KeysBooks

Okay thanks for that clarification. Its true ! I can roll with that one. I think they are being pretty conscientious and not wanting to let it fall into disrepair to save the neighborhood/neighbors from dealing with it.

KC: I understand your reponse, but not sure what the appropriate action or recommendation to the client would be. On one hand you are saying the client is not longer the owner, the bank is. Does this mean you recommend against putting home on market for a short sale? but, on the other hand you are saying, if they get hit with a 1099 c; then regardless of the timing; the client isn't responsible for taxable income. So, are you advising here that they could go ahead with a short sale without a taxable consequence? Thanks,

Thanks for the input. Just to clarify, the client hasn't been enjoying a free ride and living there for 9 months. The client hasn't paid anything on the mortgage for 1 1/2 years but also hasn't lived there either and immediately moved out 1 1/2 years ago with the intention of selling on a short sale that fell thru as the bank dragged feet and buyers renagged. It never sold. In the meantime due to several other factors, client filed BK and included it hoping the foreclosure would occur expeditiously. It hasn't and the client has kept up the home ( the a/c on to avoid mildew, done internal repairs, kept up the yard, etc.) The taxes and insurances have been added to the balance of the note with the bank and the bank has paid them. The municipalities, therefore, will not be forcing the issue. but, the bottom line maybe that if the realtor were to find a buyer for the home on a short sale, then the realtor on behalf of the buyer would have to negotiate directly with the bank. The problem is, even if the bank were to agree to a short sale; since the client still technically owns the home; the bank could send a 1099c to the client.

Client filed BK in Jan 09. Cleint included a home in the BK and was discharged. Bank never foreclosed on the home 9 mos later. Client considering a short sale to reduce burden of care of the home. However, the Client's BK attorney is not sure what the tax consequence might be if client were to receive a 1099C (cancellation of debt) for a date 9 months to a year after the BK discharge. Please advise if anyone researched recent rulings regarding this scenario as I'd like to be able to advise client. Thank you.

51% Shareholder dies in May 2008 Remaining Shareholders always filed the tax return and are filing this year. His daughter, the personal rep of estate of 51% sh who died never transferred the 51% shares to the other shareholders. Small mom and pop pressure cleaning business that has no real equity. Time to file their 2008 tax return. Can we report to the 51% shareholder only his 51% from Jan - May rather than the whole year ? Does the death itself remove him from the corporation. or is it more correct to report the whole year since the shares were never relinquished by the personal rep of his estate? This corp is resolved in 2009. Whats the correct way to handle this?

They suffered commerical fishing boat business casualty losses in 2005 with hurricanes and lost equipment and traps. All of which put themout of business. The K1 is showing 150,210 Net Section 1231 Gain as they sold a lot in that year as well (forced due to hurricanes), Line 10B -130,749; Line 15 A 8,353 and Line 17E 137,322. ATX doesn't have Line 10, 15, 17 linked to the return. Where should I show these on Form 1040? Been cruising thru the IRS sites and various form instructions. $150,210 from Net Gain on sale of lot is flowing forward to Ln 13, Form 1040. And the Net Income Loss on Business Activity of -38K is flowing to Ln 17. But, they must be able to also take the casualty losses up to their basis. They have a plenty basis as they have loans to corporation (which will also get written off with upcoming bankruptcy filings in 07 & 08). Let me know...this is a first for me and I'm helping out as their bookkeeper as bankruptcy atty needs returns and will review them. But, I'd like to get as accurate as possible before submittal to him. Thanks. ps....so, glad to see you as ATX community have taken initiative to get back up again on line as it was a valuable resource over the years. Glad to see old faces like Janien, Taxabilly and KC back at it. I was lost last tax season with out it and seriously considered leaving ATX.