kcjenkins

Jack, you forgot Obama and Biden! LOL ;)

Now that's the sort of kids we need a lot more of! My oldest grandchild, a sophomore in college this year, told me he's thinking of changing his major to accounting !!!!! :o

25 Cents A guy took his blonde girlfriend to her first football game. They had great seats right behind their team's bench. After the game, he asked her how she liked the experience. "Oh, I really liked it," she replied, "especially the tight pants and all the big muscles, but I just couldn't understand why they were killing each other over 25 cents." Dumbfounded, her date asked, "What do you mean?" "Well, they flipped a coin, one team got it and then for the rest of the game, all they kept screaming was: 'Get the quarterback! Get the quarterback!' I'm like...Helloooooo? It's only 25 cents!!!!

If a partner’s capital account is negative at the beginning of the year and has a balance of zero at the end of the year, the partner may have left the partnership without satisfying his/her share of partnership liabilities. If so, the departing partner may have received a deemed cash distribution under IRC section 752( b ) Transfers among family members identified as gifts may trigger sale or exchange treatment for the donor to the extent a decrease in the donor’s share of partnership liabilities is treated as a deemed cash distribution. Rev. Rul. 84-53 illustrates basis allocations and adjustments that may occur when a partner owns multiple interests in a partnership and disposes of only a portion of such interests. Gift of a Partnership Interest A gift of a partnership interest is usually a family affair. IRC section 704(e)(3) provides that the purchase of a partnership interest in a family partnership by one member of a family from another shall be considered to be created by a gift from the seller. IRC section 704(e)(2) addresses the allocation of distributive share where the partnership interest is created by gift. Of course, the gift of a partnership interest to a family member can be other than an interest in a family partnership. The gift of a partnership interest may have a tax impact on the donor. The following factors should be considered when determining whether an issue is present: Whether the partnership interest transferred was properly valued; Whether the adjusted basis of the partnership interest was correctly stated; Whether allocation of the distributive share of partnership items between the donor and donee was correctly computed; Whether the transfer resulted in debt relief to the donor; Whether debt relief results in a deemed sale of a partnership interest; Whether the allowance of suspended passive activity losses was correctly computed; Whether there is a gift tax return requirement and a gift tax liability The gift of a partnership interest free of liabilities (that is, has no share of partnership liabilities under IRC section 752) is not subject to income tax. If the partnership interest is encumbered by debt, or the donor partner shares in partnership liabilities pursuant to IRC section 752, there is potentially a taxable event. Gift of a Partnership Interest Unencumbered by Debt The basis of the gift of a partnership interest in the hands of the donee when the partnership interest is not encumbered by debt is generally determined as follows: For purposes of determining future gain, the donee’s takes a carryover adjusted basis from the donor. For the purpose of determining future loss, the donee’s takes a carryover adjusted basis from the donor, except that if the donor’s adjusted basis was greater than the fair market value of the property at the time of the gift, the basis to the donee is limited to the fair market value at the time of the gift. Effect on Passive Losses The gift of a partnership interest with accumulated suspended passive activity losses will not trigger an allowance of the losses to the donor or donee. See IRC section 469(j)(6)( b ). The suspended passive activity losses are instead added to the donor’s adjusted basis in his/her partnership interest immediately before the transfer. This step up in basis carries over to the donee under the general rules of IRC section 1015. See IRC section 469(j)(6)(A). The step-up is to the donor’s outside basis in the partnership under IRC section 705, rather than the partnership’s inside basis in its assets. Any tax benefits to the donee are deferred until such time as the partnership interest is disposed of in a taxable transaction. Moreover, the step-up in the donor’s outside basis has limits. If the addition to the donee’s basis resulting from unused passive losses exceeds the fair market value of the partnership interest at the time of the gift, and the donee subsequently disposes of the interest in a taxable transaction resulting in a loss, the donee’s basis is limited to the fair market value at the time of the gift.

It's just fine to brag on them, Tom. And in my experience college bureaucracies are very much like government ones. Much more focused on their forms than on the goal of the form.

Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Increase your basis by all or part of any gift tax paid, depending on the date of the gift. Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis by any required adjustments to basis while you held the property. Dad is clearly going to need to pay gift tax on the gift. For the partnership adjustments, the best guidance I know is the audit guide. http://www.irs.gov/businesses/partnerships/article/0,,id=134696,00.html

ROTFLMAO Tom, shame on you, you naughty boy! Cat will do great, I'm sure.

Yes, Tom, this is one you will like a lot. Absolutely.

I agree.

This is a bit of a change, but fits under the NT title. Really good discussion of the lie being pushed about the Ryan Medicare changes. http://online.wsj.com/article/SB10000872396390444508504577595350022637244.html?mod=djemEditorialPage_h

No way do I believe that RUMOR, Jainen. It does not in any way fit with what we do already know about him. Nor is there a shred of proof provided.

I do agree with you, Jainen, about the campaign promises, And somewhat about the voting record, although I do think that the record, over time, does show me a lot about where he will compromise, and where he will stand his ground. As for the tax returns, there are only a few things I get from them. While it is interesting to see where the income comes from, and may give some insight into why he votes the way he does on some things, I don't think it tells me much more than that. National pols are going to use professionals to do their returns, and often to manage their investments as well, so I don't pay much attention to that. The Sch A I find interesting because of the personal lifestyle information it shows. Personally, I doubt that any successful individual pays that much attention to the DETAILS of their tax returns. they leave that to the professionals. And given the way our government wastes money, if they try as hard as possible to legally reduce how much they pay, I respect that decision.

And Reid makes a mockery of the Senate when he uses his position in the Senate to make a speech that, if he made it anywhere else, he could be considered to be committing slander. The fact is, like most wealthy people, Romney most likely simply gives his documents to his accountants, who then do the best job they can to make sure that he neither under nor over pays his taxes. If it's now a sin to take advantage of the tax laws written by our Congress, I don't want to live here any more.. Plus given the way our government wastes our money right an left, I really feel like it would have been wrong for him to give them a penny more than the law required him to do. Better that he gives to charities that he believes in, in my not at all humble opinion! But Reid has no basis for his slander, either. He claims he was told this by "someone who was an investor with Bain Capital". Please tell me how just investing money with a company would give you access to the personal tax records of an owner of the company? http://newsbusters.org/node/8287 http://hotair.com/archives/2012/08/07/wapo-fact-checker-gives-4-pinocchios-to-harry-reid/

Yes. you are reading it just as I would. The trust would not have a penalty, because they did just what they should do. However, the corp then had the responsibility to pay that money over to the bene, so if they did not pay it out to him, the corp officer who made that decision could be liable tor civil and maybe even criminal penalties. So the assumption that he made the choice to invest the money into the corp is actually the best assumption for him.

Very true. It's the worst area in the entire code. When I was teaching it, my students often got hung up on the unfairness of many of the quirks in the code. Almost always, if you look back into the discussion on the passing of a particular part of the code, you would find it was a reaction to some 'creative' partnership deal that a smart accountant had come up with to save a client money. And like any law based on a particular case, there were always 'unintended consequences' that screwed up legit partnership agreements. Plus, back before LLCs, partnerships were really the only alternative to corporations, so they were used to try to fit agreements between groups of investors who did not want the restrictions of the corporate form. Indeed, many of those odd quirks began before the Sub S was created. I hated teaching that section myself, just because it was so full of complexities that were really unexplainable through the use of logic or fairness.

You'd have to read the trust documents, but I very much doubt if the trust is allowed to invest in the company, which is the only way I can see that you could avoid giving him a 1099 and taxing hmi on it. And depending on his age, might have early withdrawal penalties as well as income tax. You know how strict the retirement rules are, I know.

Seems like this is a "substance over form" issue. I think the IRS would look at this as the money being distributed to him, and he then invests it into the company, don't you? I'm nowhere even close to being an expert on retirement trusts, Tom, so don't rely on this. I just present it as a way of thinking about the problem, which may help direct your research. Clearly, if a significant amount is involved, you want some authoritative cites before you make a move, but this is where I would start in thinking about it.

I'm with Jack and John on this part. If you return the check but they "lose" it, you have no proof at all that you sent it. Registered mail does not prove WHAT was in the mail. Sure, they have no proof that you cashed it, but since they have all the power, they expect YOU to prove that you did not, On the other hand, if you cash it and put it into a savings account,, AND you keep copies of all the correspondence where you try to clear it up, I've never had any problem getting them to abate any penalties. If you do hold it until you are certain that it is not a proper refund, then return the check at a local IRS office, in person, and get written confirmation from them that you did, signed and dated, Paranoid? Maybe, but based on real-life experience.

Well, partnership accounting, as Jack mentioned, is nutty, frankly. So it's hard to explain the odd things that result. Basically, over the years, accountants tried a lot of things in partnership books to improve the tax bottom line and then the Congress and the IRS passed laws and regs to defeat those tricks, and we ended up with our current crazy mix of rules and restrictions. You could, since the building in this case is fully depreciated, take a short cut and enter the thing at FMV, with a note in there on the original cost and ac dep, and just select 'nondepreciable' for the asset type. There is no logical benefit to calculating what the dep could have been, as far as I can see. But that is your call, and maybe Jack will chime in again if he sees a reason for you to calculate it anyway.

The father's basis at the time of transfer is the partnership basis. The original cost is booked and then the accumulated depreciation is booked as well. So now, the asset continues on just as it was on the father's books.

Then they might want to consider going ahead and taking the money out of the 529 and paying it on the medical bills now. If they are going to lose it either way, better it go there, IMHO.

Those who are too young to have ever swatted a fly with a rolled up newspaper don't even understand what is funny about that one. Which I also find funny.

I was visiting a friend last night and I asked if I could borrow a newspaper. His wise-ass son said "This is the 21st century, old man, we don't waste money on newspapers. Here, you can borrow my iPad." I tell you what, that damned fly never knew what hit it...

I'm not sure, Tom, but would suggest you ask the client to get you a copy of the paperwork on the plan. there is always paperwork. And the paperwork should clear up whether the child owns the plan or the parents do. If the kid owns the plan, then you should not have to disclose it, but if the parent does, I think you do. But that is just off the top of my head, I have not researched it.