Dave T

Max - just wondering, did you submit them to the IRS or just retained for client's future reference?  IRS says they can assess penalty for not filing form when necessary.

Thanks

Dave T

I think I know the answer to this but just looking for confirmation.

Client recently informs me that he neglected to tell me that he had made traditional IRA contributions for last several years.

Turns out that he made too much each year so they are all non-deductible.  I think I just need to amend the three years in question and include an 8606.

The form says that it can be filed by itself but am not sure if that is the right approach in this situation.

Thanks in advance

Dave T

Thanks Abby.

I should have been more specific in that it was the supplemental schedule that showed his zero basis and that it was disallowed loses that had been being carried  forward.

He sold his share at the very beginning of 2019 .

Thanks again.

A relatively new client sold his interest in a partnership at the beginning of 2019. 

His adjusted basis in the partnership, per the K-1 provided by another CPA, shows as zero.  He had never contributed any capital and was brought in due to his knowledge of some very high tech equipment.   The K-1 also shows that the partnership had been carrying some disallowed losses.

I know his basis can't go below zero but I have two questions; would any proceeds he receives be considered long term capital gain ( he has had this several years ) and do these loses then get distributed to the remaining partners?

I've never encountered this before so any help would be appreciated.

Thank you

Dave T

Gail - that was my thinking as well.

Thank you

I never renew early. I always wait until the fall and then call and negotiate with the sales rep.

She is self employed. and receives a 1099 Misc. Non- Employee Compensation.  It was not an alternative fuel car.

She provides them the mileage, both business and personal and they compute the income portion.

Aside from the gas, all other expenses are paid by the MLM.  

Tax payer  is part of a MLM ( alternative energy provider ) As a result of meeting sales goals they were awarded the use of a car for a year.

They diligently recorded business and personal use which they reported to the MLM and the personal component was added to their income for the year.

She provided me with a log of business miles  but it seems that would be double dipping to take this as a deduction or am I missing something.

Thank you.

Dave T

Linda,

As noted from Margaret and Rita the housing is subject to SE tax but so is his W-2 wages.

When computing the S/E tax. be sure and ask it there are any unreimbursed ministerial expenses such as mileage, meals, etc. These are not subject to S/E.

I use ATX but use an Excel spreadsheet to compute S/E.  

Hope this helps.

Dave T

Client has a business of helping place foreign exchange students.  She works with several agencies to do so and receives 1099_Misc. I've reported this and related expenses on Sch. C with offsetting expenses of mileage, etc.

In addition, she hosts students in her own home and receives a monthly stipend for doing so and also receives a 1099 for the stipend amount at year end.  I am trying to determine how to report this income. I believe it should be shown as Other Income and not subject to S/E tax.  IRS allows a $ 50/month charitable deduction but have read where some take offsetting expenses such as food, % of utilities. etc.

Any guidance would be appreciated.

Dave T

Thank you Gail and others.

Dave T

Working on Dad's tax return ( he passed in 2019.)

During 2019 he sold a number of assets to pay his nursing home bill.  The brokerage statement shows these transaction but one in particular has 'Unknown" for date of acquisition.  I know that he purchased this one stock many years ago so am sure it is long term but not sure of the date.  I tried putting 'Unknown" in the date acquired field  and received an error message stating valid entries are, Various, a Specific Date, or INH-2010.  Not sure what this last item is but seems to work when entered. Anyone know what this stands for?

Thanks

Dave T

Thank you Rita.

Yes that is what I did. I entered Code 12 on the 5329 which removed the penalty.

Also yes as to new client.  I misspoke on my original post. His contribution was in 2019 and also withdrew in 2019.  He has changed jobs frequently during the year ( 4 w-2's ) and apparently withdrew after leaving one of his employers.  You are correct the market was on an upward trajectory but he must have cashed out on  a down day.

At any rate, thank you for your assistance.

I think I figured this out. 

Entering the distribution and contribution on the 8606 didn't remove the penalty but entering the contribution on line 2 of the 5329 did remove it,  Since the contribution was greater than the total distribution penalty amount went to zero.

Thanks

Thanks Rita

If you find something I would appreciate it.  Seems to be conflicting opinions on this and my contention is that his contributions were greater than his total withdrawal and thus no penalty.

Others maintain it is because he doesn't meet the 5 year or 591/2 rules.

Thanks

Thanks Jack

He didn't meet the 5 year rule or the age rule but the thing that confused me was that his total distribution was greater than his total contributions.

Eric,

Tried that but still calculating the penalty.

As an aside, the 8606 still shows as "Draft".

Thanks

T/P, age 41,  made contribution to Roth IRA in prior year of $ 544.

In 2019 he makes total distribution from account in the amount of $ 438. Box 2b indicates total distribution and box 5 of 1099R shows his total contributions.

Distribution code is 1B. Early distribution of Roth IRA no known exceptions.

ATX doesn't show the $438 as taxable but does calculate an early distribution penalty.  Seems to me that there shouldn't be a penalty since his contributions exceeding his total withdrawal.

Am I missing something?

Thanks for your assistance

Dave T

My father passed away in August of 2019 after being in a nursing for some time and was paying the daily self pay rate so shouldn't have any tax liability for the year.

At the time of his death he had a fair amount in the bank and in non-qualified investments. As of now his estate has not been established so am wondering how any dividends, capital gains and interest are taxed  for those earnings subsequent to his passing until the estate has been finalized. 

Thank you for any assistance with this.

Dave T

T/P's wife began working in church school part time in 2019.  Approx. 10 hours per week in their cafeteria.

School provides her with  1099-Misc. Non Employee Compensation.  

There are set hours. Work is supervised.  Done at their facility obviously so seems to me she should have received a W-2 not 1099.  

I have done the taxes for one of the teachers there for a number of years and she receives a W-2 with SS withheld so I am a bit confused. 

Any thoughts?

Thank you

Dave T

Thanks for all your responses.

Found the form to allocate earnings in Ohio only and as you have said, the impact is nominal.  $ 3.00 owed to the state.

Thanks again

Client was in Ohio during college spring semester and earned $650 working at school and upon graduation in early May returned home to NY where she earned $20K.

I am filing the Ohio return as part year resident but  it isn't allocating her Ohio wages but rather including her entire Federal AGI.

I've put in the dates that she wasn't in Ohio but obviously I'm not doing something correctly.

Any help would be appreciated.

Thank you

Dave T

Thanks Yardley.  I had seen this article as well which helped lead to my confusion as to zero basis or something else..

In my particular case, the IPO amount as basis has a significant impact on the return.

Thanks again

Been doing some research and seem to be getting conflicting opinions on this.

Client sold shares in Manulife which I believe had acquired john Hancock Life insurance in the past.  John Hancock was demutualized in 1999. Client had been a long time policy holder.

The question has to do with basis.  IRS has taken position of zero basis but I have also seen cases where court  overturned that position.  Transaction has fairly substantial impact for client when I use zero basis so am not sure how to proceed.

Thanks is advance.

Dave T

Client moved to Arizona beginning of 2018.

He hasn't sent me his info. yet as he says AZ  hasn't finalized their forms yet.  Seems odd at this stage of the game.

Anyone know?

Thanks

Dave T