kcjenkins

The sticking point in this situation is that the note for the property was from the father, then the father bought HIS OWN NOTE BACK, so I see this as a finalizing of the installment sale. Let's say the balance on the note was $10K and he paid $8K for it. The son's simply collected $4K each for the balance of the sale. Which amounts to an adjustment of the sales price down $2K. If you read Pub 537 it will give you examples of how to show this. As for the father, his basis will be what he actually paid on the principle of the note for the land. Ignoring the fact that this seems like a bit of a sham transaction, given that Dad owned the land in the first place, gave it to them so that he could buy it back from them.........I wonder if this was his residence and he sold it to them to take advantage of the exclusion of gain and end up with it back with a higher basis?

I agree, use the Simplified Method to determine the percentage to exclude.

Lowest is 3.45, highest 3.59 for regular unleaded. Diesel 3.75 to 3.98.

Yes, because the 'late fee' is basically just extra interest charged for the delay in receiving the payment. If you owe me money, and the regular interest on the debt is $.50 a day, and you are ten days late paying me, and I charge you an extra $5 'late fee' haven't I just kept myself even?

Is anyone here still using a mouse with a ball? REALLY????

OK, you are in Part IV, right? His 'basis' in the Roth is all of it, since he's the proper age and had the ROTH for more than 5 years. So you have the distribution, but there is no 'excess' to be taxed. I think you are just so lost in the trees you can't see the forest. It's that time of year.

Probably a software conflict between the new monitor's software, the mouse software, and the printer software. I'd try the help desk for the monitor maker, first, as they probably already know of the issue and have a fix that you can download. In fact, you may find it on the companies website without even needing to talk to the help desk. Always, with new hardware and a sudden new problem, start by going to the site of the company and looking to see if they have a new driver update available. They make these products, put them out with their software, and then discover, in the thousands of hardware and software combinations people have, some conflicts where two or more try to use the same bytes at the same time, etc, and they get called about it, discover the cause, and write a 'fix' for it. But if you buy that product that has been in a warehouse or on a shelf for a month or two, you do not have the 'latest' version, with the fixes since that was packaged. So often, instructions advise buyers to check for updates, but often we don't. We are in a hurry to use the new thing. We only read that stuff if something does not work, right? Right! So start there, and good luck. At worst, you spend $30 on a new mouse.

You may want to extend it so you have time to find out more. If you don't, my advice is to assume it is all taxable, since almost everyone I have ever seen that retired that far back took the option to pay no tax until their contribution was used up.

My point is, Bob, don't leave WV out of the mix, just because they don't know about the income NOW. Once you file it, they will. And it's not worth a small tax bill saved now, to be followed by trouble later. And you to blame for the bad advice. You could end up paying those taxes, plus interest and penalty. Do the WV return too.

Remember, the IRS notifies whichever state is shown on the Fed of the filing of the return. So then WV will want a return. They do not care that the income was earned elsewhere, if you are a resident you owe them a return on all your income, tho they will give you credit for taxes paid to other states. Had this problem hit me in the face with a client who moved to AR a few years ago, having moved from MO but not having filed at all for three years. We filed all the back years, and of course, we filed MO state returns since he was a MO resident working in MO in those years. But then a year later, he gets a notice from AR wanting taxes paid on his income for those three years, simply because the IRS had sent them the data because he was now living in AR. IT took us two YEARS to get AR to back off and accept that he was not living in AR those years. He was working in ST Louis, for goodness sake, and now, living in Jonesboro, AR, they suggested that he might have been COMMUTING !!!!!! Why sure, it's only 4½ to 5 hours to drive to St Louis, MO from here! ONE WAY! Who would object to driving that twice a day, 5 days a week? Suggested routes 1. 4 hours 25 mins US-67 N 231 mi 2. 4 hours 30 mins I-55 N 264 mi 3. 4 hours 48 mins US-67 N and I-55 N 254 mi

So she is a full-yr OH resident, [the visit with her mother was just that, an extended visit, not relevant for tax purposes] and he is a full-yr WV resident with PA wages. Do PA and WV have any reciprocal agreements about taxes? Otherwise, he files PA non-resident, WV resident taking credit as allowed for PA taxes paid. She files OH resident, and they file the Fed whichever way works best for them combined, either MFJ or MFS. And you bill should be HEFTY, JB, don't short yourself, you did not create the complexity, you are just dealing with it. Your time is valuable to you, and your service is valuable to them, and besides, you will probably lose them next year anyway, just because they are so far away, and apparently they procrastinate, if they just got this to you recently, so they will probably look for someone 'handy' there next year. So get paid well for this year, given the number of returns you are going to be filing.

Depends on several factors, and also varies from bank to bank. Is he a signatory on that account? If it's a joint account, probably will work fine. But some banks will not accept the deposit unless he's named on the account. So at a minimum he should verify with the bank whether they will accept it. Another option is to consider the debit card option that was added this year. Look on the efile info where it says MoneyWise MasterCard. That might be his best option. And some banks will allow the opening of a 'special tax account' that has no checks, is set up just to get the direct deposit, and costs only a small fee. You should check to see if any local banks do that.

Material Participation A trade or business activity is not a passive activity if the taxpayer materially participates in the activity. One materially participates in a trade or business activity for a tax year by satisfying one of the following tests. The taxpayer participates for more than 500 hours during the taxable year. In counting hours of participation, spouses' hours are added together. An individual's participation in an activity may be established by any reasonable means. Time reports and logs are not required. Treas. Reg. section 1.469-5T(f)(4). The taxpayer's participation is substantially all of the participation in the activity of all individuals for the tax year, including the participation of individuals who did not own any interest in the activity. The taxpayer participated in the activity for more than 100 hours during the tax year, and he/she participated at least as much as any other individual (including individuals who did not own any interest in the activity) for the year. The activity is a Significant Participation Activity, (SPA) and the taxpayer's aggregate participation in all SPA's for the taxable year exceeds 500 hours. A significant participation activity is any trade or business activity in which the taxpayer participated for more than 100 hours during the year and in which the taxpayer did not materially participate under any of the material participation tests, other than this test. The taxpayer materially participated in the activity for any 5 (whether or not consecutive) of the 10 preceding years. When determining whether the taxpayer materially participated in tax years beginning before 1987 (other than a tax year of a partnership, S-Corporation, estate, or trust ending after 1986), the taxpayer materially participated only if he/she participated for more than 500 hours during the tax year. The activity is a personal service activity in which the taxpayer materially participated for any 3 (whether or not consecutive) preceding tax years. To determine material participation in tax years beginning before 1987 (other than a tax year of a partnership, S-Corporation, estate, or trust ending after 1986), the taxpayer materially participated only if he/she participated for more than 500 hours during the tax year. For the passive activity rules, a corporation is a personal service corporation if it meets all of the following requirements. It is a corporation (other than an S-Corporation). Its principal activity during the "testing period" is performing personal services. The testing period for any tax year is the previous tax year. If the corporation has just been formed, the testing period begins on the first day of its tax year and ends on the earlier of: the last day of its tax year, or the last day of the calendar year in which its tax year begins. The services in (2) must be substantially performed by employee-owners. This is met if more than 20 percent of the corporation's compensation cost for its activities of performing personal services during the tax year are for services performed by employee-owners, and Its employee-owners own more than 10 percent of the fair market value of its outstanding stock on the last day of the testing period. Personal services are those performed in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting. A person is an employee-owner of a personal service corporation if both of the following apply. He or she is an employee, or performs personal services for or on behalf of the corporation as an independent contractor, during any day of the testing period, and He or she owns directly or indirectly any stock in the corporation at any time during the testing period. The taxpayer's participation is regular, continuous, and substantial. The participation must be more than 100 hours per year and then it is a facts and circumstances determination. Treas. Reg. section 1.469-4((1) defines trade or business activities as: * * * activities, other than rental activities [as defined in Treas. Reg. section 1.469-1T(e)(3)] or activities that are treated under Treas. Reg. section 1.469-1T(e)(3)(vi)( as incidental to an activity of holding property for investment, that- Involve the conduct of a trade or business (within the meaning of [iRC] section 162); Are conducted in anticipation of the commencement of a trade or business; or Involve research or experimental expenditures that are deductible under [iRC] section 174 (or would be deductible if the taxpayer adopted the method described in [iRC] section 174(a)).

Linda and Jainen, take the next 2 weeks to grieve, then PLEASE go to your local shelter and find a new friend who needs you as much as you need him/her. There are so many wonderful dogs available, and although the new one never 'replaces' the old one, they do make their own spot in your heart, and help you heal as well. I still miss my darling Little Bit, but the two strays that now share my life give me lots of smiles and happiness. I was not looking for them, but they found me anyway, both in odd ways. But now, they make me happy, and they really do wonders for my husband, who can enjoy them without having to feel he's shorting them because he can't talk to them! They talk to him with kisses, wags and cuddles, and he loves them both so much.

Linda, so very sorry for your loss. Anyone who does not understand that Buddy was a close family member just does not understand anything. As for the deduction, take it as UPE, and tell her to put it in the partnership agreement if it is not already there. Actually, you CAN take it on the A as an 'investment expense' but that is not the best way. And since it clearly IS for the benefit of the business, which would otherwise have to rent her an office space somewhere, it is certainly justifiable to take it on the E.

Well, it works!!!!!!

Just to throw in the 'other side' of the issue, if he's that old he may well have retired back when they had the option to take all their distribution as non-taxable, until they got back 'their contributions'. Usually got it back in the first three years, after which it is all taxable each following year. And those are the ones that say 'taxable amount not determined' because each person had a choice. Today, they have no longer got that choice, but 'back in the day', it was a popular option.

Turning it over and tapping it to knock out the tiny debris that falls into it can also help with a keyboard. And today's mice do not have track balls, they have optical sensors. Now and then they just die, but often all they need is a new battery. Always try that first when it gets flaky. Ditto for wireless keyboards. It's easy to overlook the simple things when we get this tired. Why do all the nuts and fruitcakes come in in early April??????

LA is very mean to non-residents, but whether he has to file there depends on his status as an investor. Just owing an interest does not automatically make him 'active', and if not, he does not owe LA any taxes. Just as owning GM stock does not make you owe MI taxes [or wherever GM is headquartered].

I suggest you download and read Pub 3, for all the answers to all those and more. http://www.irs.gov/pub/irs-pdf/p3.pdf

I agree, Gail, and that would clearly be deductible as a business expense. And, as I mentioned, part of the judgment is probably the other side's legal fees, and that is deductible. So none of it may be punitive. And based on that recent case, I think you could make a decent argument for deducting even any punitive amount, if there is such.

Jainen, just the 'reasonable and necessary' part, no specific cite. I agree that most of it should be deductible, but generally, courts hold that punitive damages are only granted for acts that are not within the scope of normal activities for the business. And thus, not, IMHO, 'reasonable and necessary' for the business. I've heard that argument from an auditor, and could not find a good basis to object to the logic. Although I'm always willing to learn, so if you know a way around that, please tell me. On the other hand, after reading this, I may have to rethink my position. Seems like logic is not enough, when judges rule this way. My link

Yes, Tom, but we also know that all the 'smart' crooks report all their income, it's on the expenses that they cheat. They know it is much harder to convict someone of tax fraud on unsupported deductions than it is on under-reported income. Juries tend to sympathize with someone who says, 'I lost the receipts, but I know I paid the expenses" while they find it much harder to buy the defense that "I forgot that I got paid that money". I'm not disputing that it would have brought in some more money, just questioning the huge amounts they claimed it would bring in, which were pure guesstimates. And it would have put a huge burden on all businesses, a cost that they ignored. If they had considered that, they could surely have written a more targeted, less extreme version that would still have done what you want without making us all have to send Staples and WalMart 1099s!!!!! They were not going to get any new revenue from the large public corps, who have to deal with audited financials, etc.

I agree, it was the research links that really impressed me. Having it all on one site made it a sure 'bookmark' for me. But just as I have, over the years, often given certain clients a 'Mileage Log' booklet to get them started on proper record-keeping, I am thinking about giving a few clients a Gambler's Diary. Thankfully, not too many of my clients go often enough for it to be an issue, but there are a few.......

Since he had to pay her $4K more than she had paid him, I'd be looking carefully to see what part of that was 'punitive damages'. Some of it might be the other guys legal fees, but if any of it was punitive damages, those can not be deducted.