with a booklet from the library in 20 minutes

My wife's W2 has a number in box 12a, with a Code of S (employee salary reduction contributions under a section 408(p) SIMPLE - not included in box 1).

Her wages and SS wages differ by the amount in box 12a.

Do I include the amount in box 1 when entering the information on the W2 worksheet,

or the amount in box 1 added to 12a? Do I have to do anything special with the number in 12a?

Thanks!

Ker....I mean Monkeyman

The amount in box 1 is what is entered on the worksheet. The amount in box 12a is the amount sheltered from income tax.

Hope this answers your ?

Jerry W

I just got off the phone with ATX regarding the QuickBooks W-2 import problems. They had me run trial balance report which is supposed to format the reports in .CSV. However, that didn't work either. They did admit there was a patch launched last week to fix the errors with the import and it didn't work. They are working on a fix still and promised to call me tomorrow hopefully with a fix.

Also, I called HSBC and all checks and applications began mailing on Jan 4.

Topic was supposed to be W-2 import problems. Sorry I don't know how to change it

Terry D.

Terry,

Thanks for the W2 problem update. I was getting ready to follow up on my upload but I'll just wait and see what they do.

Jerry W

Jerry, I use this feature every year and will be importing the W-2 information from some of my clients this weekend. I'll let you know how it goes. I hope this isn't a problem either.

Terry D.

Terry,

I uploaded a W2 text file to ATX last night and asked them to determine why the employee SSN, employer trade name and city, state and zip are not being imported. They are to send me an email. I'll post their reply when I get it.

Jerry W