jklcpa

Vanguard's MMA currently has a yield of 4.66%

If she is executor or trustee, isn't she required to administer those entities and satisfy any debts, including tax debts, of the estate before any inheritance payouts? The last thing she would want to happen is to have IRS create a SFR later on and come knocking.

Please revisit Patrick Michael's explanation above and complete a support worksheet. "Support" includes items not paid or having a direct association with the mother's bills so you can't just add up some bills that were paid. The FMV of housing is one such example, and the support worksheet will guide you in its calculation and allocation to the mother because the number of people n the household are factored in.

Support worksheet from Pub 501, page 14 should help you. Sorry, I tried to post with an attachment but the forum wouldn't accept the pdf. Support Worksheet from pub 501.pdf Link to pub 501. The support worksheet is in it. https://www.irs.gov/forms-pubs/about-publication-501

FAQs from FINCen's site has a FAQs page that is extensive. Section C answers who must file https://www.fincen.gov/boi-faqs#C_1

I'd already come to the same conclusions as Dan. Whoever the seller is, the heir or the estate, will have a small loss from the house sale when selling expenses are factored in. Either way, at this point I'm out of the picture unless engaged to prepare a 1041 for the estate. The heir and wife have never been my clients and I intend to keep it that way.

First time penalty abatement will be available to her if she was in compliance with earlier years. https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver#adminwaiver

Yes, I would file form 8832 for each of the LLC situations you described in the original post. Also, I agree with Abby Normal's post above about when an SMLLC filing as a disregarded entity would need an EIN. The form 8832 will list the sole owner's SSN, so that should allow the IRS to match the business and its reporting in future should the EIN no longer be required.

IRS page of common situations of when to get a new EIN. It's generally when ownership or structure changes. https://www.irs.gov/businesses/small-businesses-self-employed/when-to-get-a-new-ein

Sadly, I have to report that my questions are now moot. The mom passed away this morning and now it will be up to the estate to carry out the contract for sale of this house. At this point no one is sure if she had a valid will or who the executor is, if there is one. It may be that the guardian will be appointed as executor, and the estate will have to go through probate. Certainly this will delay settlement of the sale that was scheduled for the 15th of this month.

See the QCD section in Pub 590-B. Also, IRC sec 408(d)(8)(B) is the section and says this: In this link, you might have to scroll to get to the capital B https://www.law.cornell.edu/uscode/text/26/408 408 subsection (k) are SEPs, and 408)(p) are SIMPLEs.

No QCD from SEPs or SIMPLEs unless they are inactive. Active plans are those that are maintained under an employer arrangement under which an employer contribution is made for the plan year ending with or within the IRA owner's taxable year in which charitable contribution would be made.

At the top of the forum, you should see a "Donate" clickable word. That will take you to the appropriate area, fill in the data, pick the amount and whether it is a single amount or recurring, and choose the payment method. Continuing on through the checkout, if you would rather mail a check instead of using credit, Eric's address will be displayed at some point in that checkout process.

It is certainly not a Sch A charitable contribution deduction. If you feel it is ordinary, necessary and customary and are inclined to make it a deduction, it would be more appropriate as a business expense. Pick the category for which you feel it most closely fits your situation best, in other words is it: professional development that would include continuing education and learning, dues/subscriptions/memberships, software & its licensing if your use is more closely is associated with setting up and utilizing the tax software, books/library/research type items, miscellaneous?

Right, I figured that Corduroy Frog was asking about the automatic enrollment in Secure Act 2.0 when I separated his post from another topic. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-automatic-enrollment

I'm sure he just wants money, doesn't realize about the SE or regular tax issues, and wouldn't think it through to be saving taxes for mom. He is the sole heir at this point anyway, so it's not like he's trying to keep more for himself.

I think it may have a chance for reimbursement. I'm just not sure if it can easily be done at settlement but I told the guardian I thought she should get court's approval at this point. I not doubting that son did the work but am uncomfortable with receipts being in his name and probably not showing the actual address of the property, but if court approves it, should I be ok with adding to the basis? Oh, and son wanted to be paid for his time spent working on the house. I already said "no way."

Right! I've known these people all my life, and they were clients since my time employed with a CPA firm and came with me once on my own. The whole original basis was even more complicated involving an old farm with a 1031 exchange into a former residence and then a deferred gain under the old tax laws into this one, but I have all of those records, so that isn't an issue in this story. Who ever said taxes was boring! I told DIL that I may not take this return on but said I'd ask the questions here.

Taxpayer, spouse, and adult daughter all live in home. Daughter was schizophrenic, unemployable, on SSI. Another child, a son, is married & lives elsewhere. Questions relate to the SP (the mom). 1. 1996 - TP and SP purchase the home. I actually know the starting basis, and then add whatever improvements were made through to event #2. 2. 2009 - TP dies. SP basis = SP’s ½ of #1 above + ½ of TP’s stepped up basis from his estate. This was handled poorly and not sure if county was ever notified of his estate. For many years afterward the home was still in joint name. 3. 2017 - SP physical & mental health is failing. SP transfers home ownership to daughter, was not competent to do so, but it happened. Daughter convinced the mom (SP) to do this and lawyer made the transfer with no life estate set up as far as I know. I assume this was when county took deceased TP’s name off deed due to death in 2009. That is now what county site is reporting. No gift tax returns filed as far as I know, and son/DIL were fighting this transaction and trying to get it reversed, but that never happened either. I think SP's basis that transfers to daughter would be SP’s ending basis from #2 above + any improvements made after TP’s death in 2009 through date of transfer to daughter in 2017. 4. Through part of 2020, SP continued to live in the home. SP declines further, son/DIL step in and in 2020 move SP into long-term facility in memory care section as she can’t perform any ADLs without assistance. 5. April, 2021 – adult daughter dies with the property still in her name. Daughter has no children so mom (SP) inherits house and back in her name. 6. Between April, 2021 and now, storm damage, structural with tree through roof. Insurance paid ~ $180K. Son put ~ $20K of materials for additional interior upgrades after contractor finished. No known casualty gain. Mom's last tax filing 2020 because income was under filing threshold 2021 through 23. She probably should have filed in year of insurance payout, but that didn’t happen. House is being sold. Settlement Nov, 2024. The transfer to daughter seems like a sham, but I assure you it was not. Mom was in failing health, now is 93 yrs old. Daughter was same age as me, died at age 61, and no one expected mom to outlive the daughter. Daughter died as a result of liver damage from long-term use of prescribed psychiatric medicines and poor diet; basically her liver failed, followed quickly by total organ failure. Questions – 1. Can SP skip all of the basis-related issued prior to daughter's death and use the stepped up basis at daughter’s death in 2021+ the $20K of improvements by the son? More on this below. There ARE receipts for the $20K of improvements but mom didn’t have the funds so son paid and now wants to be reimbursed at closing. Daughter-in-law now has guardianship over SP’s money. 2. Am I correct that SP doesn’t qualify for the sec 121 exclusion because she inherited house back in her name in April, 2021 but was already a permanent resident in assisted living starting in 2020, and she didn't have life estate? She wouldn’t even qualify for the exception where a nursing home resident only has to live in the home 12 months instead of 24 months. 3. I’ve never dealt with anyone having a guardianship but assume that the local court monitors the finances. I told guardian she should check with court or attorney that set this up whether or not son can be reimbursed at closing so that it isn’t a wrench in the works that holds up the closing. Thanks for reading, if you made it this far.

Here's another good one: https://www.alvarezandmarsal.com/insights/warning-employee-loans-could-have-adverse-tax-consequences#:~:text=In Technical Advice Memorandum (TAM,the loan%2C for tax purposes.

Seriously, don't guess at this or make assumptions as to how this works. This is a recruiting incentive structured as a loan where it is written off at the end of a designed period if the employee stays with the company. It's an issue that the IRS has challenged because it believes that the "loan" is taxable when given as a compensatory cash advance, and the employer would get the deduction in the year the period ends (in this case, year 3). The complication is exactly how the transaction is set up that will govern when the income is reported. There is case law on this issue also, iirc one of the more recent ones being Morgan Stanley. Here is an older article from The Tax Advisor that discusses the issue and does reference a TAM, but there is more recent case law on this too: https://www.thetaxadviser.com/issues/2011/oct/clinic-story-09.html Here's a blog type article that also describes it and includes some of the advantages and disadvantages of using these employment incentives. https://keepfinancial.com/blog/employee-forgivable-loans-can-be-unforgiving-users-beware The OP should do more research and case law to understand the issue better and not rely on simple, basic answers here as to when it becomes taxable.

When you get back then. Enjoy your vacation!

Why don't you start the topic? This one got a lot of traction.

With Drake, it doesn't allow the caps lock on during sign in, and I also find with that program that I can fit more description on the forms using initial caps only, so I've switched away from all caps.

Exactly this. All of the factors that go into choosing appropriate investments should be considered. Look at the entire portfolio and its diversity, retirement and non-retirement accounts, risk tolerance, current age, current and future savings rate, expected retirement age, expected lifestyle, health concerns, longevity. I'm sure I've missed more than a few factors, and that is why I don't give any investment advice.