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Sara EA

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Everything posted by Sara EA

  1. Who exactly is going to claim the deduction? The estate cannot claim the deduction, because it can only deduct donations that come out of income and then only if the will specifies. The "family" is how many people? Do any of them even itemize? This query may be all sound and fury that ends up signifying nothing.
  2. The 1120 should be filed with income/expenses until the date of death. After that, it's a 1041 because the estate is now running the business. The estate can adopt a fiscal year, which in your case will end June 30 2022 if that helps.
  3. Yes, she has to file a gift tax return. No consequence unless she's already gifted her $12M lifetime exemption. She can spread the gift over five years, but no point in that since there won't be any tax. I don't think a 16 year old can legally own a car, so it would be in your name anyway.
  4. I was so proud of myself after putting in a new shrub bed--spent a few weeks visiting local nurseries picking out just the right plants, then supervising hubby digging the perfect holes, adding the good nutrients, mulching, etc. Abby clearly outdid me in square footage and money and effort spent! And you can't just sit back and enjoy. New plants need deep watering, especially in this unseasonably hot weather. I've been spending a good half hour twice a week on watering, surely eclipsed by the amount of time Abby has to spend. Isn't it nice to have projects that go beyond measuring how many inches were reduced off our stack of paperwork each day? Randall's photo reminds me of our yard in CT when the tornado came through.
  5. The key question here is whether the owner has "power of appointment," meaning she can change the terms of the agreement. If so, she didn't really make a gift of a current interest so the proceeds of the sale go to her. If she had no power of appointment, there should have been a gift tax return filed. Based on her age at the date of the gift, use IRS tables to determine the value of her interest and the remainder interest. I'm not sure, but I think you have to calculate the value of what's left of her interest when the house is sold using the same tables and the ORIGINAL value (I'm sure of that part) and her new age. The transferees essentially have to buy out her remaining interest by paying her for it. She may be eligible for the 121 exclusion but anything they receive above their basis is subject to cap gains tax. Answer to your specific question: She is gifting a home, so basis is always her basis just like any other gift. If she held power of appointment, she gets the proceeds and the 121 exclusion. If not, she gets her piece and the transferees have cap gains on their piece.
  6. I have a client who lives in another country whose return was rejected because of lack of IP PIN. He never knew he had one (thinks his mom applied for everyone in the family). I sent him the link for the "retrieve your IP PIN" at the IRS website, and within 15 minutes he had it. He's computer literate.
  7. The CPA firm I work for in CT has decided that the new minimum is $350, but in reality that can only apply to new clients. I have many long-term clients who are paying $225-275 for returns that aren't hard to complete, and a few really easy ones that are $150-200, so it would be shocking to them to boost their fees that much. From time to time we raise fees across the board maybe $10 or so, because costs go up every year, especially software. (An accountant who came to us from a neighboring town says his company raised fees 10% a year, and their minimum was $750.) The majority of my clients pay way more than $350, and I raise those fees if complexity increases one year from the prior. You also have to consider how much off-season attention clients demand. Clients who pay $1-2k often contact me multiple times throughout the year, which is fine. The $275 clients who contact you once a month deserve a big fee increase. Obviously, pricing is subjective. It's easier for me to price estates and trusts. Minimums are $500 and $450, respectively, and the fees increase with complexity and number of K-1 packages. Knowledge level simply has to play a part too. It takes time to learn to complete FBARs, foreign earned income exclusion, crypto, and the ever-changing landscape of business credits. Clients should pay for that, even if we've become so good at them that we can just whiz through.
  8. I have three clients right now who have to file 1310s. All are anxious to get the decedents' final returns filed so they can finalize everything. One thankfully will not have a court-appointed fiduciary, which means we can efile. I'm still waiting to hear from the others on this issue. If there is a court-appointed rep, no efile, and those refunds will take forever. These poor folks might be able to make final distributions in 2023 if they're lucky. The TIGTA's recommendation that more forms become efile-able is spot on. If I can attach pages and pages of crypto transactions, why can't I attach a PDF of a court appointment???
  9. Maybe time to consider an alarm company. If the alarm going off doesn't scare tntruders away, the police are also notified. It will cost you but might be worth it in peace of mind. I don't know your building set up, but maybe the whole place can be alarmed and the tenants can split the expense.
  10. I've been dedicated to planting a new bed of shrubs, visiting many local nurseries to find just the right plants. This is our third spring in VA, but covid hampered our explorations the first two. It's so fun to find these wonderful places filled with gorgeous things just wanting to grow and be happy. Oh, and I've been ignoring the 50 or so returns I have on extension. I did manage to get my own done. VA was due May 2. To my dismay, first quarter estimates were due May 1, so I guess I'm late on that one. (Still trying to get the hang of their odd deadlines I'm not used to.) Oh well, the shrubs I've planted so far look wonderful, and I feel somewhat human again. Sure beats staring at a computer all day and responding to phone calls and emails. What a little manure won't do!
  11. mc is correct, the estate will pay tax on the money it kept. It may have some deductions though, like probate or attorney fees.
  12. I finished a return today that was on extension. Turns out the client owes IRS $6. With IRS interest rates so low, she might have 20-30 cents interest. I was going to tell her she likely won't hear from IRS, but now I'm not so sure. I think it's PA that doesn't bother if you owe less than $3. IRS usually works in whole numbers, so we'll see.
  13. Dan is exactly right. Only depreciation claimed in excess of straight line would be subject to recapture. Since this taxpayer always claimed SL, no recapture. The depreciation claimed does reduce basis, however, increasing cap gains. The Sect 1250 recapture would only apply if the client has prior or future year losses, which won't be deductible to the extent of the unrecaptured gain resulting from depreciation.
  14. Most of the time we just need a few pages of those lengthy consolidated 1099s, BUT sometimes we do. Today I worked on a client who moved back to the states after working abroad for a couple of years. I had to go through all 65 pages of that tome to pull out the income/gains paid while he was a resident of the state he moved to. I think the only times we really need the pages of dividends, etc. is for part-year residents of the states. Of course, there are those call and put options that appear near the end, and the "other info" sheet alerting us to the fact that a PPT K-1 should be in the mix.
  15. Good luck finding out if a scholarship can be used for tuition or other expenses. I assume most are only for tuition, with the exception of some athletic scholarships.
  16. Note what tax ID is on the K-1. Likely it's not the taxpayer's and doesn't belong on the individual 1040. If UBTI exceeds the limit, it's the custodian's responsibility to file the appropriate forms.
  17. Had a client yesterday who sent me back one signed 8879 and two others in a separate message unsigned. When I asked him to sign those too, he told me he didn't get them. Another client asked if he had to return the whole return after he signed it (the one I sent labeled "For your files" as distinct from the first message I sent labeled "Docs to sign and return.") Next year we are sending an IQ test along with the client questionnaire.
  18. The state allocation is based on where the services were performed, so you have to divide NJ and NY days. It would be a different story if he worked at home in NJ. NY has a rule about working at home for the employee's convenience counts as work performed in NY. Not the case here.
  19. I wouldn't bother with a Sch C if there are no expenses. Just Line 21 subject to SE. If the son is over 18 he may be eligible for EIC. If the credit won't calculate with just an entry on 21, you'll have to use C. If a parent is claiming him, it won't matter because no EIC, so Line 21 is simplest. The IRS won't care as long as it gets its tax.
  20. Was the prior year a Turbo Tax return? Clients don't know what to print so print the whole dang thing (125 pages from a client recently). I print what is important or informative, like 2-year comparisons, sometimes worksheets that show how much their qualified divs saved in taxes or how much of a pension wasn't taxed. When a client has an easy return like the one you describe, sometimes I'll print more so it looks like they got something for their money. On the other hand, if the return is already 50 pages, I may print only the 2-year so as not to overwhelm. I'm so buried in returns right now, I feel like just printing it all because it's easier than picking and choosing. I won't, but it's tempting.
  21. On Coinbase, you can print an 8949. I don't have the instructions in front of me, but we've had several clients do it. Usually we just attach it as a pdf to the return. I see so many preparers trying to take this on themselves. NO! The clients are the ones who did all this crazy trading, and it is their responsibility to give us the data we need in usable form. Problems arise when clients have multiple wallets. Then we suggest they buy the expensive software to aggregate the data. No way we can do that--it would take a week for one return. When you tell them that they have to do it, mention that if you did it the fee would be in the thousands. And yes, if they earn crypto for staking or any other way, it is income (not capital gains). That income becomes their basis in the coins they got.
  22. If your calculations for each state were correct, and showed the dates in and out of each state, it shouldn't make any difference. She could have moved back to MN (or to anywhere) in 2022 so has a MN address now.
  23. Your only choice is to paper file. This was a systemic problem a few years ago when all deceased persons were being locked out by SSA. I went to our IRS liaison, he got through to the computer people in TX and got it fixed. Still, the returns that were attempted to efile before the fix had to be filed on paper. This taxpayer is now going to have two returns in the IRS paperjam.
  24. Lion, you have way more patience than I do. One thing that is causing me angst right now is these piecemealed bits of returns. I can't remember 33 emails ago what you sent me. I have gotten so paranoid about missing things that now when I start I return, I sort my emails by sender just to be sure I have what they sent or told me. Please wait and send it all at once!!! And when you do send it, please mark the box to combine the files. I got one this week with 25 separate pages. I refused to open them and asked for a combined file or drop your stuff off. For those of you who use client portals, would that help? And Lion accepts phone pics. I do not. They are rarely readable and often impossible to print to paper or electronic file cabinet. Scan it, don't take a pic please. Maybe I'm just getting testy right now when I'm so buried with work that I don't want to deal with anything that unnecessarily makes my job harder. Lion is still being pleasant and putting up with annoyances. She has lucky clients, or maybe they're just spoiled.
  25. How do people lose these things? The identity protection PINs are sent out in Dec, so it's not like they got it months ago and never thought to put it with their tax stuff. It's scary that people can be so cavalier with the very document that is supposed to protect them from tax ID theft, letting some crook who gets a hold of it do the very thing they were trying to prevent. The same goes for people who can't seem to find their prior year tax returns. What did they do with them? This year we finally instituted a fee for copies of returns that we've already provided to the client, as well as fees for tax docs like W2s from prior years (mortgage companies often want them). $25 per return and $10 per tax doc. Almost every single client we told what their fee would be was able to "find" their prior year tax folder(s) with their docs in it. Better that it was under the car seat than tossed out with the trash I guess.
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