Corduroy Frog

One interesting possibility might be to conjecture whether IRS will "forgive" excessive CTC payments which were not justified.

Agree with Abby Normal 100%. They create the Pro Version, and use the same calculating engine to equip Turbo Tax, and then tell the customers its free. They also tell consumers if they have Turbo Tax they'll be as smart as a CPA. Is there no credibility left?

Thanks Lion. The "collection hold" sounds like good strategy. However, the collection hold must be communicated. Calling the IRS at the number on the client's notice or the Practitioner Priority Line is not a viable strategy these days. Your response is appreciated, as usual.

The collection division at the IRS has not suffered the lack of funding and diversion of priorities which has plagued the rest of the IRS. Historically, the audit division would propose adjustments, and if the taxpayer ignored repeated notices, then the adjustment would be turned over to the collection division for action. The general position of the collection division would be that the taxpayer had ample opportunity to address the situation when it was tied up in the audit division, and that the taxpayer would simply have to pay up. They would not refer the matter back to the audit division. At least that was their general position. Things have now changed, it seems like. Taxpayers ARE responding to notices from the audit division, but the IRS is so bogged down with stimulus priorities, advance child credit priorities, and general lack of funding that they are simply not addressing correspondence or anything else from taxpayers. But the delay does not stop the collection division from aggressively pursuing money, whether the taxpayer owes it or not. Can anyone recommend a good strategy to deal with this on behalf of taxpayers who are legitimately trying to get their accounts settled while being beat up by the collection division?

Thanks Margaret. The trust in question has no such provision. In addition, it is not a simple trust, having no provision to distribute all income currently.

I've raised the issue about taxation of capital gains in Trusts, and have understood that the Trust pays the tax on Capital Gains rather than allocating the income to the beneficiaries. However, Schedule D (Form 1041) has a Part III, which has a column allocating some or all of the capital gains to the beneficiaries. If the above is true, how is this possible?

I believe the big problem preventing passage is the Sept 15th deadline, as it collects money in advance of the Govt fiscal year ended Sept 30th.

Probably a good idear in my case. Half of my posts are borne of ignorance, so there is no basis for awarding achievement based on sheer number of my posts. Good luck on this - maybe some way to evaluate those of us who answer questions with good answers instead of bringing questions to the group...there are those of us who give lifesaving answers from time to time - won't list names, but we all know who they are.

Thanks to Lion and Abby - upon further investigation it appears that after 2017 the 2% Miscellaneous Category was eliminated, however the "Other" Itemized Deductions was retained and includes Gambling Losses to the extent of winnings. Unless something changes, looks like the taxation is still one-sided. Total amount of winnings are taxable and are NOT netted out against losses. Losses become an itemized deduction which do not survive unless the taxpayer itemizes. Look for lobbying on the part of the new gambling forums. A typical gambler faces risk to begin with, and with the taxation the way it is, that would kill anyone's chances with any common sense. The gambling forums represent a huge boost to the economy, so I would not be surprised if they bend some ears of legislators.

Thanks Lion, your suggestion is always appropriate. I suspect that one of the advantages of these new gambling services is they will keep up with all details.

The conventional taxation of gambling has been quite one-sided - with a demand to report winnings, and no valid way to report losses and get around all the gatekeeping that comes with itemizing. And now, no "miscellaneous" categories allowed anymore. Enter new online gambling forums that are popping up in various states. Tennessee, for one, has new forums that spend so much money on advertising that you've got to wonder whether any of the participants are making winnings. The technology is so sophisticated that if you are in Georgia and go online, the forum will not respond. Suppose a $1000 deposit is required. Over the course of the year, the taxpayer wins $15,000 and loses $10,000. The host sends him $4000 of the $5000 won, and keeps $1000 on deposit. At the end of the year, taxpayer receives a 1099-G from the host. Anyone have any idea what this thing is going to look like? Winnings of $15,000 are reported. Taxpayer pays on all of the $15,000 income. Winnings of $5,000 are reported. That is the amount of "net" winnings. Winnings of $4,000 are reported. That is what the taxpayer received. None of the above. The stuff is relatively new, and I haven't been immersed in it yet. Opinions? Cites?

Tom, what if this really does happen? (And you're right, it absolutely could). So we advise our customers to opt out and not receive the advance child credit. They are going to be furious when they realize they could have received the advance credit PLUS the full credit for 2021... And guess who they are going to blame for this advice??

I would stick to Sch D and the 8949 series which feeds it. Hard to deal with this, but even paying for a $50 fillup with gasoline to a service station which accepts Bitcoin constitutes a separate transaction. Hope there are reporting alternatives to reporting every single transaction. And how is your crypto "portfolio" valued? We get back to the ancient inventory lessons of FIFO, LIFO, Moving Average. If a method chosen is other than Moving Average, a nightmare results because of multiple tiers of valuation. Especially with LIFO. Dealing with this is a nightmare to begin with. No need to make it worse with LIFO or FIFO.

Understand completely. We want to avoid the appearance of "back door boot". He has other rental property, and if he does this, it will probably be used to improve other rental property or maybe buy more. If he waits a couple years, he will probably be off the radar, regardless of what the proceeds are used for. Thanks again - you are absolutely magnificent in researching and answering these questions.

No. There is zero money except for the fee of an intermediary. Sorry to mislead.