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.

Well - that is what they are going to do. The bank has agreed to re-issue the 1099 in the decedent's name.

Now - in the mean time I was given a different piece of info: That if the will states that everything should be distributed then it must be distributed, and cannot stay at the estate level. Otherwise, the state will step in and tell you the same. Otherwise, if the will states a purpose for the money of the estate which create perpetuality, then the admin can elect to have the estate pay the tax. But I haven't found anything in writing supporting this either.

Everything I find is rather murky or referencing very complex stuff.

You always get these people right at the end of the season.

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.

I have a client who brought me a K-1 from her Father's living trust. (Father passed away in 2007). K-1 shows $67,411 in box 5 "other portfolio and nonbusiness income." I believe this is taxable but wanted to make sure?

Thanks!

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.

>>Forget the rental situation, even though parents pay kids each month.<<

I would think long and hard before advising any one to overlook $25,000 of potential rental income on the children's tax return. It appears that the kids legally own the house and are the only ones on the mortgage and that the kids are writing out a check to the bank each month and are in return receiving a check from the parents? Advising anyone to overlook the check from the parents to the kids each month is a sure way to get yourself a $5000 preparer negligence penalty.

There are numerous court cases where the parents in this situation have been held to be "beneficial owners" and have been allowed to deduct the mortgage interest and real estate taxes. A problem for you might be that in most of these court cases the parents paid the mortgage directly to the bank as I recall. I would look into these numerous court cases regarding "beneficial owners" and go from there.

If you decide beneficial ownership doesn't fit, then you've got a classic case of a rental situation. If rent is FMV, then it goes on a Sch. E. If rent is not at FMV, then line 21 and Sch A for expenses.

In no case would I advise the kids taking the $25,000 deduction for interest and taxes and just forgeting about the $25,000 worth of checks from the parents. They can't have their cake and eat it too.

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.

Maybe Linda's question is if the sole prop LLC is paying employees other than himself. Why wouldn't the the Sch C business use the 941? Does the Sch C business have an EIN?

Is it's possible that the IRS is looking for annual Form 944, if the client indicated that the taxes would be below threshold?

Sorry I don't really have an answer for you.

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.

go to print page the check the custom print box go to the k-1 and click on box it will open and show everthing check the box next to form and it will only pdf the page one of that k-1 if you already marked whick k-1 to print on bottom of global form.

See if that works for you. I tried it and it did just now

It worked perfectly! Thanks so much!!

While on the page you want to print go to "Returns" and next to last choice is "Print Current Page". You can also just right click on the page you want to print and the third choice from the bottom is "Print Current Page".

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.

on the print page click the box and check only page 1 to print and also on k-1 on bottom tab check whic k-1 ones to print. they are numbered so you only send your clients k-1 do this first then to print.

then I say pdf and tell it to save on desktop the go to desktop and right click and say to send to email address.

Works great

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?

Isn't that one of the items that your clients usualy find written on your ceiling? who needs an appraisal?

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.

Linda, I bought the "PDF factory" print driver that ATX included free in the tax software a few years ago. It's installed as a separate printer so I can just change the printer in the ATX print screen and print to that PDF printer, which then allows me to delete pages.

I just tried using the PDF print button in ATX and it creates a file from which you cannot delete pages.. (dumb). Do you not have a separate PDF printer installed?

Another option would be to scan the doc, and create a pdf email from there.

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.