Sara EA

A revocable living trust usually goes on the grantor's 1040. The exception is when the trust has an EIN and it is used on bank or brokerages accounts. The trust gets the 1099s and must file a 1041. You can elect Treas. Reg. § 1.671-4(a), which leaves the 1041 blank and provides a statement of income and expenses to be shown on the grantor's individual return. It essentially tells the IRS that these amounts are being reported by the grantor.

What are you reading? Form 1310, Part 1, Line B is where you check the box that you are the personal rep. It says nothing about amended returns. Read further in the instructions that are part of the form and it says: "For purposes of this form, a personal representative is the executor or administrator of the decedent’s estate, as appointed or certified by the court. A copy of the decedent’s will cannot be accepted as evidence that you are the personal representative." Why is everyone making this so hard? File the 1310. If you don't, you'll get an IRS notice and refund will be delayed for who knows how long.

Form 1310 is definitely required. For purposes of the form, a personal representative is someone who is CERTIFIED, and that includes a court-appointed executor. Spouses and someone who was not named by will or the court are the only ones who get away without filing 1310. Read the instructions to the form: "For purposes of this form, a personal representative is the executor or administrator of the decedent’s estate, as appointed or certified by the court. You must check Box B.

I don't like to file zero extensions unless I'm absolutely sure the client is due refunds. IRS can reject extensions you know. Say someone ends up owing $50k and filed a zero extension, IRS can say No Way and hit him with failure to file penalties. I've never seen it happen--has anyone else? I'd have the client pay $10 or something with the extensions.

To get the exclusion, the instructions clearly state that each spouse must meet the residency requirement. It says nothing about children living there. Looks like your clients will have to pay cap gains tax but, hey, they made A LOT of money on the sale. Don't forget to add selling expenses to their basis. I bet the realtor commission was enormous.

At a seminar an IRS agent once told us that the only vehicle IRS believes is 100% business use is a cement mixer.

No offense taken. I've always resented being included among "you guys," perhaps because after growing up in a household of three girls, my own family was all male (even the cat). I did not want to be included with those creatures that eat over the sink, miss the toilet, and think armpit burps are hysterical. I was just trying to inject a bit of fun into the decidedly unfun days we are all having right now. EVERY return I started today had things missing. Grrrrr

Ahem, I take offense at the title "You Guys." Many posters here are not guys. Did you only want the guys to answer?Now that I've moved to the South, I've taken a liking to the term y'all. It's gender neutral, respectful to both old and young, and sounds friendly. I used to think it was slang until I read some linguists' take on it and I'm now with them.

This was a grantor trust until the grantor died, so yes there was step-up basis in 2002. The wording you quoted clearly shows that the father retained power of appointment (he could do whatever he wanted with the trust), so it was a grantor trust. Not sure if it was a complex trust, which can change from year to year, but that doesn't affect your answer to this question.

In our business we spend so much time in front of a computer screen that I have no desire to read on one. We even get physical newspapers and enjoy our coffee and papers in the morning on our porch (even in the cold weather, just not for long.) I do subscribe to the NY Times and Washington Post online, although we buy the physical Post on Sunday and read it all week. I too love physical books. Nothing like flipping back to find what happened in an earlier event or to remember who this character is when he resurfaces. I get most of my books from friends and at the library book sales. I do love our local bookstores too, but I can't keep myself from going overboard when I visit. I don't keep many books. Almost all get passed on to friends, sometimes more than one, and a few donated. I'd rather have others enjoy them than collect dust on my bookshelves maybe to be read again someday. Share the wealth! Maybe that's another reason why i don't care for ebooks--you can't share them.

The fatal problem with AI is that it doesn't know how to say, "I don't know" or "I'm not sure," or our favorite in the tax business, "It depends." That inability is what gets it into trouble when it hallucinates, makes things up, gives irrelevant or wrong answers. When I retire next year I'll just do the office's trusts and estates plus family returns. That's enough. Time to organize those old photos, revamp the gardens, read more books, explore more of the history and attractions of our new state, help out at the library that does so much in the community, just maybe volunteer for AARP or VITA, spend more time with friends and others I've met whom I'd like to know better. It will be a relief to be free from so many commitments and deadlines.

Does it work with AMT? We haven't had much 'splaining to do since the TCJA, but it wasn't easy before then and won't be again if Congress lets the new exemption amounts expire in 2025.

I plan to retire next year, and the only thing I will keep is trusts and estates! To each his or her own. Jasdim did not make a mistake. The client did, but blames the preparer of course.

Jasdim, when this stuff happens I turn proactive and turn the tables by telling the client that I am here all year and why didn't s/he talk with me before taking such a huge distribution. If your client (ex-client?) is on Medicare, wait until he finds out his premiums go way up in a couple of years.

So does it get an energy credit or not? I think not. Solar just opens and shuts the panel, like the highway signs with the little solar panels powering them. The Dept of Energy states these are eligible, "Solar PV panels or PV cells (including those used to power an attic fan, but not the fan itself)." So maybe the cell is eligible but not the skylight.

If the state is classifying the money as stock proceeds, to me that means the state sold the stock. Now they are passing the proceeds to your client. He must report on Sch D. If he knows the cousin's date of death, just look up the value on that date for basis.

ESA distributions can be used for room and board, books, computers, etc. Also, the 10% penalty is waived if the student got a scholarship that reduced tuition.

I got the same error in Ultratax. It may be an IRS issue. That Sch B doesn't even have an input screen and is filled in by the software when required.

The capital loss carryover of $3k has not been increased since 1978. According the Congressional Research Service, it would be about $13k if adjusted for inflation.

They got a letter even with basis reported? Are you sure? That defeats the whole purpose of the reporting mandate.

Organizers are just too long and most clients don't bother with them. Others start asking for them Jan 2 as it helps them figure out what they need to provide. We now use a 2-page questionnaire that addresses most of the issues we need to ask about, e.g., changes in bank accounts, dependents, foreign accounts, HSAs, insurance subsidies, gig economy jobs, use tax, etc. For most of the questions clients check a Yes or No box, and a few have lines for amounts or explanations. We insist that all clients fill it out, and most do without prompting. It's just easier than pages and pages of organizer and covers the same ground. We don't bother telling Sch C and E filers to give us their income and expenses; they already know that.

While it seems a bummer that mechanics can't deduct the cost of their tools, don't forget that they own them and can take them home or to their next job or sell them. Many mechanics are fervent about their tools. My husband was never a professional mechanic but started working on cars when he was a boy. Today he has this tall chest of tools and can tell you when or how he acquired most of them, specific jobs this one or that one is good for, and tasks from way back when one or the other saved the day. When one of our sons neglected to put a screwdriver or whatever back where it belongs, he got in more trouble than if he was beating up his brother. So while tools are an expense, they can also become part of a person's identity.

If he inherits the account, he inherits the interest too. He will report the interest income because he's the one who received it.

Since the child did not live with Dad half the year, better use Form 8332,

The current W4 essentially asks the taxpayer to complete next year's tax return this year and is a disaster. Does it even account for the additional Medicare tax when one spouse is over the threshold and having the extra taken out but the other isn't? When there is glaring underwithholding, I tell clients to put Single, zero exemptions on the W4 and leave the other lines blank. (Not many want their employer to know what their spouse earns or their other sources of income.) Then we'll look at it at the end of the year and adjust accordingly.