imjulier

Hopefully someone has some experience with this because I don't. Client set up an LLC (one person) to use to invest in various activities but has only invested in one so far. An oil and gas partnership which issues a K-1. I don't have the paperwork yet so I don't know if client or LLC name and tax id are in the K-1 but I'm guessing its going to be for the LLC. How do I handle this? A Sch C with the K-1 information on it? Any guidance is greatly appreciated. Julie

Catherine- Here's my 2 cents: If money is accrued for the SEP, the s corp should have taken that as a deduction on its tax return and therefore, they are required to put into the SEP. If they don't, the S corp return should be amended/filed to remove this expense and the related liability and the personal returns amended or filed accordingly. I assume it is for 2008 as you can't put into a SEP after the due date of the return. If it is from previous year's, I would amend that year's 1120S and personal returns accordingly. This would be the tax benefit of making the SEP contribution, if allowed. As for the loan from the shareholders, it depends on what their basis is in the S corp. Recall that non-deductible expenses and losses affect basis so the loan may or may not be their basis in the company. If they have basis in the S corp and it is closed out, I would take that as a sch d loss....limited to $3,000 each year or to offset capital gains. Hope this helps. Julie

I just wanted to check in with some of the great minds on this one....I'm sure many of you have seen it before. Client has rental property which was trashed by renters and required $20K+ to get it back in shape and functional as a rental. Clients claim (and are probably right) that "improvements" don't add value to the home and that if not totally trashed by the renters, they would not have done any of this work on the house. "Improvements" they are describing to me all sound like capital assets as they have a life of many years. Of course, my plan is to capitalize and depreciate but client doesn't want to do this as they are out $20K and at least want to see a tax benefit from this. I explain basis and how this will help them out when they sell the property. Do any of you see any justification for expensing vs. capitalizing? Thanks for any feedback. Julie

Thanks Deb and Cathy- This is my understanding as well and thought the $500 additional only applied to 2009 home purchases but I just wanted to make sure my understanding was correct as well. Also, I've only had a client buy in 2008 so haven't had to think about 2009 purchases. I'm having trouble staying caught up on all the tax law changes. I guess you could call it fun but frustrating might be more like it. Any one else want to weigh in? Julie

I don't mean to sound stupid but......What do you mean amend for the other $500?

Taxbilly- So if an accountable plan exists no reporting on the 4562? Thanks, Julie

I've just always been confused on how to handle vehicles in the s-corp. Single shareholder S corp who reimburses themselves at standard mileage rates out of the corporation. Should the vehicle be entered in Asset entry (in ATX) and reported in section B of the 4562 or can mileage reimbursement be claimed as auto expenses without doing this. Shareholder, not Scorp, owns the vehicle. Thanks for your feedback. Julie

I did this yeaterday in a client's return and it worked fine. What seems to be the problem? Julie

Hmmm....now I see where your line of thinking is coming from. Any of the examples I have available to me (client's and my own records in my office at the time) do not show amounts in the Prior OT....but none of my clients moved here recently as in your example. Also, as you may have tried, I went to the Dept of Motor Vehicles page to try to find a description of this and got stuck in a loop so couldn't find it. I think you are correct in assuming OT is Owners Tax. I'm just not sure what prior OT really is. For what it is worth, I've never really thought about it and have always just used the Own Tax box. If there was anything in Prior OT, I haven't used it. I'll have to keep my eyes open and see if this mystery ever reveals itself. Is it significant to their return and does it change their results that much? Julie

If I recall correctly, the account has to be fully distributed prior to claiming losses. Julie

I think you might be asking if this is deductible as an itemized deduction. The answer is yes. Its usually marked "Owner Tax" or "Own Tax" in about the middle of the car registration. I'm not sure what previous OT is but if my response is confusing I can run out to my car and try to figure it out. Julie

Help. I think I saw this topic here not long ago but don't recall. I have a client who's dad bought her house in 2008 becasue she could no longer afford it and now she is renting from him about $500 below FMV....even in this economy! I think it falls on him to report correctly on his tax return. My question is if this should come into play in determining if she can claim HOH which says taxpayer has to pay more than 1/2 the cost of keeping up home. I don't think it should impact that but wanted some other opinions. Julie

You are right. The loss should equal the amount of the transaction fee, if there is one. I generally "plug" the basis to get the correct loss after entering info from the 1099B. Hope this helps. Julie

"Bunny Hopping" from line 44 will get you there

I've done it this way and haven't had any problems. Julie

When I had this a few years ago I used the 5329. 1099 R showed earnings on the money as taxable amount. The taxable amount is subject to the 10% penalty. If no earnings, taxable amount should be zero. ATX handled all this from the 1099R input and my conclusion was that this was correct. Julie

Does anyone know on this?

Bottom of the filers info tab of the 1040 form

I looked....make that 84 people. I don't do any daycare so didn't even really know what it meant. Julie

Have a self-employed client who put 10,000 in his SEP when only about $6500 should have been allowed and is deductible. I think I should just take the allowed amount on page 1 of the 1040. Is he allowed to get the rest back? Should I handle this any differently? I told him last year that he should wait until his taxes are done to get the amount from me but he thinks that is too complicated. Thanks, Julie

For me here in Colorado, I ignore it because these are state employees that are covered by a plan set up by the state called "PERA". But this only takes the place of SS and not medicare. I would guess this might be different by state. Julie

Yeah! Wayne's here!

I had one of these a couple years ago. If they are not a resident of the VI, file 1040 with form 8689 attached with the IRS. Send the same to the VI. If a resident, only file with VI. At least thats what I found out a few years ago unless anything has changed. See the instructions to form 8689. And remember, everything is on Island Time down there so its not easy! Julie

Thanks guys for your responses. Obviously, allocating income on the K-1s makes sense and is a lot simpler. Julie

Anyone out there know the impact of changing the ownership percentage of S-corp at mid-year? I believe this requires a short year tax return for the first half of the year (with ownership allocation in place) and then another short year tax return for the rest of the year with new ownership allocation. Am I right? Thanks, Julie