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If mom needed more and he wanted to give more, he can actually do that and still not pay gift taxes. He would have to file the gift tax return, use the $14K of annual exclusion, and then the portion that exceeds $14K uses up some of the unified credit allowed over one's lifetime. The gift tax return will calculate the tax on the excess over $14K and will allow a credit of the same amount to offset, so there still wouldn't be any gift tax due. Everyone gets hung up about the $14K limit, but that is the point under which you don't have to file a gift tax return, not the point at which you actually will pay tax. Of course, that is assuming that this wealthy individual hasn't already made such gifts in earlier years that the unified credit is mostly used up and won't cover the gift tax in the current year. If anyone reading this doesn't understand what the unified credit is or what it represents, it is the amount of gift/estate taxes that will never be paid because estates are currently allowed assets of up to $5.43 million (for 2015) and not be taxed. In other words, that is the total amount of wealth the tax law currently allows one person to transfer to others without ever paying tax. Those transfers can be made either by gifts during one's lifetime or after death from his estate, that is why gift and estate tax works together, and why it is called the "unified" credit. The gift tax return asks for all prior gifts made during one's lifetime that exceed the annual limit and accumulates them so that the IRS knows how much wealth has been transferred during one's lifetime via gifts, because that amount ultimately reduces the $5.43 million amount. As a very simple example, if an individual makes gifts exceeding the annual limit during his lifetime that total $2 million, then his estate can only have up to $3.43 million of assets and still be considered small enough to not be taxable. Disclaimer: That is for federal purposes only, and anyone reading this should consider any implications at the state level also to determine if gifts in excess of the annual limit will create any taxes currently payable under existing state laws.

Terry, this transaction actually results in the recipient being taxed on the difference between proceeds and exercise price, and is ultimately taxed at ordinary rates because it is considered compensation on his W-2. Here's how it works: He got $44K. That is proceeds. Report on 8949. The basis has two parts. It is the exercise price shown on the paper from Morgan Stanley, the gross amount before withholdings, AND ADD TO THAT... The basis ALSO includes the amount shown on his W-2 because he is going to pay tax on that at ordinary rates, so he gets to use that as basis too. Those 2 figures added together should come out to very close to the proceeds because there were some trading fees or transaction costs to sell the stock. That will generate the small cap loss that everyone is talking about. Yes, you need the 8949 to report the part that is the cap loss from the transaction fees.

How did you complete the schedules? Did you show each year or use an abbreviated approach? Reconciling all this crap is like being a junior accountant again playing with these depreciation schedule tie ins. I FINALLY finished my client's review financial and returns. He is coming at 8pm tonight. I may not get dinner until very late. I'm so glad for e-filing of the federal. The state gets a copy of the entire federal with all attachments and it is so thick that I had to staple it in 3 separate parts for even my heavy duty stapler for extra thick packages to handle it. Then I put in more staples to hook the 3 parts together. I have spent WAY TO MUCH TIME on this because of the 3115 issue. This is ridiculous!

I updated the title of this topic to draw more attention to the problem so that hopefully people will see it before updating.

Right, I've been wondering if we'll see some adjustment to the payback caps because situations like this one.

Another topic here brought this back to mind, so I thought I'd start a new topic. For those of you that operate businesses from your home and meet with clients there, you have risk exposure should someone be hurt on your property and that person was there for a business-related purpose. Your homeowner's insurance will not protect you from this exposure. My business was required to purchase a separate general liability to cover that risk.

That would depend on the insurance coverage. If someone sues an LLC in the case of a building, the liability stops with the assets of the LLC. The personal assets of the owner are protected, and that is the reason to form an LLC such as this. As it was before the LLC was formed and until that building is transferred into the name of the LLC, if someone sued because of something that happened with the building, all of the owner's assets were at risk. Hmm, this brings up another topic for those preparing taxes and meeting with clients at their homes. I'm going to start a new topic for that one.

The 1120S beer company isn't a charitable organization, so no deduction is allowed. My sister tells me she spent a lot of time in the coat closet at Catholic school. That was the nun's version of sitting a child in the corner. Me, I missed out on that and attended public school.

I received this email message today: The IRS recently issued Notice 2015-9, providing limited penalty relief for qualified tax returns which have a repayment of the advanced premium tax credit. Generally, taxpayers who do not pay their entire tax liability by the return due date would be penalized under §6651(a)(2); however, taxpayers who have a balance due attributable to the reconciliation of the premium tax credit could have these penalties abated for the 2014 tax year. Additionally, taxpayers with an underpayment of estimated tax penalty under §6654 (a) might have this penalty waived if a repayment of the advance premium assistance credit is present on the return. Relief is only available for the 2014 tax year.

He didn't receive any funds thought, right? Sean-the-beer-expert has no donation because there is no value placed on one's time. Shawn-the-1120S-guy got the benefit of free advice as far as I can see, and no 1099 should have been issued. The nun would hit your wrist with a ruler.

Well, after the 21 last night I now see that more must have come in. I have the icon showing indicating that there are some more to be installed when I shut down and restart.

Ron, thank you, thank you! That gave me the clue to find it in my software where it was listed immediately below the other one (you know, right where it should be ) and the last words of the title were cut off so that I didn't instantly recognize it. I'm so tired already, what will I feel like a month from now?!

I agree with Tom, and I think the exchange should direct them to Medicaid. I think you meant to say Medicaid, not Medicare.

Thanks for that reminder, Lynn. I did realize that too, and my client and the rent example would fall still be well within those limits. I'm going to draft up something to attach that will cover this election. I don't see anything in repairs to capitalize, mostly small $3-400 items, but it totals close to $2,700 for the year for the one store, and this election would cover them nicely.

Margaret, it looks like this person is single and needs about a $20K reduction to be below the 400% of FPL. There might be nothing to do, but is there any possibility that the pension distrib was late enough in Dec to still be within the 60 days to consider a rollover of enough funds? If the person has a HD plan that would allow a contribution to an HSA, you could play with the figures to have a somewhat smaller rollover of the pension (if that is even still a possibility), and use the tax refund to partially or totally fund the HSA. When a person is closer to the FPL and has a large payback, retirement contributions and funding HSAs are an easy sell if they can afford it because they get to keep their money and save for retirement too.

The download itself did slow things down, and I don't know how long that went on. I was moving pretty slow last night too with typing in assets for 3115 attachment, so maybe I didn't notice the lag.

Joan, for my system it was only a couple of minutes at shutdown, as usual. Then updating the registry on restart, it seemed like only a minute or two more.

Yes, I had slowdown yesterday with that windows update. When I shutdown, it said 21 updates were being installed.

Not really. I don't use ATX, but my software does have the de minimis election. I believe that election only covers the $500 and $200 limits in Reg 1.263(a )-1(f) and 1(h)(2)(ii). According to the CCH special report I saved earlier this year, this says that a statement must be attached to a timely filed return (including extensions) each year, and references 1.263(a )-3(h) and 1.263(a )-3(r )(2)(ii). It doesn't appear that the de minimis election covers this. Am I totally wrong about this?

Yes, the add back would be the $600 if they were below 200% of FPL and filing as any status other than single. So the amount you should have started with for the initial calc would have been the out-of-pocket portion of the premiums your client paid plus the $600 and go from there. As for your second post above, I don't think you need to do the calculations in 2014-41 if the taxpayer does not have any repayment of the subsidy he used during the year. Is that how you ended up working it out?

Doesn't this mean that for all of our clients that fall into the definition of "small taxpayers" that also rent space, that they should be making this annual election in addition to the other de minimis one?

Depending on the type of business the taxpayer is in and what the repair is for, in addition to the de minimis safe harbors for tangible property purchased and the materials and supplies, there is also a safe harbor for small taxpayers with buildings (Reg sec 1.263(a )-3(h)(8) that says the total of repairs and improvements for building repairs totaling 2% or less than the unadjusted basis of the building, capped at $10,000, meets the safe harbor. The safe harbor also extends to lessees where a taxpayer leases a building or leases space within a building, ref is reg sec 1.263(a )-3(h)(2). The "unadjusted basis" of a leased building or space is equal to the amount of undiscounted rent paid or expected to be paid over the entire lease term, including renewal periods. Small taxpayer definition - having average annual gross receipts of $10 million or less in 3 preceding tax years. I have my retailer that I'm still working on today that leases two retail stores. He falls into that safe harbor also, so in general terms for example, if he pays ~ $50K per year for one store and has a 5-year lease, that's 250K * 2%, so he has a safe harbor of $5K. If the lease had a 5-yr option, the safe harbor would include that option period too. If he spends $800 to fix a damaged door or a plumbing issue that don't fall into the categories of betterments, restorations, or adaptations, then can he safely continue to expense those? Am I on the right course?! Also, from what I've read, this is an election that must be made for each building that the taxpayer must make each year with the timely filed original tax return. Timely filed includes through the extended due date. I can't find a sample election and isn't included in my software. Does anyone have something they could share?

That might depend on the type of business your taxpayer is in and what the repair is for. In addition to the de minimis safe harbors for tangible property purchased and the materials and supplies, there is also a safe harbor for small taxpayers with buildings (Reg sec 1.263(a )-3(h)(8) that says the total of repairs and improvements for building repairs totaling 2% or less than the unadjusted basis of the building, capped at $10,000, meets the safe harbor. The safe harbor also extends to lessees where a taxpayer leases a building or leases space within a building, ref is reg sec 1.263(a )-3(h)(2). The "unadjusted basis" of a leased building or space is equal to the amount of undiscounted rent paid or expected to be paid over the entire lease term, including renewal periods. Small taxpayer definition - having average annual gross receipts of $10 million or less in 3 preceding tax years. I have my retailer that I'm still working on today that leases two retail stores. He falls into that safe harbor also, so in general terms for example, if he pays ~ $50K per year for one store and has a 5-year lease, that's 250K * 2%, so he has a safe harbor of $5K. If the lease had a 5-yr option, the safe harbor would include that option period too. If he spends $800 to fix a damaged door or a plumbing issue that don't fall into the categories of betterments, restorations, or adaptations, then I think he can safely continue to expense those. Am I on the right course with that?!

Thanks, Marco. That is about how I'm feeling with these repair regs.