Gloria

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.

Thank you all -- for your time and advice -- I will be doing some research based on your answers. THANKS AGAIN.

Forget the rental situation, even though parents pay kids each month. The house is owned by the kids, they get to claim the deductions because they are actually paying the mortgage. I have personal experience. Who got the money from the loan, parents or kids? This is the deciding factor of the risk.

When you ask, Who got the money from the loan? Are you asking, who financed the loan? If that is the case, the kids did and the house is under the kids names Maybe I should find out who came up with the downpayment (if a downpayment was made--with all those risky loans that were going on for a while!!!)--would that make a difference (the downpayment information)?. Please let me know what other information I should find out from the taxpayers. I am going to meet with them on Wednesday? Thanks for the input based on your experience.

Your post is confusing. Whose name is the house in?

Did the children buy the house and the parents live in it?

The parents live in the house and the children are financing the house for the parents; therefore, the house is under the children's name.

Is there anything that can be done in a situation where the son and daughter-in-law financed the home for the parents. The parents do not take the interest or tax deduction because the loan is not under their names (which is significant over--$25,000). The son & daughter-in-law would like to benefit from the interest and are wondering if they can treat the house as a rental (using the going rental rate). The parents give them a check monthly so that they can in turn pay the mortgage. I told them I did not think they could bout I would do some research. Also setting the rental issue aside—if in the future the house is sold by the parents, would the parents loose the $500,000 tax exception since the house is not under their names—assuming the son/daughter in-law cannot treat it as a rental..

I will appreciate you expertise. Thanks.

Thank you KC and Gerald for your advice.

I switched from ATX to Proseries last year -- and I am back with ATX this year. I was dissappointed with ProSeries all year. Quite a few years I used Proseries for two years after Intuit purchased Parsons Technology who had a taxpackage for a little over $300 or maybe it was even under $300. Of course, afer the acquisition they did away with the program and we were offered the ProSeries at a dsicount for two years. I was very impressed with Proseries back then but I had to find a different tax program when they increased the price the third year--with my part-time tax business I could not justify the high price. I found ATX/Saber and I was dissapointed with all the features that ATX did not have compared to ProSeries but the price was reasonable. Over the years ATX has continued to make improvements and the program is now better than ProSeries. I switched to ProSeries because they contacted me and they offered me a good price for two or three years and I did not know what was going to happen with ATX after CCH took over ---- PLUS I remember how much I liked ProSeries several years ago --- BUT LAST YEAR, I REALLY MISSED THE EASE OF USE that ATX provides -- so I am back with ATX -- and I really hope the program is not discontinued by CCH. I, too, have also learned a lot by reading the posts when I have time. Thanks everybody for helping out with the questions that are posted.

I have an appointment with a new client next week and he indicated that in late 2006 he purchased 3 UKC registered dogs and the purchase price was written off in 2006. For 2007, he has taken the dogs to shows and has purchased a travel trailer and he has quite a bit of expenses. He takes the dogs to the shows so that when they have puppies he can show the awards earned to be able to justify a higher selling price.

Since the taxpayers has not had any income for 2006 or 2007 from sale of puppies as he has not started breeding the dogs yet, will this create a problem? When I meet with him, I am going to ask questions to make sure this is not a hobby versus a business. If it does seem that it is a legitimate business, would he have any problems with not having any income from the business to date?

Thanks in advance for your advice.

Does Arkansas have efile for business returns? Most states don't unless it's some kind of web-file option.

I was not aware most states do not have efile for buisness returns as I only have one Corporate client. Thanks for the information.

Thanks for the VERY VERY VERY HELPFULL information --- do you think you can link a "DONATE" button to your member area so that some of us can maybe make your dream (basking on a beach) a reality--YEAH SURE!!!!. Thanks and have a great day.

A gift.....is a gift.......UNLESS it is a gift with a retained interest. Then, under IRC Sec 2036, the transferred property is includable in the decedents estate and gets a stepped up basis to FMV at date of death. Please note that while the code section is titled "Transfers with retained life estate" a formal life estate is NOT necessary to achieve this result.

The elderly parent transferred the home to a daughter and the elderly parent continued to live in the home until the elderly parent died. The elderly parent transferrred property and retained the possession or enjoyment of the property for a period which did in fact not end before his or her death.

Ooopppps........now the daughter actually gets a stepped up basis to FMV at date of death under 2036. Now if only I got a dollar every time someone answered this question that a gift is a gift, I'd be basking on a beach somewhere instead of doing taxes......lol.

Has anyone been able to create an e-file for 1120S (Arkansas), I keep getting an error on the E-File signature page indicatint that "if either the Preparer's Firm Name or EIN es entered, both must be entered or both must be blank. Both are blank -- I have deleted the form and reopenned it and I get the same result.

Also more than likely the State is a piggiback --- does anyone have any idea when it will be ready to e-file based on prior year's experience.

Thanks.

The basis of inherited property is generally the fair market value at the date of death. What would be the basis in the following situation: [font="Arial Black"]A single elderly parent was very ill and title to the principal residence was transferred to a daughter’s name several months before the death of the parent? The parent had lived in the home for many years until she died. Would the basis be the parent’s basis or would it be the fair market value at the time title was transferred, or something else?????.

Thanks in advance for your response

Has anyone ever reported S/E tax using the wrong social security number? If so, how did you resolve it?

My problem is so boneheaded. Spouse has a small business with a small yearly net profit of around 3-4,000 (no W-2). Since 2002, I have actually had the husband as the business owner (major oops!!). The self employment tax has been recorded under his name. Client came in with earnings report that shows zero earnings since 2002.

Anyone have any suggestions?

I did something similar to what you did. I had been preparing a tax return for the spouse (female) for several years and she is self-employed. When she got married I continued to prepare her taxes. In the year she got married, I changed her name to the spouse's spot on the return but I neglected to chance the schedule C to indicate that she was now the spouse---needless to say, the social security was reported under the husband's name for two years until I realized the mistake tha I had made. I contacted several people at the IRS and the social security administration with no straight answers. The last time that I contacted the IRS they adviced me to prepare amended tax returns to correct the error --- I did and the problem was resolved. I asked the taxpayer to look at her yearly summary that the social security administration provides and it ws corrected. When I prepared the amended returns, I attached a note to the front of the return explaining why I was amending the return eventhough the explanation was also included on page 2 of the amended return.

Thank you very much -- your answers are very clear -- I appreciate it.

The IRS has the following listed on their web page regarding food program reimbursements:

Food program payments to daycare providers. If you operate a daycare service and receive payments under the Child and Adult Care Food Program administered by the Department of Agriculture that are not for your services, the payments generally are not included in your income. However, you must include in your income any part of the payments you do not use to provide food to individuals eligible for help under the program.

My question is: if the reimbursements are not taxable would the child care providers reduce their food expenses by the amount reimbursed? And what do they mean by "that are not for your services".

I have a client that received $5,312 in reimbursements and had food expenses of $7,428 -- so it seems that I should reduce the expense by the reimbursement. The T/P runs the child care and prepares the meals with help--so she would provide the service.

If any of you have experience in this area --- I will appreciate your advice.

Thanks in advance.

Have any of you submitted an e-file and had the bank reject the deposit because the checking box was selected on the e-file transmission rather than the savings box or an account was closed --- if so, do you know how long the IRS takes to send a paper check to the taxpayer.

Thanks in advance for your answer.