ralphv

A BIG thank you to all for the wishes. You are all great. Hope you have a great weekend from your friend from S. Fla.:-).

You are forgiven.

Mr. Crandall, I believe that where I live, what I eat and what I make are really nobody's business. As for your comments regarding making a big deal of a $200-400 a year increase, I would like to remind you that lat that I heard, he US economy is based on capitalism. Try going to a store and buy a $50 shirt with $45 and see what happens. In this system, people have the right to choose what they want to pay for a particular product or service. If the price is right, they buy, if not, they walk. I also know that when you are hired, you have a pretty good feel for the type of work you will be doing. Unfortunately, your field is not on the top of the earnings board. If you are disgusted with your current or past positions, you should consider a change of profession. As far as ATX is concerned, they have a good product, but have made a few marketing gaffes. TRX has come in and offered some outstanding deals that in my opinion are hard to beat. Fortunately for me, I don't need the income from this profession to pay my bills, but I don't like to waste money either.

According to the IRS website, The Homebuyer Assistance and Improvement Act of 2010 extended the purchase date requirement for homebuyers who entered into a binding contract before May 1, 2010, to purchase a home before July 1, 2010. Under the Act, these homebuyers may claim the credit if their purchase date for the home is before October 1, 2010

>>client buys a new main home on 7/2010 and would like to take the credit<< There is no credit available for a home bought after April 30, 2010. taxbilly Taxpayer signed contract before April 30th. Closed on 7/07/2010.

I have a client that took the 1st time HB credit on a home purchase in 5/2009 ($7,500)and was included in her 2008 return. Client sold the house to a related person on 12/2009 and returned the credit on 2009 return. Now client buys a new main home on 7/2010 and would like to take the credit. She would like to amend her 2009 return and get the $8K credit for her latest home purchase. Being that she had already owned a main home even though she only owned it for 7 months, in my opinion she would not qualify for the credit again. Am I correct?

Catherine, keep on dreaming.

After evaluating the software, I decided to go ahead and make the switch to TRX (Taxworks). It was a difficult decision since I have been using ATX since the early '90s and can handle it with my eyes closed. But the people at TRX have been very nice and helpful. The "learning curve" is not as bad as it first looks and after playing with it you start to feel comfortable with it.

I used them last year and purchased the ATX TTO package. It was an excellent decision. Now they are offering Taxworks and at first was reluctant to change, but the deal they are offering is too good to pass up.

Thank all of you for your replies and support. I am taking the same approach and will report after all is said and done.

Attached is right out or the IRS website: Installment Sale If the taxpayer sells a passive activity on the installment basis, current and suspended losses may only be deducted in the same ratio as the gain reported. If there is excess gain, that gain is passive income under Reg. § 1.469-2T©(2) and will permit deductibility of additional losses to the extent of the gain.

Yes, the property sold in '05 (installment sale)was a rental property. I inserted all of the values from tp into ATX for tax year '06 and the software routes the gain from the sale to form 8582. It combines it there with all rental losses from '06. The rental loss was $87977 and the gain from the sale was $85383. The loss on form 8582 is limited to the amount of the gain (85,383).

Ok,now that I have ALL of the facts, let me share: TP had 4 rental properties and sold one of them using installment method (6252)the previous year (2005). In '06 (year being audited)the balance was paid off and the majority of the gain was realized (85,383). These 4 properties were all rentals and had been for some time. Up to this point there were no suspended losses. The 3 remaining properties reported a RENTAL LOSS of 87,977. On the return, the loss of 87,977 is limited to the gain of 85,383 and both amounts flow to form 1040, lines 13 and 17. The IRS is disallowing the 85,383 loss and thus only considering the gain, resulting in a deficiency of around 50K when incl. penalties, interest etc. I would like to thank all of you that chimed in. I know your time is precious and limited. This field is very complicated and things can be interpreted differently and sometimes incorrectly. I am of the belief that if you are not 100% certain, you ask and dig. That is why I posted the question.

Yes, some of the loss was specific to the property sold.

There were 4 properties, one of which was sold.

Isn't the gain on the sale of the rental prop passive?

Have a new client that is being audited (2006). Client & spouse had w-2 income of 155k, a rental loss of 87,977 and a gain from the sale of a rental property of 85,383. IRS wants to eliminate the rental loss of 87k because of income limitations and tax the gain of 85k. On the return, the two figures flow to form 8582 and allows a rental loss of $85,383. I believe that you can offset passive losses with passive gains and that the return is correct. Am I missing anything here?

Jainen, thank you for your input. NECPA, I am glad you got a laugh out of this. Yes, doucumentation helps quite a bit at audit time. You can also throw in deep pockets and a good tax attorney as well :-).

Ok, good. So even if client could qualify for R/E prof. status, suspended losses can only be used to offset passive income in the future when he sells the properties whereby he would generate a gain on the sale (unless real estate keeps loosing value)or gain on other passive activity. In that situation, his gain from the sale of the rental properties would be lowered by his suspended losses, correct? However, rental loss incurred in 2010 would be fully deductible.

The individual works for the govt. and has about 2 months accumulated leave that he plans to use before retirement. He is both active and materially participating in the rental activities and also perf. repairs/renovations, besides managing. Do the regs spell out minimum # of properties to qualify for R/E prof.? If so, what #?

Correct me if I am wrong: I have a client that owns two rental properties. During the last three years, he has over 50K in losses that were not deductible due to income limitations (W-2 income over 150K). He is going to retire early in 2010 (June)and thus the rental units will be his sole responsibility. That being said, if he has the necessary hours (750 I believe) he can qualify for "Real Estate Professional" status, making his loss for 2010 fully deductible. Can the taxpayer carryforward the loss from the previous three years and apply to 2010 return and if not where or in what situation can they be applied. Thank you.

Is this a new client or did you roll over? Was the data there when you rolled the return over?