BulldogTom

I am happy. I am not sure the new guy will be better but I was not happy with the Werfel. Not political, just felt like he was not capable of getting the IRS to the place where they could be counted on to do their job efficiently. And I have always believed that he did not respect the professional preparer community. Seemed like he was always pointing the blame for the fraud issues at someone else and then imposing new rules of practice that the bad guys aren't going to follow anyways. And I am happy I won't see any more of his dang cat videos on LinkedIn. Tom Longview, TX

How do you find this stuff? I skimmed the pages as well and I never saw anything. I suck at searching. You are the best, as always. Tom Longview, TX

If Florida taxpayer qualifies for extension until Oct 15 2024 of filing and making IRA contributions for 2023 return based on federally declared disaster, and before that due date, another disaster hit, does that Oct 2024 deadline for 2023 return get extended into 2025? This is a real taxpayer, but not my client. Taxpayer wants to make a 2023 IRA contribution and claim that they are still able to do so under the disaster declaration as their due date of the return was extended a second time. I know that they could have made the contribution up to Oct 2024, but I am not sure you can "Stack" those declarations. Tom Longview, TX

Shedding tears of sympathy for you is all I can do. I am not experiencing that. Tom Longview, TX

Attorney was on the email they sent me. Tom Longview, TX

I asked that question and I am waiting for a response from the client. Tom Longview, TX

That is what I told them. I cannot guide or advise them in this transaction as I don't have the skill or experience to do so. Tom Longview, TX

Non tax reason. They are teenagers and the Grandparents want the mother to have control until they grow up. In an SCorp, you own the shares you own the votes. In a partnership, you can split control from profits. At least that is what they expressed to me. Tom Longview, TX

IRS would say it was in connection with the work and therefore wages subject to payroll taxes. If the employer is not paying those taxes, the employee should. However, the correct approach would be to file an SS-8 for a determination from the IRS. Could you argue that the employee is not in the business of moving and therefore not subject to SE tax? Yes. But the substance of the transaction is going to make that a moot point if the IRS audits, because it should have been properly classified as wages, which would probably be the result of an SS-8 determination, so I don't think I could take that position on a return. Putting it on the C is convenient but most likely improper because there is no business associated with the income. Taking deductions against the income for the cost of the move is definitely improper. The client should be advised of this and given the option to amend the return that includes an SS-8. Client's choice on how to proceed. We only advise the proper way to file. In ATX, you can code a 1099 as subject to SE tax. If it was my client and I got that 1099MISC, that is probably how I would have proceeded assuming the client did not want to go with the SS-8. Tom Longview, TX

Thanks Lee. I saw that in my research. Very helpful. Lets me know I am not able to advise the client on the F type reorganization option. I think I am on the right track with how the taxation goes if they liquidate the corp and then fire up a new LP. Just looking for some re-assurance that I am applying the related party rules correctly. Tom Longview, TX

S Corp is looking at succession planning. 3 shareholders right now, Grandma (40%), Grandpa (40%) and Mother (10%). Grandma is the President. GM & GP want to pass their ownership to Grandchild #1 and Grandchild #2 eventually but keep M in control of the company. S-Corp owns highly appreciated real estate that generates rental income. There is only a small amount of debt on the property. Taxpayer plan is to convert to a Limited Partnership. GM & GP would form trusts holding their partnership interests. The trusts would then pass the partnership interests to GC#1 and GC#1. I don't think there is a way to get a non-taxable re-organization of the company from SCorp to LP? If I understand the general rules correctly, the SCorp needs to essentially buy all the outstanding stock from the shareholders in a liquidating transaction. The SCorp will calculate gain or loss and that will increase the stock basis of the shareholders, and then the shareholders will calculate gain or loss on the sale of their shares to the corp. Do I have the basics correct? However, since the parties are all related, they don't get Cap Gain treatment on the sale (§1239). Am I interpreting this correct? Assuming FMV of 3MM and Adjusted Basis of 700K, the Corp would distribute income of 2.3MM to the shareholders via their K1 and the shareholders would pay tax at ordinary rates on that amount. The 2.3MM is the sales price for their shares, assuming basis of of 200K plus the 2.3MM distributed, would produce a loss on the redemption of their shares of 200K which would be capital in nature. Finally, the shareholders would contribute their stepped up basis property to the new LP and continue in business. Am I anywhere near on the right track? Tom Longview, TX

I have a lot going on personally and professionally so I don't have the time (bandwidth) to devote to this client at this point in the tax season. That is all I am saying. Tom Longview, TX

HMMM....I have it on 2 computers, but I used 2 phones. Same app on each phone. Which authenticator are you using? Tom Longview, TX

Clients - CA MFJ currently CA residents. Exchanged 1 rental property in CA for 2 rental properties in ID in 2021. Have rented and reported rents every year on ID properties. They now want to move from CA to ID and convert one of the properties to a primary residence. California conforms to the §1031 provisions, with a clawback provision and reporting requirements for exchanges out of the state. I understand all those provisions. Rev. Proc 2008-16 generally provides a safe harbor of 2 years rental on exchanged properties converted to primary residence or personal use. Does CA conform to this safe harbor? My clients are good with the timeline for IRS purposes as they have over 3 years rental on the ID properties and it will be over 4 years of rental period if they make this move. Reason for the move: Irrelevant unless audited, but they have been taking care of their mother in CA and are no longer able to do so. The mother will be moving into assisted living which terminates the need for my clients to continue to live in CA. I am not worried about the IRS, but I cannot find anything that says CA will abide by the Safe Harbor provided in Rev Proc 2008-16. Total deferred gain is over 400K, so I don't want to screw this up. Thanks for your comments in advance. Tom Longview, TX

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I had a client several years ago who works overseas. I last filed his 2019 return. He contacted me this week asking if I could get him caught up. I don't have the bandwidth right now to get to the unfiled prior year returns (I assume most of you don't either). He lives abroad. Lucrative client, just something I can't get to in January. DM me if you are interested in a referral. Looking for a good home for this client. Tom Longview, TX

I don't know why you made your decision, but if you do come back, I will welcome you. I have enjoyed your company on this board. Tom Longview, TX

chump change

Don't hold back Judy, tell it like it is..... Tom Longview, TX

I know this is a stupid question, but since we went to 2FA, will ATX stop making us change the Password every 90 days? Seems redundant. Tom Longview, TX

I have nothing of substance to add to this post. I just want to say thanks for posting. I learned something. Tom Longview, TX

There is a time and place for Roths in a financial plan. There is a time and a place to do conversions (very low income years). Conversions are not the solution to all financial and tax plans. Tom Longview, TX

I hear you. If you are in the 10-12% bracket and you think you will be in the 28% bracket in a couple years, it makes sense. I don't see it happening for my retired clients either. Tom Longview, TX

surrender penalty is up to client to decide on. I just want to make sure it is tax & penalty free because it is in the IRA. Thanks for confirming my thought. Tom Longview, TX

Client does not want to keep his annuity that is held in his IRA. Wants to surrender and invest in something else. Since the surrender value will still be in the IRA, there is no tax or penalties, correct? Tom Longview, TX