Lion EA

Yep, new IPIN in the mail in January every year to use for the new calendar year for any and all returns e-filed/mailed during that calendar year only, including prior year returns and amendments. Not at all easy to explain to clients!

It turns out the NY bakery had no PA income until the second half of 2021 when they earned $600. That's why we didn't file in PA for the partnership in 2020. We filed PA in 2021, and per ex-DIL her new preparer filed PA in 2022 and 2023. So far, PA has asked for only 2020. She was told the base form only and she can upload it for purposes of renewing her license (?) but to mail the return to PA also. I may do it by hand/on fill-in forms, because my biz returns are pay-per-return, and I'm not getting paid. (Yes, part of me wants to charge her, because it's not my fault and she/her mother got everything in the divorce -- house, car, daughters, child support, day care costs even though ex says she doesn't work, no holidays with the girls, his entire Roth, etc. -- but she's the mother of our grandchildren and has kinda kept communication open for the girls sake, or at least because we're now paying their day care and buy things at their school fundraisers!) I should be able to get to this next week.

Yes, they've been filing personal PA returns for years. And, had a LT rental house for a few years. I remember following the flow from Federal to PA, especially for depreciation. I've had a few other PA residents that I filed personal PA returns for, but no one other than my son currently and no other PA partnerships since 2021. This one really threw me, because the partnership didn't have any PA business until 2021, and that was the last year I was the partnership preparer. The partnership paid less than $36 in PA sales tax, but had strange quarters: November & December 2021 + January 2022 was due 2/22/2022. The partnership closed for the winter and didn't reopen until the spring, so that year-spanning quarter meant the income was reported in 2021, but the sales tax was paid in 2022. I really hate returning to prior years. I generally charge a premium.

Judy, I appreciate your time and research skills and advice and everything you do. A huge thank you! And, thank you to Dennis, too. And for anyone else who has followed my rant.

No business in PA through at least 2020. NYS only. Due to some paperwork she just sent me, it looks like she registered for PA sales tax 7/1/2021 with an Effective Date of 02/04/2022. Don't know if she had any catering contracted in PA coming up in 2021 or 2022, or if she was just preparing to file for divorce and would be working out of her mother's PA restaurant as the partnership by 2022. (She did stop getting W-2s from her mother's PA restaurant by about 2019, so she had about three years of zero income reported when she filed for divorce.) It's possible that the bakery had PA income in the second half of 2021 or in 2022. But not in 2020. As messy as her bookkeeping is, nothing for PA in her 2020 paperwork. I can prepare the PA form with zero PA income and use the reg # she obtained the following year and upload it on my portal for her to sign and mail to PA.

I believe, but do not know, that ex-DIL has had PA clients and is working out of PA since 2022, but she had her mother's preparer for 2022 and 2023. Apparently, she has some type of license that she needs to renew that she cannot until she files the 2020 Form PA-20S/PA-65.

CT has something similar, but it's only for CT partnerships/S-corporations to report to all its partners. Not for partnerships in other states to report to its CT partners. CT doesn't require a CT partnership return from a NY partnership; the income flows to the CT residents via their K-1s.

I guess it's the coordination with NY reporting that worries me. The partners receive Federal K-1s and NY IT-204-IP. Why would a NY partnership even have a PA ID from the PA DRS?

The partners already filed joint PA returns, as well as NY and Federal, with the bakery loss account for on their joint NY and Federal returns.

So do all the DE companies with partners and shareholders who live in PA but work only in DE have nexus in PA and have to file partnership and s-corporation returns in PA? PA is worse than NY and CA.

I had to fight CA years ago when CA said a CT partnership had CA nexus because a partner lived in CA. The partner had invested some monies to help the 95% partner start the CT company but never did any work in any state at any time for the partnership. We did win that battle and were NOT required to file CA partnership returns.

I'm not looking forward to doing more free work for my ex-DIL; her bookkeeping was a nightmare.

Is this going to double their personal/joint return loss in PA, because they already reported the loss that flowed from the 1065 K-1 and the NY equivalent?

I called up the form/instructions as soon as I heard from her. I'm unclear whether only the PA-20S/PA-65 can be filed/mailed as a stand-alone form (it does have a signature block) or if they need a full partnership return when the partnership was not formed in PA and did not operate in PA. What I mean is, does this form flow from the Federal 1065 or from another PA partnership return?

By the way, this was a MMLLC taxed as a partnership.

(And, I do understand the use of "foreign" when used by states.)

It was a NY partnership. No PA income that year. (Hancock, NY, is on the PA border, so there were times over the past decade+ that they had catering income from PA.)

After the divorce, and after my time as their preparer, I think ex-DIL has been working out of her mother's inn/restaurant in PA. But, that's none of my business!

But in 2020, it "was a foreign partnership to PA having no income from PA sources but with PA resident owner (foreign to PA = meaning a partnership formed in another state but operating within PA)."

I'm in CT and have lots of NY clients (I'm also near a border, so commuters and a few residents) but my son, his then-wife, and the granddaughters were my only PA clients.

Ex-client is a PA resident who was a partner in a NY partnership (brick & mortar bakery formerly in Hancock, NY). We filed Form 1065 and NY IT-24 and related forms and schedules, including Schedule K-1 and NY IT-204-IP. And for their personal joint return, Form 1040, NY IT-203, and PA 40 with related forms and schedules. Never in what the partners requested or my software diagnostics suggested since 2012 has PA asked for anything else. Now the remaining owner says she needs a 2020 PA Form pa20s-65 filed with PA. For 2020.

Should PA-20S/PA-65 been a part of their 2020 returns?

Do I need to prepare PA-20S/PA-65 for all years since 2012? Or from 2020 forward?

This is my ex-daughter-in law who owned a bakery with my son. Due to their divorce, 2021 was my last year preparing their returns. My son is no longer a partner in that bakery.

From at least 2012 through their 2021 returns, I prepared all the business and family returns for free.

All advice gratefully accepted.

My NY license #s roll forward, but not CT. NY requires a DL, no matter what state the DL is from, for a NY resident or NR return. CT does NOT require a DL, but claims they DO use it for ID purposes if it's included. IIRC, CO doesn't require a DL but strongly warns that refunds will be delayed or language to that effect. At least TN and FL don't have state returns. It's too late at night to remember the other states 8 I file.

Yep, started on another family. Every. Single. Return. has something new and different this year. Same old clients, in fact I fired a few. But my guesstimates on when I'll complete a return or when I'll get to someone #12 in my stack are way off this year due to all the new issues. I also started a load of laundry last night. 

Marchternity

@MarchternityBot

Today is March 1544, 2020. It will never end. #taxtwitter

And, that person who lost his license and got a new one without telling you. Thank goodness, I ask each year, so I found out.

CT makes you hand type in the license number each year. I don't know if Mr. Normal's link will work if a client has a CT return. I'm going to try something similar in my software to check it out, though!

I'm hoping! The dad did mention his son depositing the scholarship check, because the check was in the student's name only, and then dealing with the college to send them 2 cashier's checks (1 for each semester) in a certain way per the college. Son will go online to get the 1098-T and bursar's report when they return from their trip.

From the college's website:

External Scholarships

So you have been awarded an outside scholarship by a church, civic organization, your high school, business, private donor, foundation or any number of external agencies—Congratulations! Billions of dollars are earned by college students every year across the country.

This page will provide a step by step guide on how to notify the Tennessee Technological University (TTU) Office of Financial Aid about your outside/external/private scholarship. Federal regulations require that you notify the University regarding all externally funded (not awarded by TN Tech) scholarships, and we want to make sure all federal regulations are followed.

How to Submit External Scholarships to Tennessee Tech

Please be aware that you are required to notify the Financial Aid Office at Tennessee Tech whether or not the award is paid to you directly by a donor or through the university. You are responsible for ensuring that your Tennessee Tech Financial Aid reflects all scholarship funds that you receive. This is important to ensure that no one inadvertently violates federal regulations regarding total eligibility for other forms of financial aid. When you receive notification of any award from a donor other than Tennessee Tech, please immediately notify the Tennessee Tech Financial Aid Office.

If you, the student, receive a scholarship check from a private entity:

Please submit the scholarship check to the Tennessee Tech Financial Aid Office immediately upon receipt by the donor. Checks should be submitted no later than August 1 for the fall term, December 15 for the spring term, and April 15 for the summer term in order for them to be processed by the first Fee Payment Deadline. Checks submitted after those dates may not be applied in time to assist you with bill payment.

Make sure the scholarship check has your name and Tennessee Tech ID (your T#) listed on the Memo at the bottom of the check. If you go by a nickname or your middle name, be sure to provide your legal first name.

Check to see whether the check is written just to Tennessee Tech, or to both Tennessee Tech and you. If your name is included in the "Pay to the Order of" line, you will need to endorse the check by signing the back of it.

Make a copy of your award letter or any information included with the scholarship check (such as a check stub). We will need a copy of this information, but you should also keep a copy for your records. Then, remit to the Tennessee Tech Financial Aid Office.

I know, I started with prizes & awards and kiddie tax. Fund is labeled as a scholarship, and essays were required; committee judged the essays and awarded 3 scholarships. But, I could name my company Dollars & Sense Scholarship...

The good news, if it's a scholarship, is that parents did not claim any education credit. But they also do not have Form 1098-T. Student is retrieving it electronically from the bursar's office. Turns out he doesn't know his password, and they're on vacation. So when they go home.

That means I'll worry and obsess over what this $5,000 is, where to report it, for another week!

Thank you, everyone.

Ouch. Fall 2023 tuition & fees were $5,415. If parents took any education credit, that leaves at least some scholarship monies taxable to the student.

Family is on vacation in CA as the student's HS graduation present. I think I'll wait until they're home to deliver bad news.

Gotta check with software to find out how to enter this. Earned income, right? Darn.

Yes, without preparing the parents return, I was missing that piece. No Form 1098-T for the student, no knowledge of 529 Plan distributions (I'm sure there were none, because grandfather invests money for grandkids, and I have their consolidated 1099s), savings bonds cashed in for education (again, unlikely), scholarships reported on 1098-T, etc. Student went to an in-state school in a LCOL state with tuition about $10,000. It's going to be close! I'm used to contacting the father each year for the amounts I need for Kiddie Tax. I may be UNDERthinking, because I didn't think to ask about the amounts I need to know for which return needs to report which info for education. I don't remember having a client with a scholarship that didn't appear on Form 1098-T before. Another question I must add to my DD list. Back to dad... Thank you, Tom and Judy, for pointing me to education credits when I got stuck on "scholarship."

But the parents already took the education credits for their dependent and have possession of the Form 1098-T. (I don't prepare the parents' return.)

So, the parents would subtract the private scholarship from tuition before calculating the LLC or AOC; and the student does NOT report the scholarship on his return?

Anyway to prove this is a gift and no need to report? The closest I find is Prizes & Awards on Schedule 1 for winning with his essay. But, is there anyway to subtract tuition from that? Is there any other place to report this private "scholarship" where I can subtract tuition?

The dad seems to think the scholarship offsets tuition for both fall semester 2023 and spring semester 2024, and worked with the college DD Tech to send them a cashier's check to apply to fall tuition and another cashier's check for spring tuition. But, I feel the student had constructive receipt before his HS graduation in 2023 when he was handed a check written in his name.

https://www.fincen.gov/boi

https://www.fincen.gov/boi-faqs

https://www.fincen.gov/boi/Reference-materials

https://www.fincen.gov/boi/small-business-resources

https://www.fincen.gov/sites/default/files/shared/BOI-Informational-Brochure-April-2024.pdf

Dividing up marital assets in a divorce is NOT buying an asset at FMV from your soon-to-be ex.

Dad got back to me; situation is different from what I understood from grandfather.

BB Yacht Club scholarship (even though check was written by BB Church). Family is NOT members of the Yacht Club.

Offered annually to all graduating seniors in the DEHS Band.

Essay contest with 3 prizes in the form of a check. My client won 1st place of $5,000.

Check was made out to him personally with the memo " A BB Yacht Club Member's Name Scholarship." (Member wanted to support HS music.) No other paperwork.

No mention, verbal or written, on a restriction on the use of funds.

Knowing this family, though, it was no surprise that they worked the DD Tech to split the funds between 1st and 2nd semesters, applied to student's account via cashier's check. Dad did keep photos documenting all the process, if I need them. I think dad is saying the funds were used for tuition.

It was called a scholarship but was paid to the student for whatever he wanted. The student has no relationship to the specific scholarship/person whose name in on the scholarship. However, the student attends the church that has the scholarship fund; only church members received scholarships. Grandfather hires me to prepare his grandkids tax returns; he's an investment banker and has invested monies for them since they were born. I talk to the dad once/year to get his return info for Kiddie Tax on his kids' returns. I'll check with dad/church member, but grandfather thinks there was no application nor essay or anything. Grandfather thinks what ever committee at that church just picks a few recipients out of their HS graduates. I'm trying to confirm or get details from dad. Prizes & Awards and taxable? Gift and not taxable?

Wow! Quick work, Eric. We appreciate your knowledge and hard work to make this move and to continue to monitor it for us. Thank you!!

College student received a $5,000 check written to him from XXX Church Trust with YYY Scholarship in the memo. Taxable? Other Income? Kiddie Tax?

Follow the link Catherine posted.