jklcpa

I think you are out of luck for the interest on the 4952 that for years 2012 through 2015. It will carryforward until the TP has investment income, or has a cap gain or cap gain div that he can elect to treat as investment income, but then he'd lose out on the cap gain rate on that portion he elects to treat as inv. income for this purpose. The election to capitalize and include in basis is made when filing an original return so you can't do that for the previous years, but you can make the election for 2016. Here's the reg for the election with its wording, and where it says it must be filed with the original return for the year: https://www.law.cornell.edu/cfr/text/26/1.266-1

It was 2 questions combined into one. However, I'll disagree with you on your second point. This woman will not be able to file as HOH if the unemployed son is not a qualifying relative, and to be a QR on her return, the support calculations are necessary. He is 28 yrs old so he fails to be a qualifying child. To use HOH, the home must be the main home for a qualifying individual, either a qualifying child or qualifying relative, and that QR must also be her dependent.

I feel like I'm missing something and need to run this by those of you that work with this status more frequently than I do, which is hardly ever. I also have a question about dependent support calculations. Facts: Couple's divorce was final during 2016 and the wife is my client. Husband lived in the home through almost end of July 2016, so 7 full months of the year. Two adult sons also lived in the home all 12 months of the year. One of them was unemployed with W-2 income of only $2963 and could possibly be a qualifying relative. He's over 24 yrs old. He had no assets beginning or ending of year, and had no other sources of income. HOH question - Since my client was actually divorced by the end of the year, does the fact that the husband lived in the home for 7 months knock her out of using HOH status if she meets all other tests, or doesn't that matter? Is that test only for those that are separated and trying to fall into that "considered unmarried" category? Support test question (sorry it's long) - To arrive at unemployed son's share of the total household expenses on line 13 of the worksheet: Since the # of people changed during the year, I split the expenses into the two periods (Jan-July and Aug-Dec) and divided by the number of people in each time period to get to this son's share of expenses and then added the results together. I'm good with the calculations down through determining that this son did not provide more than 1/2 of his own support. What I'm not clear on is how to calculate the bottom section to determine if the mom provided more than 50% of the support. To arrive at the figure for line 25, if mom had been the only one paying expenses for the household, I would be subtracting the son's contribution toward his support from his total support amount on line 19, but if the now-ex-husband shared equally in the household expenses for the period of Jan-July, how do I work that into these figures? What I initially did was use the amount of this son's share of the household expenses for the Jan-July period and divided it in half for line 23, saying that the dad shared equally in those expenses of the household during that time, and that was his contribution toward the son's support, but I don't know if this would be the proper way to do this. What do you think?

Oops, sorry I missed your point. As I understand it, if the couple chooses to file using MFS and don't qualify under the domestic abuse/abandonment rules with the necessary documentation, then 100% of the PTC is disallowed and payable back with the return. If they do qualify to use MFS under the special rules for abuse/abandonment, then the caps for line 28 would apply, and the allocation of amounts have specific rules depending on who the policy covers. So to answer your question, it IS possible that MFS could have a cap on the repayment, but in your case with no domestic abuse /abandonment, simply choosing to file MFS should result in 100% payback of the PTC. I still can't tell you how to make the software do that though, but that is how it should work. If you want references for that, here's the page from the federal register that discusses it in item #5, and also look at page 7 of pub 974, and the instructions for lines 9 and 28 of form 8962. https://www.federalregister.gov/d/2014-17695/p-135

If ATX doesn't have a way to generate a descriptive statement then I'd suggest you create one or use a preparer note if that goes with the e-file that will put the IRS on notice that estimates were paid on a joint basis and how they are being claimed. Include the social security numbers of both parties and how much each is claiming. Drake has a check box for joint estimates that were paid with a former spouse, and it has a link to a blank descriptive schedule for the preparer to use if the couple is still married and are using MFS filing status, and instructs the preparer to include the SSN of the other spouse in that schedule.

Yes, they can choose to file MFS any time they want, but that should knock them out of being eligible for the PTC. Fourth bullet point down on this IRS page: https://www.irs.gov/affordable-care-act/individuals-and-families/eligibility-for-the-premium-tax-credit and on this one, items #9 and 10 https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit I can't answer why ATX is allowing it. Since it is allowed in certain circumstances, perhaps there is a checkbox that you are missing to tell the program that they aren't eligible, or there may be a programming issue.

No, if MFS then a married couple is not eligible for the PTC. There is a special exception if there is domestic abuse and abandonment, but assuming this isn't the case, your client cannot choose MFS simply to stay under the 400% threshold.

Rfassett was correct that Form 1128 is not required. The initial year will be governed by its first filing. From the 1128 instructions under "Exceptions" - Do not file Form 1128 in the following circumstances: Corporations - A corporation adopting its first tax year.

And if you really hate my answer directly above and still insist that you are correct and the rest of us are wrong... And if you say that boyfriend isn't engaged in this rental for profit and still insist on reporting this, then I'd suggest that you look at Pub 527 for Residential Rentals under the heading "Not Rented for Profit" where it instructs how to report these kind of rental activities. Hint - these don't go on Sch E and have nothing to do with vacation home rules, but I still think BF is NOT "renting" anything! Link to the Pub 527 BTW, "guru" is assigned by the forum software based on the number of posts by members and has nothing to do with rating whether those answers are good or bad.

Cohabitating and sharing expenses is not the same as rental activity that someone engages in as an income-producing activity for profit. We'd help you with the input, but instead we are trying to keep you from making a mistake.

I disagree. The business activity starts when the business operations commences that will generate its operating revenue. For example, if its a service or consulting business, the operations begins when services start being provided. For a retailer, business begins when the doors open to customers regardless whether or not a sale is made in its first days. I open a tax practice on Feb 1 and meet with my first client on that day and begin working on a return. Even if the return isn't finished until the 10th and I don't get paid until the 20th, I still was open and operating on the 1st of Feb.

Facts and circumstances matter, and Lion was on track with that. If someone is renting out part of a duplex or a room(s) and has access and use of common areas, then that is a rental situation. The girlfriend moving in and sharing the bedroom and all the rooms and contributing for groceries and other cost of running the household, well they are just living together and I wouldn't view that as him renting part of the house to her. If that is the case, then I agree with Jack, they are living together and no way that is a rental situation. Jill O, yes, most here use the ATX program, and our members probably know why I asked the question. We frequently have members of the public come on and ask for free advice, and we won't answer those, so I wanted to make sure you weren't asking for a "friend."

Dan, thank you so much. I will take time to read each of those cases soon. One other thing that's bothering me now after reading what you wrote about those cases is that the attorney advised the stockholder that it was not necessary to go through with a formal dissolution, to simply not pay the franchise tax to the Sec of State and let the corporation's certificate be not in good standing. I may need to check with the attorney on this, but if I recall, I think he told the stockholder that the corporation is considered out of existence after several years of not being in good standing, might have been 3 years. I have never liked that advice and told my client that at the time.

It might be helpful for us to know which software package are you using.

Sorry, this does sound like a mess! The nondependent son could be covered under parent's plan up to age 26 even though he was eligible for an employer's plan, and you are correct that this does mean that he wasn't eligible to receive the PTC on his insurance through a Marketplace. Since you say that he isn't a dependent, is working, and is eligible for his own insurance, I'll assume for purposes of preparing the 8962 that this son is NOT part of the tax family, that his MAGI is not included in the household income. Next, you are also correct that the 1095-A amounts must be between the parents and the nondependent son under the special situation #4 reason described in the 8962 instructions. I do think you have to use a corrected amount for the SLCSP, and I don't know how to get that for someone in CA. If you are preparing this son's return, maybe try to work out how best to allocate to minimize the tax impact of their errors. You must be consistent in applying the allocation across all amounts for that month or months, and the percentage agreed on can be changed for other months. I don't know how you will explain that you are using a different amount than is shown for the SLCSP amounts before allocating. I haven't had that situation. Would you attach a statement of explanation? Lastly, for the dependent son that worked part-time, if he is required to file a return (filing for other than to recover withholding) you will have to include his MAGI on the 8962 because it sounds like he is part of the tax household. If parents do have to include his income, it may further reduce the amount of PTC they are finally allowed!! You are right, it is a mess. Sorry, I don't think I helped you, only confirmed that you are on the right track.

This is not about ATX

I'll just leave a link back to this other topic here when we discovered who's really behind it, and the lack of transparency. There are a couple of reviews toward the end too. And thanks, keithcole, for reviving another old thread.

This is making me really nervous because this refund is $135K and because the final year of the corp is still an open year. Also, the corporation did file its returns on the accrual basis. Obviously the company didn't know about this at the time it liquidated, and I don't think the owner could have anticipated or calculated the receivable. The attorney told me it was the electric company that discovered the problem early this month, was caused by a faulty meter, and that they calculated the overcharges going back about 10 years. The owner said that looking back now he can see an increase, but at the time when he was busy with operations, each month's overage wasn't significant enough to question and thought it was due to increased usage and rate increases. Would you still handle this only at the personal level?

Your state considers a house to be personal property? Sorry, that just doesn't make sense to me when thinking about the types of property that can be in an estate: cash, intangibles, real property, and then personal (unproductive) property of the decedent.

Forget the qualifying relative test for now. I think you need to go back and look at the qualifying child rules for the daughter for 2016. If you look at the 7 tests for QC, they are: Must not be able to be claimed by anyone else, including self Joint return test Citizen or resident test Relationship test Member of household for > 1/2 the year Age test: - must be under 19 and younger than taxpayer claiming - under 24 & a student at least 5 mos of year and younger than TP claiming - any age and permanently and totally disabled. Means can't engage in gainful activity because of physical or mental condition AND doctor has determined that the condition will last continuously for at least a year or will lead to person's death. This is pretty much a given if the person is already getting SSI. Support test - dependent must not provide over 1/2 of own support For those that are permanently and totally disabled, Sec 152(c)(3)(B ) covers the age requirement, basically saying that age is not a factor for meeting the requirements of the age test in determining if one is a qualifying child if permanently and totally disabled. It does not matter when she became disabled; she will meet the age test. Notice that income isn't directly one of the QC tests but support is. If the daughter is truly disabled, then the income test (like is used in determining QRs) doesn't matter, but what does matter is how much support she provided for herself vs how much the mom provided. If you look at the support worksheet, line 1 is "funds available at the beginning plus taxable and nontaxable income, plus amounts borrowed, plus amounts in savings. You'll include the $5600 of CD as savings because its really just cash, but don't include its redemption as income or you'll be counting it twice. Add in the SSI and anything else daughter has as the starting point. You just have to work through the numbers and find out how much of that daughter spent on herself vs how much mom provided. If daughter banked all resources and didn't spend one penny on herself and mom provided all, or more than 1/2, then mom can claim her as a qualifying child.

Oh, that too!! A Rita Hug may be in order....

The FDIC does audit banks, but I've never heard of it auditing account holders. I'm wondering if this is a new scam to get to the taxpayer's information. How was your client contacted about this? Perhaps the client should call his or her bank or lender.

Next up in the junk mail, you must purchase new employment law posters from us or you are not in compliance and will be subject to penalties!!!!!!!

I'm with Tom and Ron on this. I won't prep a sch A when it's very clearly not needed and will explain that to the client. Since DE allows itemizing when claiming the standard deduction for federal there are still times when I have to prepare the Sch A anyway. In cases where it's close and unused, if I've input the data it will be printed on the yearly comparison, so I'll use that summary to show the client that I considered the available options and explain how the standard deduction was more advantageous. I don't charge by the form either.

I agree with Rich that the parents are able to deduct the r.e. taxes that were paid by the daughter. T.C. Memo. 2010-286 case covered this where it was exactly the reverse, where medical and r.e. taxes of a daughter were paid by by the parents directly to the the payees.