Tax Talk

I want to make a change for my CPE.. anyone ever use Surgent? I've been using CPE 247 but I want to try something else.

I have another H&W client with an short term rental -  out of state Airbnb with less than 7 days average rental period.They purchased the property mid-October 2023 and began renting in December. I can't find anything in my research that discusses how the more than 100 hours test is applied when a short term rental is purchased late in the year.Is the more than 100 hours still applied for 2023, or are the 100 hours prorated?If it is a hard 100 hours no matter when the property was purchased, then maybe they will be able to meet the substantially all hours participation test.If they meet the material participation test, which causes the property to be taxed as a business, will they be able to expense $5,000 of start up cost for expenses to get the property ready to rent? These are expenses such as cleaning, supplies, travel, repairs and maintenance that are not major remodel or improvements but they total $6K.I am reading conflicting information regarding the treatment of startu

Hi, client has a property ready for rent, waiting HOA approval. Is it considered placed in service for depreciation purposes?

Hi, client has W2 income where he contributed $14K pre-tax and about $50K schedule C income. When I check the max to contribute to solo 401K in Proseries Basic it says $31K. It seems like 1. it's not accounting for the $14K contribution on the W2 income and also the fact that it's past 4/15. If I'm not mistaken, he can contribute employer portion only past the 4/15 deadline which is around $9K?This is the first year, the account is not yet established. Does the extension allow for retroactive employer contributions?Thank you!

I am filing 2023 tax return for a Nonprofit Org. to get an investment credit and am being stuck here in Proconnect. I file 990-EZ first with Form 3800 and Form 3468 attached. It was accepted by the irs but then I found out I have to file 990-T to apply for the credit. So, I filled out the 990-T and also attached Form 3800 and Form 3468. I e-filed 990-T but the return was rejected. The reason for the rejection:"Error message: If any 'GeneralBusCrFromNnPssvActyAmt' or 'PassiveActivityCrBeforeLmtAmt' from 'Frm3468PartVICYAggrgtAmtGrp' has a non-zero value and the corresponding column (c) 'PassThroughEntityEIN' does not have a value, then Form 3468 must be present in the return.Solution: Form 3800: Current year general business credit from form 3486 credits from non-passive activities (column e) has a value but the pass-through or transfer credit entity EIN (column d) is missing. If there is no EIN then form 3486 must be in the return. Since the program currently does not support

Indiana IT20 Gross Income tax of $1,000,000 must be E-filed.  Proseries and other programs do not allow for E-file.  State is charging my client over $7,000 penalty.  What is solution? 

Hello all and thank you for reading! The client has a software business set up as an LLC that is filed on schedule C with his 1040.a while back he took on a partner/investor who made a 300K cash infusion for an equity %in the Company. i think it was 30%long story short is he has now as of TY 23 bought out the partner for a mutually agreed upon price of 80K for all of the 30% back.The business has been showing major losses for a while and for the first time in 2023 it had income although still a loss over all. he was audited by NYS for 2022 ( big loss), so i am being cautious with just entering the 80k expense without insight. he has all the receipts for everything so ultimately we are not worried.my question, what is the correct way/terminology to classify the expense as a single line item on the schedule c. Shall i enter guaranteed payment to partner or partner buyout. or am i completely off.i have took into consideration the whole idea of the LLC not being filed as a partnership

My client (US based startup funded by VC) bought a 100% owned foreign subsidiary, and they are transferring funds sporadically to the subsidiary to fund their operation. Both companies are R&D and not making any profit, just lots of expenses.What would be a good way to structure the transfer on the tax return? I am thinking as intercompany loans? Any advice on how to figure out the interest would also be appreciated, since the transfer s are sporadic. They would transfer 200k one month, then 100k the next. They are jointly doing research and closely collaborating.Also, in the first half of 2023 the subsidiary paid acquisition-related expenses on behalf of the parent company, the sub's CPA firm also classify them as intercompany loans (due from parent). So at the time the parent actually had an outstanding loan (due to subsidiary) until eventually the parent transfer enough to become a creditor in the 2nd half of the year. How would you recommend booking those transactions in the ea

He, my client owns S Corp 100% and - allegedly by a former contractor - he did not follow through with a promised ownership offer. She, the ex-contractor, also alleges that he embezzled from an unrelated party (on a separate business matter.) She is furious and irate and possibly mentally unstable (words of the DA) and flooded me two weeks ago with 10 emails describing conversations with her lawyer and the local District Attorney.  They engaged an attorney to mediate their dispute. That attorney has not contacted me.I highly doubt she initiates me in a legal action or involves me.  She has not made any hints and seems comfortable talking with me and sharing her feelings, ugly as they are.  I assisted them with an ownership tax issues two years ago but he didn't make an ownership offer.  She has not asked me for advice  I don't know if a lawsuit has started.  I anticipate that this 2023 S Corp return could be a part of a future lawsuit. I probably

Have a couple she is retired he will be retiring within 5 years.  He is paid a very high salary as well as bonuses.  We've been deferring, investing, and saving using all avenues.  Now he wants to modify all four bathrooms in his home.  He feels $100,000 is what he needs.  Trying to figure out a way to be able to use $100,000 and due to home modifications. They are seniors and this is their forever home.  I am sure I am missing something because this seems fair and doable.  Can someone advise on if this is possible?  

using Lacerte SC1041 is calculated taxes due on the SC income and applying withheld taxes to the liability.  cannot force flow through of income to K1.  if trust pays tax at trust level, shouldnt the k1 to beneficiary be zero?  if so, does nonresident beneficiary still have to file a SC personal return?

a client received 1099 q indicating 190000 was received in 2023............ form 1098 t plus other educational expenses paid for 2023 totaled 165,000...   does the irs match 2023 1099 q with form 1098t for 2023...........? in this case the excess withdrawal was used to pay and frontload 2024 first semester expenses ......... any problem .............? in this case the taxpayer  in this case the taxpayer withdrew monies for 2023 which included 2024 first semester anticipated costs ............any problems here ?    

I vaguely remember some California practitioners mentioning this subject.  For those who are still interested, there is an interesting article here: https://www.politico.com/live-updates/2024/05/16/congress/a-successful-discharge-petition-00158356 Which has a link to the bill, which apparently extends some disaster-area deduction time frames while making specific references to the wildfires, and to the Ohio train disaster.  You have to read between the lines to figure out why a Republican from Florida is so passionate about this subject, and managed to recruit so many Democrats to actually get some action on it.  

Bill Romanowski and his wife have around 15 million in tax liability.  How was the IRS able to go so far back in years for that assessment of taxes?  It even sounded like liens weren't recorded until 2019 or so.  And the taxes are all the way back to around 1998.

December 2023 client takes a distribution and receives a 1099-R Box 1 Gross Distribution $264,076Box 2 Taxable Distribution $264,076Box 2b Taxable amounts not determined checkedBox 7 Distribution Code 4 DeathIRA/SEP/Simple marked with XClient used funds to purchase a home in 2023 with these funds.Question: Can the client take a $10,000 first time homeowner's credit resulting in taxable income being reduced?  If yes, where do you enter in Lacerte? 

The client provided a list of deductions, one of them being fraud expense. Is this deductible?

Anybody know what to do about efiling nonprofit short year tax returns, as well as the requirement to file 2 in the same calendar year?The IRS has required this for over 2 years, but proseries still has not resolved the issue. the work around they gave me took 6 hours to implement and then did not work. 

In depreciating a home office, that office is supposed to be depreciated as commercial real property, which is MACRS straight-line over 39 years. Generally, §1250 property is depreciable real property (i.e., buildings and improvements) that is not subject to §1245. Now, a home office is "buildings and improvements". So, this home office nonresidential real property (in the MACRS 39-year class) is depreciable only under straight-line, this real property is not subject to recapture.Yet, it has been my understanding that there is home office depreciation recapture, and many posts talk about matters surrounding this. But no one that I have seen explains why such depreciation recapture even exists, given the paragraph above. Please explain.

This is why I don't do 1065's. 1. Is a deemed distribution of a partnership interest in an assets-over merger of two partnerships under § 1.708-1(c)(3)(i) of the Income Tax Regulations (“regulations”) treated as an “exchange” pursuant to § 761(e) of the Internal Revenue Code (“Code”) that requires a mandatory downward inside-basis adjustment under § 743(b) when the resulting partnership has a substantial built-in loss? 2. If so, to what extent are the resulting partnership’s liabilities included in calculating a transferee partner’s adjusted basis in the transferred partnership interest and a transferee partner’s share of adjusted basis to the partnership of the resulting partnership’s property for purposes of § 1.743-1(c) and (d)(1)? 3. Is cancellation of indebtedness (“COD”) income that is deferred under § 108(i) included in calculating a transferee partner’s share of adjusted basis to the partnership of partnership property for purposes of § 1.743-1(d)(1)? Why do I ask?  Well,

Hi, is there a limit to contributing after-tax 401K when switching employers? Client maxed out on previous employer with the pre-tax 401K and made after-tax contributions on top of that. Now switched employers and is asking if they can make additional after-tax contributions?Thanks!

What is the tax effect on someone gifting a non qualified annuity to child?  gifter is 70+ years old and child is 50+ years old.  Can this be done by adding a rider (child) to annunity then change annunity to payout phase by taking one payment.  Then change ownership to child.  The child would have lifetime income and only pay income taxes on the gain of each payment of the annunity.  Let me know. 

You didn't get the memo?  It says right here in the Manual that IRS issues a memo.   20.1.3.2.7.1 (12-10-2013) Estimated Tax Penalty and Reasonable Cause The penalty for underpayment of estimated tax cannot be removed or waived for reasonable cause alone. The penalty for underpayment of estimated tax generally is not waived as a result of disaster. However, in the case of a federally declared disaster area, a significant fire, or a terroristic or military action "the Secretary may specify a period of up to one year that may be disregarded" in determining whether estimated tax payments were paid on time. In these cases the IRS will issue a memo with specific instructions regarding the payment of estimated tax in the affected area. Master File programming generally takes all special disaster area rules into consideration when computing the penalty for underpayment of estimated tax. Even when the taxpayer’s books and records are kept within the disaster a

I've had three 1040 clients this week tell me that they got a refund check for the underpayment penalty that was calculated on their 2023 return in ProConnect Tax.  The underpayment penalty calculations for all three of these clients appear to be correct to me (i.e. there's no reason they would be exempt from the penealty).  Is anyone else experiencing this?  Am I missing something?  Is there a glitch in the 2210 calculations in ProConnect?  

This client shows in her mother Form 1095-A as a covered individual. She is not listed as a dependent in the mother tax return. Do I have to enter the mother's 1095-A information in the daughter personal tax return?

Original minority shareholder surrendered his 20% shares on 09/22/2023 and on 09/23/2023 the company reissued the shares to Presidents wife who did not have any shares up to that point. In ProConnect, how should I report the transfer?