Lion EA

Simplification = I get to increase my fees!

A realtor who exaggerates, what a surprise! /s/s/s

If she makes more money, she'll pay more taxes. If she wants to make more money, she can depreciate everything possible over the longest life possible. She can raise rents. Usually landlords want to make as little money as possible or, better yet, have losses. Then they make money when they sell, and have suspended losses to release in the year of sale. Some of that sale income can be long-term capital gains. You're her tax advisor. Maybe she needs a life coach.

$16,000 per person per year. Not $16,000 at one time and $1,000 later in the year and $500 for her birthday. If OP's client did that, a gift tax return would be required. But OP said his client did NOT want to file a gift tax return. Unless his client has been very generous during his lifetime, he's not likely to owe any gift tax with the return.

Why would you use ID.me anyplace other than your online IRS account? I was told in a class that you can use video chat to identify yourself to the IRS, instead of using ID.me

You have a copy of your 2020 income tax return, right? If not, can you call your software provider who transmitted your return? I haven't opened an IRS account (I can no longer get into e-Services, for example, because the IRS says "there is something in" my account). What info is shared with private vendors?! Can they access anything in my IRS account? That would be important information to know.

Don't forget that if he gives her $16,000 of bonds but wants to NOT file a gift tax return, that he can give her NO other gifts in the same year, no birthday, holiday, any reason gifts.

Maybe they can pay Rita in tomatoes...

Filing does preserve the 3-year SOL and makes identity theft harder (or catches identity theft since the last time they filed, so they can act on it now). And, the state may be a lower requirement (isn't IL only $33 of income?! CT is a higher threshold than federal, but ANY amount of CT w/h requires a filing or a $50 penalty).

If it was one residence for the MFJ couple selling, and they otherwise qualify, then up to $500,000 exclusion. It was one residence for the couple, per OP; they just sold it in two pieces. A bit like selling some land used with a residence and then later house and rest of the land as two sales that can qualify for the exclusion if meeting all the qualifications and time limits. Never a rental, right?

If the partnership was on extension until 15 September, then the K-1 is very timely. Hope the partner/your client was on extension, also.

And, the family has some hoops to jump through to provide you with documentation that the FMV has appreciated from the cost basis.

Sounds like it was the client's fault. If they want to call/wait on hold to see if they can fax it to someone that would speed up the process...

OK, so a family bought the basket in 2010 for $1,500. One family member passed away? Then the family donated the basket in 2021 to a museum. I don't see any other documentation other than the $1,500 -- IF there's a paper trail for the $1,500. Are you asking what charitable deductions all the remaining family members receive on their 2021 returns? Without any other documentation, and assuming they kept their purchase documentation, $1,500 divided by the number of remaining family members. If the family is hoping for more, they have some more legwork and research to do.

I see only mailing in the instructions.

It sounds more like a hobby than a business. Why would you want to draw attention to it by filing an S-election now, hoping to make it retroactive? Why does the company want to be an S-corporation? It's going to cost them a bundle to have you do their past bookkeeping, payroll, financial statements, personal returns, etc. I hope you have a huge retainer. Can they afford you? Can they afford all the P&I? If they came to me and insisted on a much-too-late S-election, I'd send them elsewhere! If they came to me to make a fresh start, I'd work with them to treat their casual hobby/business like a real business. I would not rewrite their history. Depending on their income and long-term plans (do they want to take in a new shareholder, for instance?) I might suggest an S-election for 2023, after I've seen them make the changes I'd require. If you have time to redo 2022, you might make a late election for 2022.

Not to mention the P&I on all those years' worth of late payroll forms, 841, 940, etc., and amending his personal returns to account for the new W-2s and K-1s. Your fee should be huge! They issued a W-9 stating what name, TID, and checked what biz structure?

Our tax dollars at work -- NOT.

Has it been operating as an S-corporation since 2016? Payroll? Forms W-9? Did everything except file the election? Thought lawyer filed it? What?

Was it part of the inventory of the belongings of the deceased for probate or on his estate return? If the estate paid tax on a $3,300 value, then that would be documentation. If they haven't included a value, or a value no higher than $1,500, before or at death, then they need good documentation now to claim a higher value! Can't have it both ways!

What is the basket currently insured for? That could be documentation, maybe. Or, a quote from an auction house or consignment shop, what would they price it at?

And, a lot of high school kids listened to their friends and filed in the IRS portal for EIP3, which counts as a tax return. The kids get their free $1,400, but their parents' returns get rejected due to their dependent already filing a "return."

Thank you, Katherine. I think I understand that.

Again, I'm not doing their bookkeeping. Are you saying to overwrite to include it on the balance sheet as a normal depreciable asset for 2021? (Depreciation will begin in 2022.) I'm not giving them journal entries. They have a list from the checks written and from deposits made during the year. They have no fixed asset account, because they have no "books" except for the list generated after the fact from the business checking account.

I was looking at the Other assets (attach statement). It's going into service now, so I know I can make the adjustments to move it on the 2022 return. (This is my son and DIL. It's always the freebies that take me the most time and anguish!!) Thanks so much, Margaret and Judy.