kathyc2

72(t)(2) clearly states:  made on or after the date on which the employee attains age 59½

Since it was a 401K penalty can be avoided if separated from service at time of withdrawal. 

I had a client yesterday with a balance due notice from 2021.  It didn't appear to be first notice since it didn't have the line by line changes section.  Rather than wait on hold for hours on the phone, I asked if we could set up an IRS account for her.  She agreed and I was able to figure out that 2 of the estimated payments they told me they made for 2021 somehow got posted to 2019 tax year.  Of course she then remembered that they received a refund that they didn't know what it was for.  LOL!

I think I'm going to go the online route rather than phone calls going forward if the client is willing.  Much easier!

The business is the LLC.  That didn't change.

Part of the year it was taxed as a partnership and part of the year as SP.  

Nothing was dissolved.  The business can continue on with the same bank account.   Unless they actually took all the money out of the bank account, BS should show the balance of the account. 

I would probably show his ending ownership at 0% and hers at 100%, but I don't know that it really matters. 

1065 return is a final since one owner no longer allows LLC to be taxed as partnership.  Since it's the final 1065 return, K-1's are also final. 

It depends on if it is a true partnership or a LLC taxed as a partnership. 

If it's a true partnership, then everything should be closed out.  

If a LLC then nothing on the company books changes other than combining the equity section combining the partner accounts to an owner equity account. 

From an article:  "Researchers say the artificial intelligence chatbot has trouble understanding math and makes up facts to cover up its mistakes."

Hmmm......

I've only ever used Pro, starting in 1997.  Because it's rather pricey I've downloaded various others over the years, but have always decided that for me the extra price is worth it over having to learn how to use other software. The older I get, the less I like dealing with change.

I've also scaled back and had pretty much a stress free season. Each year I go to Costco and get a bag of Lindt truffles and a big bottle of Bailey's. Still quite a bit left in each, so I know it's been stress free. 

I don't like extending, but this year I have four clients that haven't received K'1's yet, so I had no choice.

On the final day I was actually out mowing the lawn!

2 hours ago, Abby Normal said:

The gain is less than the depreciation so it all has to be taken this year. Doing an installment sale will not help.

I disagree.

453(i)

(1)In general

In the case of any installment sale of property to which subsection (a) applies—

(A)notwithstanding subsection (a), any recapture income shall be recognized in the year of the disposition, and

(B)any gain in excess of the recapture income shall be taken into account under the installment method.

(2)Recapture income

For purposes of paragraph (1), the term “recapture income” means, with respect to any installment sale, the aggregate amount which would be treated as ordinary income under section 1245 or 1250 (or so much of section 751 as relates to section 1245 or 1250) for the taxable year of the disposition if all payments to be received were received in the taxable year of disposition.

What you are describing normally happens with 1245 property.  If 1245 property sells for less than original cost but more than basis, it is ordinary income and goes direct from 4797 to 1040, bypassing Sch D.

Since generally 1250 property is depreciated with straight line it is a gain and not ordinary income.  The confusion comes because it is taxed at the higher of marginal rate or 25%.  However, it is still a capital gain and goes from 4797 to Sch D before showing on 1040.  

If the TP happens to have net capital loss from a mutual funds or such, they will decrease the 1250 gain.  They would not decrease the 1245 gain I talked about earlier because that is ordinary, not capital, income. 

1 minute ago, BulldogTom said:

The gain on the property sold is all related to depreciation taken which was deducted against ordinary income, therefore must be recaptured and taxed at ordinary rates?

Correct.  A lot of us (myself included) use the term recapture loosely. See the instructions for 4797 Part III line 26.  Line 12 on 6252 pulls from line  31 of 4797.  If straight line was taken, line 31 will be zero.  The gain can be taken over the like of the installment note. 

4 minutes ago, jasdlm said:

It's all as you list, Tom, until line 12.  ATX is populating line 12 with 0 and line 14 with the $30,.  I must have something toggled incorrectly.  Grrrrr.

 

Thanks!

More than likely it should be zero.  Read the instructions for 4797 Part III line 26 to see if anything should be on those lines.  If not, you are good.

28 minutes ago, BulldogTom said:

Line 10 - 120K
Line 11 - 0
Line 12 - 30K
Line 13 - 150K
Line 14 - 0

If straight line depreciation and no bonus depreciation then line 12 is 0, line 13 is 120 and line 14 is 30.

If you want to report the entire 30K gain this year, don't use 6252, just report gain on 4797.  

If you do want to report as installment the 5K received this year first calculate how much of it is interest income.  Then remaining is 80% tax free return of capital (120/150) and balance is 1250 gain.

I don't use ATX, so I don't know how you enter it to get this result. 

3 hours ago, Margaret CPA in OH said:

This is true but she cannot change to MFJ after the due date of the return.  For 2022, it isn't too late.  Yet.

You can change from MFS to MFJ any time under normal amendment timeframe. Changing from MFJ to MFS has to be done before due date. 

How is the saving account he parked the money in titled?  If with rights to survivorship, I believe it passes to her regardless of not having a will.

If the income between the 2 was significantly different, MFS will more than likely produce higher overall tax, especially if one or both receive SS.

Free advise often costs more than what you paid for it.

Personally, I'd be leery of scanning software that's from an unknown company.  Who's to say they aren't capturing the info on the forms they are scanning?

7 hours ago, ETax847 said:

Kathy, do you know where I could find this online? Client was curious as to the source of this information.

 

I'm not understanding what part you are asking about?  Pub 969 covers both HSA's and FSA's.

17 minutes ago, mcb39 said:

But, is the Marketplace considered a HDHP?

There are many different policies available on the marketplace.  Some are HSA qualified, others are not.  For 2022 the max deductible/out of pocket is 7,050 for single and 14,100 for family. Many times HSA is included in the plan name if it qualifies.  Have them look on their insurance card to see about the name and deductible. If single and max out of pocket limit on the card is more than 7,050 then no HSA.

Do they each have their own policy?  FSA isn't reported on return.  As long as wife's policy is HSA qualified there shouldn't be a problem. Of course she will be limited to the self only contribution.

As long as the policy is HSA qualified. Most of the offerings around here have too high of a deductible to be HSA qualified.

Another option might be with a financial advisor.  I've had a couple over the years offer me office space.

Correct.  She can contact her bank to see if they can refuse payment similar to a stop payment on check. 

14 minutes ago, Lion EA said:

But I can have texts show up on my computer &/or email instead of on my cell? So, I can easily move them to my clients' files on my computer? (I urge email, so I can store; but I have a few who really want to text.) Can I respond to texts from my computer? I hate typing a text on my phone with that tiny keyboard. I end up texting, "Check your email." and then typing out an email to them!

My son set it up so I get texts on both phone and computer.  If an android:  https://support.google.com/messages/answer/7611075?hl=en  Guessing Apple has something similar.  Much easier to type with a full keyboard.  If I need to keep it, I use snipping tool to save it. 

Was the Mom the custodial parent?  

1 hour ago, BrewOne said:

When I went out on my own, I was greatly influenced by that experience and wanted to offer my services at a fair price.  It's meant that I have all the work I want and I can be very picky on whose return I do.

Yep.  I'd say I spend twice the time on a new return as a returning client. Looking over prior year for carry overs and obvious errors, needing to type and double check for typos basic info, depreciation if applicable, among other things.

After allowing for things like death my retention rate is almost always over 95%, so I guess I'm doing something right.