Linda Mathey

Good question, I have never thought about it and never had it come up. When I efile a federal extension I usually end up paperfiling the actual return and just attach a copy of the 4868 to the Ohio return. I think before I would send letter, etc. I would call Ohio Dept of Taxation and ask how to handle. I have had really good results with phone calls or using their email found on their website. They usually get back to me within 24 hours. Let us know what you find out.

If you elect a fiscal year and if the estate makes distributions to the benes during that year you can pass out income equal to the distribution to them on a k-1. They might be in a lower tax bracket than the estate. If you elected a fiscal year you will file it on a 2007 form but the benes would pick up the income on their 2008 tax return. In addition, if you elected the fiscal year and the estate then made payments of expenses such as attorney fees, executor fees, etc. it would reduce or perhaps eliminate the taxable income. You can elect any month end as long as the first year for the estate is 12 months or less.

I agree that unless the other income is also a business and not a wage he will be limited on the Section 179 expense to the amount of income from business ventures. The extra 179 over and above the income from the business would carry forward to next year.

I know this is late, but my understanding is the proper way to handle it would be for the expenses to have been used when paid even if there was no income to offset. There is no NOL with a 1041 for those type of fees. They are just lost. This is one reason that it is important to hold off paying those large legal and executor fees until the final year since then they can pass thru to the benes unless there is adequate income in the early years to absorb them.

I agree with both responses above. I always match the 1099 and insert a line below saying "reported on Form 1041 under EIN #XXXXXXXX. I have never had any matching notices. Be sure to give the information to whomever is preparing the 1041 so they are sure to pick up the correct amount of income.

If the farm transferred right after her death thru TOD designation then all income earned after date of transfer belongs on son's return. There would be no Form 1041 since her estate had no income after her death.

Most wills specify either that after all bills are paid the balance is to be divided between X & Y or the will may specify that a trust be set up. I have handled numerous estates and even those that are to be distributed are still open long enough to make sure that all bills are paid. Sometimes you get medical bills from the last illness, utilities, etc. that need paid. However, it is also true that with US savings bonds if they are cashed as soon as possible then that income can be reported on the decendents final tax return. Just make the election to do so.

These trusts which are revocable during the grantor's lifetime become irrevocable at death. If she is a bene and this K-1 is made out to her then tax it on her return.

When facing a situation like this, select a year-end prior to making any distributions. Then the estate will pay the tax and the estate can distribute the first day of new year. For example if you select July 31 and no distributions have been made, the tax will have to be paid by the estate. Then on Aug 1 distribute the monies remaining, close the estate and file final return.

I always used to use Capital Changes Reporter but since I am on my own I do not have that service. I am looking for a free service that will allow me to track stock splits, spin off's, etc. on stocks. Specifically right now I have a client that bought First Data Corp in 1994 and now owns more shares than the original purchase. They cannot remember selling any shares. Before I allocate 100% of the original purchase price to the shares I would like to be able to track splits. Can anyone help?

Thanks for the feedback. I will look at the notice. Unfortunately the person doing the taxes, payroll, etc. is his girlfriend with no background in tax. I talked with her and she did withhold for him and prepared a W-2. They filed his return and picked up the W-2 income and withholdings. A mess...not sure I want to tackle it unless they get a notice on the 1040 and then we can talk about it.

To answer the other question regarding the exclusion available if the home is sold in the future. That also hinges on who really owns the home. If it is owned by the kids and not their primary residence then no one gets the exclusion. If the deduction for interest and taxes is $25,000 then the mortgage payments are probably much more than that amount . How about if the kids did a wrap around mortgage? I can't remember exactly how it worked but when we did it, it allowed children who were paying parents for the mortgage on their (kids) home to deduct the interest even though original loan was in parents names. Wish I could be more specific but it was quite a while ago.

The K-1 (if a 1041 is required) would be a 2007 K-1. However if we assume that the 1041 would have a year-end after 12/31/07 then any income would not be reported until the 2008 tax return. Listen to the others and ask your client for permission to contact the attorney. Find out from him whether a 1041 will be filed and if yes, who will be responsible for filing it. Find out what year-end he selected for the estate. With such a short time frame, extend his return while you figure it all out.

Sorry I was not clear earlier. He owns a bar & lounge. He has employees. He withholds both federal and state taxes as well as social security taxes. I told him to file a 941 for 4th qtr 2007 (his first quarter in business). Now he got a notice telling him not to file 941. No, we did not tell them income would be below threshold. Guess I will have to 'bite the bullet" and call IRS. I do not do his payroll taxes but I think he may have also paid himself and withheld. Once I check how do we correct that if that is the case?

Does anyone out there know how to report quarterly wages and withholdings for an LLC---single owner---filing a Schedule C? Client received notice from IRS not to use Form 941. Any help would be appreciated.

Had a similar situation about 10 years ago. The employer was eventually forced to pay both halves of the social security taxes. Nothing to be done about withholding since that was a "she said....she said" Didn't bother my client since she was no longer working for the party and the employer had no recourse to withhold the social security from future wages because my client no longer worked for her.

It worked perfectly! Thanks so much!!

Yes, that works if I want to print the page but I need to know how to create a PDF file with only pg 1 of the K-1 in it.

When I first went out on my own I developed my own organizer using Excel. I always have to go back to the prior tax return so I can input the prior year's numbers. Several years ago I looked at the mini organizer but it was not adequate for the majority of my clients. Thanks to the posting of the message I went back into the 2006 program and selected 2007 organizer. I was pleasantly surprised to see all the prior year numbers. I will definitely be using the expanded organizer in the future. Thank you ATX.

I do not import any worksheets into ATX although I use them for my clients to tie out totals for things like dividends, interest, capital gains and losses. They function as my way to double check what I input into ATX. Many of my clients have multiple brokerage accounts due to different investment managers. These managers each do hundreds of sales in a year. The spreadsheets help me to make sure the proceeds reported on 1099 tie to the sales reported on Sch D.

Sorry to sound "dense" but when I select print I do not see where to select only pg 1 to print. I go to the k-1 to global and select which k-1 to print but it prints all 10 pages including basis. What am I missing?

I watched from the sidelines while another person in our offices went through a nasty audit upon the death of a wealthy client who did not get appraisals when gifting property and shares of stock in their closely held company. Instead the client had relied upon non-professionals to set the value. The IRS "pulled" large amounts back into the estate by arbitrarily deciding that the value at the time of the gift was larger than declared. I usually use that example and if the gift is large enough, they get an appraisal.

No, I do not have a separate PDF printer. I guess I will scan and create file from there. Thanks for responding.

Tom, Yes I need to know how to get the software to put it into Part II without overriding things. I just want to make sure the ordinary income portion is shown correctly. What am I doing wrong? Thanks.

In the past when clients gave a % of property to their parent or child, we got an appraisal, filed a 709 and reflected on the title the new owner's percentage. This is especially important if the property is property that is appreciating. It locks in the value of the gift.