Sara EA

This was a TOD account (transfer on death, not six months later), so the income is her son's and should be reported on his return. He can ask the brokerage to correct the 1099, or just put it on his return. You can file a 1041 and pass it through, which has the advantage of deducting attorney/probate/accountant fees. If you don't the IRS computer may send a notice, but the son will just have to show that the income was reported on his return. I'd let him decide if he wants the 1041 or not. It goes on his return one way or the other, the IRS only cares that the one who got the money reports it, and he can avoid the extra tax prep fee. If there is no court appointed rep, the son can sign as personal representative.

You are correct. In this case you will have a calendar year because a fiscal year can end in any month but December (because December ends a calendar year). All income after the date of death goes on the 1041. This should be an easy one because, provided the executor moves the assets to the estate EIN promptly, you won't have to weed through bank and brokerage statements dividing up what was earned before and after death. It's likely you won't have to do a final 1040 either, unless that person made a heck of a lot in the final 13 days.

When did this happen? A new Reg? Please offer a citation. I have a bunch that could really have used them.

Did you tell your (now former) client how many IRS letters each of see every year because people never bothered to give us their 1095A? She'll find out soon enough. We all have clients who try to cheat in broad daylight. This one hurt because you didn't see it, but of course you couldn't. The forgone fee will be worth the entertainment value when she comes running in with that letter.

State laws on this vary, so it's wise to check their websites. I had a CT trust that became a SC trust when the trustee moved. I have a CA trust that remains a CA trust because the grantor lives there even though the trustee resides elsewhere. If you are talking significant bucks here (say, owe NY or MA $100 or $200 for 50 years) send the client to a tax attorney. They can negotiate with the state, while keeping the taxpayer's identity anonymous. The power they wield is that they know who the client is and the state doesn't, so if the state doesn't reach an amiable agreement on how much back tax they want, they will never find out and will get nothing.

The exception is publicly traded partnerships, where passive losses can only offset passive income of that particular partnership.

Sounds like ATX is doing what UT is: First quarter estimate due 7/15, second quarter due 6/15. Gives a whole new meaning to the adjective "first." I have noticed a couple of states warning that interest is statutory and will be charged if paid after April 15. How can anyone keep track of this?! I'm encouraging my clients to pay sometime in April because we are all used to that date and no one is going to be thinking about taxes in July.

I think printing all the worksheets confuses the client. I've been in the habit of printing the "1040 reconciliation worksheet" in UT, which is the old familiar 1040 because it doesn't bunch all types of income and deductions together (especially last year). I just got a call from a client who was confused by it, when I thought it was less confusing. I don't think anyone but a tax pro could follow a taxable Soc Security worksheet, or taxable state refund, or AMT worksheets when they aren't subject to AMT. I do print ones like the Q dividends and cap gains worksheet so they can see that they saved money and the QBI deduction worksheet so they can see why they are not getting the full 20 percent. Ever get a client who self-prepared last year with TurboTax and brings you 88 pages of gobbledeegook from last year's return when all they had a couple of W2s and maybe bank interest? I just don't think more is better, unless you really charge a lot and want clients to think they got their money's worth.

I don't know how people bill in short time increments at all. Don't you spend so much time keeping track of time that it's hard to get any work done? We try to keep track of our time but actually bill clients by complexity. I start a return, get two must-take phone calls, a client or two drop in with docs and questions, the printer jams, a colleague needs help, the boss drops in to vent or tell a joke.... Three hours later how do I know how much time I devoted to the return on my desk? And did I have to keep track of the time spent on those calls or drop ins to bill those clients? Do you keep a stop watch on your desk? I once got the probate filings for an estate, and the attorney's bill actually listed the time spent on opening the mail. I am really curious about how those of you who bill in short time intervals do it.

I have done a lot of these. You have to report everything on the decedent's final return if the 1099 is in his/her name because the IRS computers will be looking for those numbers. Then back out what belongs to the estate. You have to do these calculations manually. I identify the negative amounts as "to be reported by estate" and the EIN. Then on the 1041 I put the payer as "reported to" and the decedent's SS number. Charge a lot!

I don't want a check! I don't have a mortgage and can afford my living expenses. Give the money to self-employed people whose businesses are ordered closed, or to school bus drivers who make so little and won't work for months, to waitstaff, to people who can't work because their child care centers closed. The money should go into enhanced unemployment benefits and relief for small business owners. Instead of thinking of creative ways to get people money they might not need, let's convince the powers that be in DC to get it into the hands of those who need it most.

Don't bother with the gift splitting--that gets complicated just showing each spouse where to sign one another's and their own return. Unless your client is likely to have gifts and a residual estate in excess of $23 million, he is in no danger of ever owing gift and estate taxes. So file a single return for him and be done with it. Better check the state though--some have much lower thresholds than the feds.

How about the photos that are sideways? Or the ones where the font is so small it should be illegal. I HATE when clients send photos. They get an abrupt request for a legible document and put in the back of the queue. On a related note, how about the phone messages where the person leaves their number so fast that you can't digest it or write that fast. If I can't get it after listening three times, I do not attempt to call back. (Our billion dollar phone system does not show caller ID within messages. They're in the history but cumbersome to track down. If someone can't leave a clear call back number, they do not get a call.)

The state will absolutely calculate the value of the remaining life estate and count it as an asset should she apply for Title 19. The mother should have received its value on the sale. The daughter had no right to keep all the proceeds. There is no completed gift unless mom got no money for her interest. The calculation of the remainder interest on sale is tricky but needs to be done or the state will do it for you, which actually sounds like it will save a lot of work!

I think we're all bumping into these types of issues at this time of year. We know exactly what the outcome should be, but how to tell the software? I spent the good part of the morning on a return with foreign income exclusion. That was the easy part, fighting with the software took a lot longer. Diagnostic that address was incomplete. Well, I didn't enter a city or state because she lived in France, duh. Same with employer EIN. I just kept going to the help screens in UT and eventually got it worked out but it took a lot of time. These types of events show why we are tax Professionals. We know what the result should be, and if the form doesn't match our expectations we have to figure out how to tell it what to do.

The IRS hasn't decided whether or not to allow the excess deductions yet. I think it's best to continue entering the expenses in the event they eventually get moved to the not 2% area. I did that last year with PMI even though the deduction had expired. This year when I encounter a client with PMI I check last year's return to see if an amendment is in order. So far I identified just one, the others still wouldn't meet the higher standard deduction. The IRS hasn't updated the 2018 software yet, the software companies can't until the IRS does, and we don't do prior year amendments during tax season anyway. At least the numbers are in there. I'm doing the same with the 2% deductions on the 1041.

Vanguard actually warns people that their 1099R will show the full distribution and that they should make a copy of the check (which is sent to the taxpayer but made out to the charity).

The Box 13 amount is not reported on the return. It is a basis adjustment (but only for covered bonds; the adjustment for uncovered ones is somewhere in the detail pages.) The taxpayer paid more for the bond than its face value. That "premium" is amortized. It is part of the cost of the bond, not earnings on the bond (those are reported as interest). A loss on the sale of a tax-exempt bond purchased at a premium is disallowed.

When you sell a home, as we recently did, the attorney gives you a form to sign and check off whether you've lived there for 2 of the past 5 years. If so, and the sales price is not above the Sect 121 limits of $250k or $500k, no 1099S is issued. Therefore no reporting is required. Why make work for yourself?

Is this the same Ring Central as the doorbell business? We all know how NOT secure that is, including employees looking into people's homes.

In many places the $1 is required to trigger the recording of the transfer. Like if you give your old car to your kid, DMV puts $1 sales price in order to transfer the title ($0 would imply the car was junked).

Rita and Gail are correct. If mom lived in the home, paid the bills, etc., there was an implied life estate. IRC Section 2036 states that such "paper only" transfers are subject to estate taxation. Property included in an estate is assessed at fmv on date of death, which is what the heirs inherit as their basis.

Life insurance proceeds are not income so are not reported on a 1041 (there may be some interest included, which is income). However, life insurance is taxable on a 706, which taxes assets instead of income. With the high estate tax threshold it's unlikely any of our clients will ever file a federal 706, but some states have lower exemptions.

A gift tax return must be filed. I don't know what state the clients are in, but some state tax departments are meticulous about checking public real estate transaction records for such things. They don't want to let people get away with gifting their homes and then qualifying for Title 19 when they need nursing home care.

You're right. One spouse can't itemize while the other takes the standard. Don't know what I was thinking. I once asked some IRS agents who were students in one of my classes if the IRS actually checks to see if both spouses itemized or not, and they all did a good job of beating around the bush.