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Yes, the five year look back starts on 7/15/16 so you are correct that in this case would go back to 7/15/11. You may count the number of days of personal use from 7/15/11 coming forward to when he moved into the new home and divide that by 1825 to arrive at the percentage of the $250K he is allowed, or you may use whole months divided by 60 months. He would need 730 days or 24 months during the look back period in order to utilize the full exclusion, and he must not have excluded any gain from another residence during that period.

Are these C corps? It seems that you have a "deemed" sale in corp A because of the transfer out that is a taxable event, distributed out at FMV. If debt is involved, it could also generate taxable income from relief of debt that exceeds FMV at the time of transfer. Corp B reports the sale as grandmabee said. I think they shot themselves in the foot with trying to circumvent taxes, and they will have little to no gain in Corp B, or possibly a loss after selling expenses, and no way to utilize the NOL.

It appears that 8615 is still required for the twins. For #2, they are required to file because unearned income is greater than $1,050.

They shouldn't have legally been able to form an LLC without each member having an SSN or ITIN. Also, the LLC couldn't elect S-corp with a foreign owner. That leaves partnership or disregarded entity. Were these two individuals married at the time of LLC formation? In general, H-W LLCs can elect to be a disregarded entity. I'll post a link to a topic that I remember on this subject from a while ago. Anyway, the question in my mind on this ultimately is this - If the ex-wife is not sharing in the profits, gains, deductions, and losses, is there really a partner relationship at all, or is this a disregarded entity to be reported solely on your client's return based on that fact alone? Is the installment sale the only reportable item or was the property rented prior to sale, are there other properties involved? Maybe you don't need this, but here is the link to the other topics:

I don't think you have to worry about it if the recipient isn't your client because that's whose return it would be reported on. The ones I've seen have had the funds paid out in the student's name so that it's reported to the student who then turns over the funds to parents that are paying the bill. Sometime if you are interested, Pub 970 explains the Coverdell and QTP payouts very nicely, and includes an example of how to reduce the qualify education expenses by any that were used by the parents in calculating any education credits claimed on their return. The QTP chapter was only about 4 or 5 pages that I easily followed that for the last one I did. Again though, I don't think you will be doing anything with the one you have if it is in someone else's name.

Thanks Rita, I was just going to post the information and discussion that was in that post. You have to work through the calculations for the SEHI deduction and the involvement for the s.e. tax for someone who also qualifies for the PTC. It isn't as simple taking the premiums net of the credit because of the s.e. tax.

John, those are great, and I really wish I'd set on up for the Goodwill entries! I must get this set up so that I have it for next year. I have Alt-P set for the PIN screen.

Yay! Don't be sorry about asking. We're all tired at this point and sometimes we need a little help from our friends.

For those that don't click on the links, this is the contents from my link above where ATX- Stephanie addressed this problem in an ATX blog post back in February. It's a local computer issue having to do with the computer's internet connection at the time the return or e-file is created. I read another post that says this can happen sometimes if the computer is connected to the internet via a wireless connection where that IP address inserted has a problem.

Glad it's working well for everyone again this year! I also had another very productive and worry-free year with Drake.

Check out this ATX blog post I linked below. It explains why and what to do. It doesn't seem to be related to the MeF intermittent issue, but it IS odd that these messages are just now popping up. I got an email mid-day that said the MeF issue has been resolved. https://myatx.blogspot.com/2017/02/irs-reject-195196-ip-address.html

Have you asked your client for the estimated household income used at sign up? Line 6 of the 8962 instructions give the criteria for that rule so that some people may still be able to actually qualify for the PTC even if the final household income is below 100% of FPL. If the person does qualify under that estimate HI rule, check the 'no' box on line 6 and continue on with the form. If the client doesn't qualify under that "estimated HI rule" I think that there is a payback, but that the payback is capped using the table for line 28 in the 8962 instructions based on the filing status.

New couple came in today to pickup their finished returns and I noticed that the woman had tears in her eyes as she sat down. So I thought, gee, this return isn't anything to be emotional over, but whatever. The first thing the woman asked was where I got my beaded necklace and said it was one of her mother's. It turned out that her mother used to make original bead and stonework pieces and did restringing repairs also. This woman's mother made the necklace that was of her own original design about 30 years ago when I purchased it and the matching earrings. I then told *my* mom this story and she was with me that day and remembers the purchase too! It is the oddest thing that I chose this exact day because I haven't worn it in about 20 years, and this morning I felt compelled to wear the piece with a particular sweater I had in mind, and not a new sweater either. These were happy tears for this woman and made her day knowing that mom's work is still out there for others to enjoy. It's an interesting business we are in, and one never knows who will walk through our office door and into our lives. Whatever the reason for this, I have a happy client and a new friend. Happy Tuesday, everyone!

Sara, John, everyone - TAG's original post is 2 years old(!) and was revived by a new member, and from the profile I can't tell if this person is a professional or member of the general public.

What does the agreement say? Is there any leeway that would allow a special allocation of the income and expenses during that period for the K-1? The LLC definitely files a final return through that date in May.

I don't know how long ago you accepted his work or how much you really need or want this revenue, but I don't know that I'd want to be the one to untangle this mess. If you are going to amend anything, you only have a couple of weeks to straighten out 2013. In all the years of being in practice, I've only sent a handful packing when I saw their messes, and this sounds like one I'd walk away from. Why isn't he using GA preparer this year? In each of those years from 2006 through last year, he reported the "rent" that should have been P&I, and yes, he could have had the benefit of the cap gain rate vs ordinary rate, but he also kept deducting expenses and kept taking depreciation too, and that depreciation alone comes to more than $13K over the last 9 years. Have you come up with a strategy yet? Start to schedule it out to see where they should have been at the end of 2012 to maybe fix the open years? How to get the property off the depreciation schedule if you don't go back and fix this?

Adobe Acrobat also has the ability to convert a pdf to recognize text. It is in the Tools section. See this snip:

I googled your error message and found this ATX blog. I think someone else had one of these 2 error messages recently too. Here's what I found: https://myatx.blogspot.com/2017/02/irs-reject-195196-ip-address.html

This page of links should help you and your client get started and figure this out. The first link in the Individuals section and the second one for Tax Pros will get your started. I'd suggest that your client file form 14039. https://www.irs.gov/individuals/identity-protection Unrelated, but would you please turn off your caps lock. It's considered shouting to post in all caps, and it is also not as easy to read.

The return will have to be paper filed. Is there an ex-spouse that might have claimed the son's exemption? If you can't figure out who claimed the exemption, there is also the possibility that it could be a case of identity theft of the son's SSN.

Wow, Terry, I'm really sorry you had this happen, and at the worst time too! You've already received excellent advice here to not rely on that extension and definitely do contact the IRS. Also consider putting a freeze on your credit with all of the credit bureaus. It may be inconvenient if you do need to borrow, but it will lock down your credit so that no more accounts can be opened in your name, and it doesn't affect your credit score.

Oops sorry, it was only the worksheet for the 8829, BUT the Sch A mtg int and r.e. tax were definitely reduced. Weird, and I agree that padding of the bill might have been going on too. These people did complain about the bill. There is a lot going on with this return, but the people are very organized and gave me that totals for everything that I needed to input very easily, and had all backup attached. Nice.

I agree with you and that is how Drake handles the mtg int & RET also, but what made me question it was that the return from LY clearly has them limited, and has the worksheets showing the reduction. I don't know if the preparer forced it, or if somehow a code was entered that shouldn't have been. It is on an 8829 worksheet tied to the 2106, and that is what made me even think about it, why they would have allowed the preparation like this. This couple are W-2 employees only.

Thank you for confirming!

I'm working through a new client's return where both husband and wife have home offices in the McMansion. They are residents of PA, and PA and their local returns allows the home office expenses as unreimbursed business expense as a reduction of compensation. Here's what I noticed happened on their 2015 return prepared by another CPA firm: The only deductions on each of their 2106s is the home office deduction, and it was based on the actual, not the safe harbor. The totals of the two 2106s combined is about $3400 and gave no tax benefit because of not exceeding the 2% limitation, and the resulting reduction in mortgage interest and real estate taxes deducted on Sch A were reduced by a total of ~ $2000. The end result is that there was no federal tax benefit of claiming the home office at all, and they lost deductions on Sch A of $2000. For federal tax, they are in the 33% bracket and hit the AMT. The state benefit to them is a reduction in the PA tax of 3.07% and local reduction at 1.25%. The whole state/local tax savings on that $3400 of deductions is only about $148. Why do this? Am I missing something here? They don't have to claim the home office deductions at all, and it would raise their mortgage interest and r.e. taxes on Sch A back to 100%. Or I leave the basis for depreciation entered so I don't lose track of that information and use the safe harbor method, and then I can still take the mtg int & r.e. taxes at 100% on Sch A, and I think I can use the actual expenses on the PA and local.