BulldogTom

I have a client who passed last year. Age 97, definitely taking RMDs. No issues there. Final return includes the 2022 RMD. The Trust is named as the beneficiary of the IRA. In discussing the trust with the Trustee, I mentioned that they will need to take RMDs each year and totally distribute the balance of the IRA in 10 years. Trustee calls me back and says the broker indicated that Putnam (IRA company) will not calculate the RMDs to the trust, that they feel the regs say they only have to distribute the entire amount by the end of 10 years. I call the broker and he confirms that is Putnam's position and they are not going to change it. None of the beneficiaries want the extra taxable income at this point in their lives. My reading of the situation is that the proposed regulations need to be followed, and since the trust appears to qualify as a "see through" trust, the trust is a "designated beneficiary". The 3 beneficiaries of the trust are all identifiable persons (decedent's children), none of which qualify as an "Eligible Designated Beneficiary". I can calculate how much of a distribution to take to meet the RMD requirement, but I really don't want to take on that liability. Am I reading this right? I have gone through all the materials I have, mostly from Spidell (my go-to CPE provider). Have I missed anything? Thanks in advance. Tom Longview, TX

ATX does not make the form intuitive. The concept is pretty straight forward, the income was double taxed. The US will grant a credit for the taxes paid to the other country, but only to the extent the taxpayer pays taxes on that money in the US. That is what the form is trying to do. There are more nuances to what the form does, but if you follow through the logic, it is pretty straightforward. Tom Longview, TX

Should I just start with the 990 EZ? So that I am used to it when 2025 comes around? Tom Longview, TX

I read something about needing a special ERO account to file a 990 series form. Is that correct? Tom Longview, TX

2023 and 2024 probably under 50K. 2025 probably over. After 2025 definitely under.

I am volunteering with a Non-Profit (74th National Square Dance Convention) and I have never prepared a 990. Never had a non-profit client. I don't think it is something that is above me, just not familiar. Anyone willing to chime in and give me some pointers? This is the first year of the non-profit. It is expected to be in existence for 5 years and then fold. The corporation has been formed (June 30, 2022) and the 501 ( c ) 3 status has been approved by the IRS. All of the income activities so far have consisted of selling admissions to the convention, soliciting donations, selling t-shirts and miscellaneous branded items to raise money for the convention. Total revenue as of 12/31/2022 is less than 50K. The costs so far are deposits on facilities, purchases of miscellaneous items for sale, and legal fees for incorporating and and securing non-profit status. Total Costs to date are less than 10K. Can I use the 990N for the first year? Thanks in advance. Tom Longview, TX

I think it puts an audit target on the organization when you elect out. This regime for partnership taxation is not taxpayer friendly. It is designed to get the most income for the government at the lowest cost in time and effort. Someone in our government believes that foreigners, crooks and terrorists are proliferating in partnerships and s-corps and they are determined to weed them out. Enter the K2/K3. Wait until those audits start coming down. I could be all full of it on this one, but I think if you elect out, you will see more scrutiny. Tom Longview, TX

@Tax Prep by Deb It is facts and circumstances. Does it rise to the level of a business? How much time does she spend managing the apartment complex and what percent of her income does the payment represent? Does she hold herself out as a professional at managing apartments? Keep separate bank accounts for the payments? Derive any amount of enjoyment from the activity? Only you can ask the questions and then apply the facts to the taxpayer's situation. Just be ready to defend to the IRS when you come to your decision. Tom Longview, TX

Finishing up a 1041 trust this morning. Everything went perfect...until I tried to print the payment vouchers to .pdf. When I look at the form in the return I can see all the data, and I can print to paper and get all the data, but when I print to .pdf, I get a blank voucher form. No taxpayer info, no IRS address to send it to, no amount to pay? I printed the forms and scanned them to pdf and got through the issue, but I never had that happen before. I did delete the form, save the return, and add the form back but I get the same result. No issue with the CA payment voucher, just the federal. Anyone else ever see this problem in ATX? Tom Longview, TX

I know. What I wrote was what pops up in the software when you click the dropdown menu in the 8949 box f. Tom Longview, TX

8949 Input sheet, box f. Rec'd 1099-B or 1099-S as nominee. Adjusts the gain and puts the transaction on Schedule D. Pretty slick. Tom Longview, TX

TP passed with a couple hundred shares of stock remaining in his brokerage account (active trader - 58 pages of trades). Brokerage account is part of revocable trust. Daughter is Trustee. She sells remaining shares in account after death because she fears the price of the shares will drop. She did this before she got a new Tax ID number for the trust. Transaction is on the 1099B with all the other transactions from the shareholder under the Decedent's SS#. She told the broker when she did it that the TP had passed, so the broker stepped up the basis on the 1099B. It is not a large gain. How do I report this in ATX? Is there some way to "Nominee" the transaction from the final 1040 to the 1041? Or do I report it as is on the 1099B and back it out with an explanation on the 8949? Thanks Tom Longview, TX

@cbslee Thanks. I am over it now. I only have 4 returns to amend and it will be pretty simple, just waiting for confirmation of receipt of their refunds before I file them. I caught 3 others that were completed but waiting for signatures and was able to change them before they efiled. Tom Longview, TX

@BHoffman So sorry to hear about your struggles and heartaches over the last couple years. Please accept my heartfelt sympathy. As to the disaster loss...the year of reporting is generally the year in which the amount of the loss can be ascertained. So, if you have insurance and you don't know how much the insurance reimbursement is, you don't claim the loss until you know what the insurance will reimburse. In your case, if you timely filed your insurance claim, and you have been paid out by the insurance company, or they have told you an amount that you are reasonably certain will be paid, then you can take the loss on your 2022 return. If you don't know how much your loss is and you cannot reasonably estimate the amount of the insurance reimbursement (because you don't know how much you will get from insurance) then you should wait until you file your 2023 return to claim the loss (after the insurance reimbursement is finalized). Hope this helps. Tom Longview, TX

I don't know what to say, but you have my sympathy.... Tom Longview, TX

Those plans fall under the General Welfare rules, because you have to apply for and show need to receive those payments. Tom Longview, TX

Fair point, except the TAX LAW does not support the IRS position. Any educated analysis of the tax law will show that there is no basis in tax law for the IRS to exempt these payments from taxation. And I have bills to pay. I need to prepare returns. I can't wait for an inept government entity to get off their @ss and do their job. Tom Longview, TX

Sorry Sara, I think they bailed on their responsibility to collect taxes. Congress makes tax law, and Congress said all income is taxable unless Congress says it isn't. The Nine Clowns in Black Gowns (otherwise known as the Supreme Court) have affirmed that ascension to wealth is income unless Congress exempts it. Congress did not exempt the income because a plain reading of the General Welfare Exclusion tax rules provide that you must show need in order for the claim to be made. Governors from states that did not want their constituents driving to the polls pissed about inflation does not fit the definition of need. The payments made by the state of CA under the name "Middle Class Tax Refund" do not meet the legal definition of a tax refund (it was not based on taxes paid) or General Welfare (recipients did not have to show need in order to qualify as required under statute). Just because the states made the IRS job hard does not give them the right to just throw in the towel and say we are not going to do our job. And they will get away with it because it is like complaining that the highway patrol is not stopping speeders.

So we need to amend the returns we already filed? I cannot believe the IRS just threw tax law out the window "in the interest of sound tax administration". I want to rant so badly right now, but @jklcpaJudy will kick me off the platform if I do. Tom Longview, TX

Help me with this please? I have never had a household employee client, so I haven't put this on a return. What I thought I knew was this: If the employer does not pay the employee more than $2400, they don't have a WITHHOLDING AND 941/944 RETURN requirement, but they are still responsible for providing the employee with a W2. They pay both halves of the SS/MED on Schedule H. Do I have this right? So in the original post above, the employer should still be sending the employee a W2? Correct? And they are going to put the amount of SS & Med the employer is going to pay because they did not withhold on the employee W2? Correct? Tom Longview, TX

Working on an S Corp. all day. First one of the year. The last thing I need to do is enter the shareholder distributions. I cannot for the life of me find the entry screen. I pulled a huge brain cramp for about 20 minutes. Then I found it and felt stupid. Happy Tax Season everyone! Tom Longview, TX

I saw that explanation as well in my search. I can't find a cite for it in my MTG or anywhere in an IRS pub (yet - it was a cursory search). @cbslee do you have an authorative cite? Thanks Tom Longview, TX

If a Non-Profit reimburses a volunteer for legitimate travel, what rate do they use? 64.5 cents or 14 cents? Thanks Tom Longview, TX

I still think someone needs to dig into the 1099B and figure out what was held and sold. @DANRVANI like your suggestion above about zeroing out the Cap Gains, but I don't think I could do it myself. I don't think I could take that position and potentially have to defend it upon audit for the estate in a couple years. But I do think the estate Trustee should be able to get the information. It may just be a simple phone call to the Unclaimed Property Dept of VA, or it could be more involved. Tom Longview, TX

Thank you so much....appreciate you. Tom Longview, TX