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I'm following Abby's method. Some that were in the phaseout range called during 2020 when they received the reduced payment, so that information was saved in their file at that time.

If there are other bonds in the portfolio for which the election was made, or if there are taxable bonds that are "covered securities" for which the amortization is being deducted against the interest income, then that constitutes the "election" to amortize. The choice covers all bonds held; one cannot pick and choose which to apply the rule. If amortizing and reducing the interest income, then basis is reduced. If not amortizing, then basis is not reduced. This is so that someone amortizing can't double dip by reducing the earnings and claiming the higher basis at disposition. You might be interested to read this blog post that came out around the time the brokers' reporting rules changed. It describes this issue and the problems of amortizing when a portfolio includes noncovered and covered bonds that are being amortized: https://tscpafederal.typepad.com/blog/2015/01/problems-with-new-irs-bond-premium-amortization-rules.html

I know that with covered securities, if the premium IS being amortized, that box would only be blank if the interest income is already reported net of the amortization, otherwise the 1099 shows the two amounts. Because it's noncovered, the brokers weren't required to track basis or report it to IRS, and IF the premium is being amortized, it reduces basis as well as the interest income. I think that is why you see it as a supplemental item and not on the 1099 itself. Amortizing is not mandatory except for tax-exempt bonds, so the taxpayer had a choice whether or not to amortize the premium. Once elected though, the taxpayer must amortize for the year of election and all years thereafter unless the IRS gives consent to stop. Do you know whether the premium was being amortized in prior years, and if so, is the broker is tracking and adjusting basis for the noncovered investments? Pub 550 describes the methods of amortizing, depending on when the bond was purchased, and how to deal with amortization that exceeds the interest from the bond for the year.

I cured one of that complaint after I stated my top hourly rate and told her that's what she'd pay if I had to restuff them.

They are the type that would expect you to restuff each envelope for them.

If its an ordinary meal for himself because he has to eat, and he is in his "tax home" and not traveling, those meals are not deductible. We all work more than that and wish our meals were deductible too. To be deductible, the meal must have a business purpose and must be ordinary and necessary. If it is for entertainment or recreation, those meals would not be deductible. He would need the log that includes all of the items you mentioned plus the stated purpose and name(s) of the people he met and dined with. He would also need the receipts for the expenditures.

Ron, not all ordinary income on a k-1 is s.e. income. What is the nature of the operations and this client's involvement in the first partnership? To clarify, the second partnership's $30K loss that is comprised of the $120K income and the $150K loss is disallowed, and is entirely disregarded in computing SE tax. The income from the Sch C of $5,114 appears to be flowing correctly. Now the question is about the first partnership income of $11,355 and whether or not that is truly s.e. income. ETA - From what you say the K-1s report, it appears that Drake's program is handling this correctly. So you need to find out about that first partnership.

Is the ordinary income of $11,355 from the first partnership also self-employment income? What does that K-1 show in box 14? That is a calculation based on the basis and at-risk figures entered in the program, and Drake is populating the Sch SE based on what is on the K-1s in box 14 and taking into consideration the basis limitations. The K-1 entries span 2 input screens, and then there is a separate tab on the Sch E input for basis entries. And I'll agree with Abby Normal that not all K-1s are prepared correctly.

I suppose I should point out that the CCA isn't authoritative and shouldn't be cited as precedent but serves as internal guidance. I posted it because it does have the code and reg sections cited, and also notates a rev ruling that's been erroneously used to justify allowing the loss in the calculation of net earnings from self-employment.

I am curious about how your software is handling it. Is the disallowed loss of $30K also flowing to Sch SE, or is the program using the $132K and prompted your question?

You received this response on The Tax Book forum several hours ago: This point was argued by the IRS last year, and there is a Chief Counsel memorandum that addresses its finding. This is from the last item from The Tax Advisor. Link to the actual memorandum that also has an example of partners with loss limitations because of basis and at-risk rules as it impacts SE tax: https://www.irs.gov/pub/irs-wd/202009024.pdf

Years ago when I worked at a firm, I did the accounting and taxes for a place here in Wilmington DE called "The Stamp Center" that is now called "Dutch Country Auctions". The owner at the time was Keith Marsh who is now listed as a senior appraiser. They buy, sell, appraise, handle consigned pieces. https://dutchcountryauctions.com/about-us/

Thank you, all, for the support and well wishes for my husband. Today's emails were some whining about being so upset, asked me to provide a copy of the *missing* 1099R that wife sent to me via email yesterday, and asked for a referral. Not ever happening! Then a bunch of garbage about the daughter forming an LLC and taking over the business, and more BS that I don't care about. Then late this afternoon a blank email with a bank statement from last summer attached. Why, to prove expenses were legit and not made up? My focus was on the deposit column that had deposits from many sources including Venmo, Shopify, Paypal, none of which she disclosed to me previously, plus some from Square that were part of the 1099K. I thought I was clear last night. Guess not, so my reply today was: "As of last night, I terminated our relationship. Please do not send me any more data or documents."

I am so mad right now and have been since 10 am this morning. I was going over a return with clients and it was missing an IRA distribution. Husband accused me of losing the document. Guess what they found when they got home! So I fixed the return but luckily had another appt and didn't reprint it. It gets worse, read on! Return also had new activity on a Sch C and surprise, surprise, three hours after the email with the missing 1099R, I received a list of more Sch C exps! Uh, it's not like I didn't ask about more expenses when they dropped off and on the phone during prep with other questions I had! Guess they didn't like those balances due! I was still fuming from earlier and this came at 3:30pm. Part of the expenses were rents paid to locations in two other states! So I checked and found a website under her DBA name that said it's a collaborative effort with her daughter, and Linked-In shows her as co-founder. So, a little nothing Sch C turned into a multi-state *something*. What? A partnership, joint venture, or what? Also, expenses didn't mention anything about other states' licensing or collecting/remitting of sales tax. I know darn well that this business activity would NOT have even been mentioned to me had it not been for a 1099 issued by Square! I suppose it's possible with last year's work environment to have all credit card and no cash sales if all activity is via internet, but NOT when the expenses now provided list retail locations open to the public. I know I'm tired and cranky, but I have some really nice clients and don't need this aggravation from someone that lies straight to my face and thinks I don't know or won't find out. Well, they are seeing my wrath of old that I try to keep a lid on, and came out today! If you made it to the end of my story, I applaud your effort and thank you for listening! PS - it's been a really bad week. Husband is finally recovering from AAA EVAR vascular surgery (5 trips for me to the hospital) after being sent home too early and developing an infection over last weekend. And my printer broke on Tuesday in the middle of a return, but I got a nice HP that arrived yesterday at lunchtime and is already installed.

If ever a non-tax comment needs an edit, it's my second paragraph that is one loooooooong run-on.

Everyone always has the ability to hide his or her own post and start again fresh, and that ability to "hide" the post does NOT have a time limit. From a member's perspective, that appears to delete the post from view, so copying and pasting the contents (not quoting) into a new dialog box before hiding will allow the poster to have the whole text of the original post for further editing. Note that hiding still allows Eric and I to see all of the posts made so that we can see what transpired or caused someone else to respond in a certain way. If we allow editing up to 15 minutes, others may respond to that in a certain way, and then the person goes back to edit and it changes why the conversation and subsequent posts may have been made unless we start quoting of others if following a post within the 15-minute editing window, and sometimes I may be addressing the OP and don't necessarily want to include that other person's statement in my response, but my response may be a result of it.

Yes, file gift tax returns because it's over $15K per donor to the son. Then the parents utilize the unified credit, assuming they haven't exhausted that, and they'll pay no gift tax.

But it was a quick question! The answer(s) aren't!

I wondered about this too and checked and found that Drake actually has a spot to enter an IP PIN for a dependent.

A Drake support person told me an interesting story related to getting POAs. She said that a firm allowed individual preparers within the firm to get the POAs in their names rather than in the name of the firm, and the firm did not have these individual preparers sign a non-compete agreement. When these preparers left the firm they were able to take those clients as their own because the clients had signed the POAs that granted those individuals the authority rather than at the firm level. Has anyone heard of this happening?

Got a 10-ream case of Hammermill Plus from Staples last week for $36 delivered to my door.

Not correct. Suggest you review pg 2 of the instructions under "Declaration of Representative".

I can't answer about what ATX is doing, but here is the section from the 8863 instructions. I don't see a contradiction. See bold that is mine where it says "you DO qualify."

Yes, well, that is the post and chart that I took down after 2 people followed up and said that their states hadn't actually passed legislation yet but Drake's chart shows conflicting information. I checked one of the state's legislation in question, and sure enough, that state's bill had passed the senate but is still in the house committee at this time.

See "Medical Expenses" on pg 6 of pub 559