Corduroy Frog

Cry me a Wabash? All of your statements are true, but missing the point. Anything slowing down real estate hurts those in much lower tax brackets, slows down construction jobs, slows down the economy.

Good question Joan. Obviously, they cannot be DIRECTLY affected by the NIIT on their tax return. Where they get affected is in the slowdown of real estate movement because taxes are too high. In my career, I've been through two political movements to do away with capital gains because only the wealthy could benefit. Once they did away with LTCG altogether. Before the year was out, they brought LTCG back to rescue a sick real estate market. The current rates for LTCG are 15%, plus another 5% for the big income people, plus 3.8% NIIT. Total 23.8%. I do have a few landowners who ask me to calculate tax on sale of their farmland. Farmers are not used to paying these bodacious taxes, and most of them simply tell me they will just hold on until someone meets a price sufficient to pay taxes.

Good one Lion. Another is the dreaded Obamacare tax, especially the 3.8% NIT on investments. The problem with taxing investments affects the sale of real estate, which depresses jobs for those who work but do not earn enough to pay the tax. This has been a point of contention with capital gains for decades.

Many elements are not adjusted for inflation. Which is the worst, i.e. needs adjustment more than any other? My vote is for Child Care Credit. The $3000 and $6000 limit has been around forever. The increased percentage?? Forget about it - if the couple gets more than 20% they can't afford to pay babysitting nowadays. To make matters worse, employers have gone absolutely ga-ga over a new benefit - up to $10,000 tax deferral for babysitting. Some employees are going after this like a pig after slop. But it only works if it negates the Child Care Credit in its entirety. And if the spouse doesn't work or have earned income, ALL of it is taxable. My clients find out about it too late, and drop it after one year of misery. Yes, my vote is for the Child Care Credit - dubious benefit, and nowhere NEAR the hyper-inflated cost of paying a babysitting service.

I always take the word of the client, unless there is a suspicious reason not to. It is the job of the IRS to audit them, not mine. One concern is that these assets were purchased prior to the formation of the partnership, and were contributed as capital investment - i.e. "hot" assets. They will have to be tracked if that is the case for five years. Also, my experience is that the partnership will not last long, unless they are bound together like family members. I don't know how many of these partners love each other to start with, and after six months they are ready to go their separate ways. Running a business is not the same as painting.

JohnH, sorry I couldn't resist! I remember the Pablo restaurant on Polk Place years ago....

Self-Rental is subject to Self-Employment Tax. One common thing businesses are doing: Create an LLC with their building or real estate - pay at least FMV rent to the building, and take a deduction for rent against their self-employment tax. And then the LLC reports rental income not subject to self-employment tax. If the building is rented to no other party, how does this strategy stack up to the self-rental doctrine? JohnH has a tax-preparation and consulting business in North Carolina, which makes $100,000 per year. He and his wife own a building and decide to open up an LLC filing as a partnership. He pays enough rent such that the LLC makes $20,000 profit, and the LLC reports its income on Form 8825 meaning there is no self-employment tax. The LLC has no other customers paying rent. Eureka!!! JohnH still makes $100,000 per year, but pays self-employment tax on only $80,000. But has he violated the "Self-Rental" doctrine??

I am seeing many of the problems I've described with Schwab are in the process of being corrected, caught up, resubmitted, etc. To the effect that all will be well, especially for those who haven't filed yet. Some time ago I opened a post that tax season was getting shorter. We have LLCs now due March 15th, and if you have to wait until after March 1 to make appointments with clients who have brokerage statements, you have to cram those appointments into less than 45 days. I would estimate that 2/3 of my clients have brokerage statements.

1098-T. Many of the forms are scarce because the issuers want to bail out of printing them and paying postage. When you ask the client, either he doesn't know he has them, or else you get: "Oh yeah, I've got that right here on my phone!!" [Scroll...Scroll...Scroll...Scroll 95 more times] 20 minutes later they hand you the phone which you can barely read. "Can you print this out?" "Oh no we don't have a printer anymore. We keep everything on our phone!!!"

I'm amazed at the "Here to Help You" with our expertise. "We are experts in the field and are able to advise ignorant people like you to help you." Bankers are experts in banking and "help" their customers by talking them into a $100,000 CD paying less that 1/2 of one per cent. Stockbrokers are experts in investing and "help" their customers by investing their money in mutual funds, where $$$ is skimmed off the top for the brokerage company and their cronies. To speak nothing of their fees. Online colleges are experts in "help" training people for the variety of professions in their curriculum. I worked with an Accountant with a Masters Degree from University of Phoenix who couldn't even reconcile a bank account. Big-box Tax Preparation firms and TurboTax will "help" customers to get the "Maximum" Refund. Better than going to people on this message board. In fact, Turbo Tax wants to help customers so badly that they will perform their service "Free." I could go on-and-on-and-on., but Lion knows what I'm talking about.

Yes they do. And that turns out to be the saving factor. If one takes time to look at the account number, they would send a message as well because they would be different. Update on the "wrong" Schwab statement referred to in the earlier post. The late statement finally arrived, and it was from TD Ameritrade. Much easier to understand.

Good question, Judy. The client who had the Schwab statement that was portrayed incorrectly also will have a Schwab statement for the TD Ameritrade period. His stockbroker told the client that the portion for TD Ameritrade would not be sent to him before March, so I was unable to complete his taxes. Situation with the Ameritrade takeover has turned into a real snake-pit. Held up my dead brother's estate from being closed out, and with as many different accounts of problems, I've got to wonder whether the Schwab issuing office for these statements is centralized or issued from different locations.

I don't know why that happened. I've seen a few Schwab brokerage statements this year, and only one where the qualified dividends were split out differently from the ordinary dividends. I don't know why that happened, and possibly Schwab will issue a corrected copy. This post is a different situation from the one described above - why I began a separate discussion.

I prefer someone who charges based on a percentage of portfolio value. That way they prosper if you prosper, and suffer if you suffer. The sure-fire way for rewards to follow performance. Generally a percentage over 2% is too much. I have seen so many statements showing $1500 as dividend income, and custodial fees of $1800. Customer is being duped.

A new topic, because the issue is different. Schwab is not doing anything wrong (perhaps). Sat down to two Schwab Brokerage statements: The first is 1099-DIV: starts ABC $96.00 DEF $128.00 GHI $144.00 .....All "qualified". The second 1099-DIV: starts ABC $96.00 DEF $128.00 GHI $144.00 .....All "qualified." Dealing with a duplication, right? So ignore the second document and put it away. Not so fast. We notice another listed company XYZ $118.00 on the first statement, and $128.00 on the second statement. Yikes!! What's happening? Schwab bought out TD Ameritrade. Didn't wait for year-end, bought out during the year. Some companies kept their quarterly dividends the same. The afotementioned ABC paid $24 four times during the year, twice under TD Ameritrade, and twice under Schwab. In like fashion, the others did the same. However, XYZ paid $59 twice under TD Ameritrade, but then increased their dividends to $64, and then paid twice under Schwab. Total $246. So at first glance these two brokerage statements from Schwab appear to be duplicates. They are not. Taxpayer must report the total of BOTH statements as income.

Tom, it might be the biggest one out there -- Schwab.

I thought so Brew. The issuer is a major stockbrokerage company.

Assume FROG Mutual Fund dividends are $100, with $90 being "Qualified".. I am accustomed to seeing Dividends reported in the following manner: Frog Dividends $100, Qualified Dividends $90. But now I am seeing a 1099-DIV as follows: Frog Dividends $10, Qualified Dividends $90. Has something changed this year, or is the issuer of the 1099-DIV improperly reporting?

Tom, you make sense. I'm going to file the girls return for free with explanation, as her parents have paid me handsomely.

Thank you. Item 3 on the link defines the "gain" and not the "selling price."

Parents have a stockbrokerage account for 10-year old daughter. Dividends were minimal ($200), However one of the securities sold for $7000. The gain on the sale was $500. The "taxable income" (before std deduction) from all this is only $700. However, the "Gross Income" well exceeds the filing requirement. Is the daughter required to file? TTB only states "income." Depends on the definition of "income" I would think.

Any way he could take a deduction for "Theft"? Not as a casualty as in the old days, but if he has a business it might work.

When we applied, the user fee was $1200. The cemetery does well to receive $300 per year.

I was (unfortunately) appointed Treasurer of our family cemetery. I do know that the IRS does not challenge the deductible contributions to a church, but outside of that, I believe the only way to assure deduction for anything else is to exercise Form 1024 for a 501(c)3. I tried to do that for our cemetery association, but the IRS sent back the 1024 asking for a huge user fee. More money than donated revenue for five years. We declined. We do have a FEIN but I've told donors that the deductibility of their contributions could not be guaranteed. So few people in Tennessee are able to itemize anyway so it makes little difference to them.

Going back to 2018, the employer would have been required to add to his W-2: the difference between FMV and the purchase price. His basis should therefore be the FMV as of the purchase date in 2018. This assumes there have been no subsequent activity for those shares between 2018 and the selling date of 2023.