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I think it's deductible, with some of it subject to home equity indebtedness limits. Consider the following: It can't all be "acquisition indebtedness" because that does require that the loan be used to "buy, build, improve" the qualified residence securing the loan, Sec 163(h)(3)(B)(i)(II) however, It would fall under the definition of "home equity indebtedness" though, subject to those rules and limitations, because it was used to buy, build, improve a qualified residence of the taxpayer. Sec 163(h)(3)(C). Qualified residence is defined in 163(h)(4) and includes the principal residence and one other selected by the taxpayer for the year. I think it works like this: If there was an existing mortgage on the principal residence that was refinanced, the amount of the new loan up to that amount would be considered as grandfathered in as acquisition indebtedness, and then only the excess above that that was used for the second home would be considered home equity indebtedness. 163(h)(3)(F)(i)(III) and 163(h)(3)(F)(iii)(I) https://www.law.cornell.edu/uscode/text/26/163 Hope I got all the code references right!

I had errors in Drake the way I was answering the questions too. What I found out is that "C" must be checked, "No" to a will, the next 2 questions checked as "No", and "will distribution marked as "Yes". Then, the name shown as "in care of" must match the name on the 1310 of the person claiming the refund. The "in c/o" name may be your problem with it showing a mismatch error. iirc, I didn't attach anything and I was able to efile the return.

Those under 25 can get EIC if they have a child and meet the other tests. The 25 to 65 rule is for those that don't have a child but meet the other requirements.

No reason to fix it if users are willing to put up with these problems.

Agree with cbslee. The Senate's amendment to the bill reads as 2020 only. It says this: As for Pacun's question about income, prior to the above amendment, Sec 85 of the Code said this: ... and now we will have item ( c) for 2020 from the amendment I quoted above so that gross income will include only that unemployment income in excess of $10,200.

Good article from The Tax Advisor specifically about when the S corp comes into existence. "An S corporation's initial tax year does not begin until the earliest to occur of the following three events: the corporation has shareholders, acquires assets, or begins doing business. The term "month" is defined as the period starting on the day within the calendar month that is numerically equal to the first day of the tax year and ending on the day before the same numerical day in the next calendar month (Regs. Sec. 1.1362-6(a)(2)(ii)(C)). Since most newly formed corporations do not begin their first tax year on the first day of a calendar month, the election deadline may not fall on the 15th of a given month." " "Practitioners will generally find that the earliest of these three dates is triggered by the legal incorporation process (the filing or registration date of the articles of incorporation with the secretary of state). At this point, even though the shares of stock may not actually have been issued, the corporation may be deemed to have shareholders and, therefore, be considered to have satisfied one of the three tests." There's much more in the article and worth reading. The 3/15/20 deadline assumes that the business was for a full year, so obviously a short year return will have had a different deadline. I am not entirely sure this business would qualify for the late election. Was there reasonable cause for missing the date to elect? Worth a try? Why do the owners want to be an S corp instead of a partnership?

I would follow the interest tracing rules and the ordering rules for repayments, both of which are outlined in 1.163-8T. https://www.law.cornell.edu/cfr/text/26/1.163-8T

Right, it's supposed to be a one-line adjustment, but if it had been done correctly from the outset those entries would be on the 4562. In this case I might be inclined to enter the assets there with all of the pertinent data, date, depreciable basis and accum depreciation through 2019 with the labels something like "rental house-481(a)" and let the system handle the disposition correctly. That might get you to the correct result anyway, I think. If there is some other component of the 481(a) adjustment because of owner's use in previous years that limited other expenses creating a carryover that the program isn't handling correctly and there aren't many years involved, you could enter it in the original year and roll the Sch E and 4562 forward through each year's program. Maybe that would work?

Here is some reading for you. Note, these do go to pdfs: Contribution Of Appreciated Property To A Partnership: More Than Just A Nice Credit To The Capital Account and this one has a couple of basic examples of the debt problem: Structuring Contributions of Appreciated Property to Partnerships: Avoiding Tax Recognition on Built-in Gain Assets

Wow, where to start with this one! Yes, the partnership depreciation should continue on using the same method and remaining life that the contributing partner used. It doesn't start over, so you would be entering cost and accumulated depreciation. If the contribution wasn't on the first day of the tax year, be sure that the partial year depreciation expenses on the (former) Sch E and on the partnership return are calculated correctly. Sec 721 overall says that, in general, partner receives nonrecognition of gain/loss on contribution to a partnership. Sec 721(b) deals with contributions to investment companies, not intangibles, but still doesn't apply here. Contributing partner MAY have gain recognition if he is relieved of debt to the extent that the debt exceeds his basis in the property contributed. Any debt relief to the contributing partner is considered a deemed distribution that will reduce his basis in the partnership, and if that deemed distribution exceeds his partnership basis, that then creates a gain that the contributing partner will recognize. If that happens, iirc, then the partnership gets a step-up in basis. So, yes, sometimes a partnership can have a step-up when no one died, and yes, "step-up" is the correct term. You will have special allocations in the partnership that are meant to keep the contributing partner from shifting tax attributes (the built-in gain from contributing appreciated property) to the other partners. Maybe someone else can explain this more clearly. Below are a couple of links that describe some of these problems are their handling more fully, including examples and code references. (Give me a few minutes to get to my desktop - can't post the links from my tablet right now for some reason.)

I agree with you and I have been doing so all along. I hope your comment was directed to Pacun and to Possi and any others who agreed with him. To refresh, I did say this in one of my earlier posts above:

I doubt states will reissue 1099Gs. Why would they need to do that? I see this as being similar to someone that received a 1099G for a state refund that is only partially taxable under the tax benefit rule. Perhaps we'll have a worksheet or a built-in calculate for the federal, and then each state has its own rules and handling. Some don't tax it already, some more already made it n/t for 2020 alone, and for those that piggyback federal under normal circumstances, I guess they'll have decisions to make. As far as holding returns, I posted this in the other similar topic we have going:

True, the retroactive changes aren't your fault, but I think at a minimum you now have a responsibility to inform clients of the potential change to their returns and give them the choice to file or wait. I only have a handful that came in recently and they chose to wait a week or so rather than amend and then have to wait for a refund that may take months to receive, or pay a balance due that will end up a refund once the change is signed into law and is incorporated into the program. After all, they do hire me to work on their behalf to achieve the best possible result.

I edited your first post to update it to 2020.

I've talked with the clients in so far that have received UI benes and all have agreed to wait. Some are ready to print when the change comes through and some untouched. My affected clients are all in DE that starts with Fed AGI and had already made it n/t as a subtraction, so that adjustment will need to be removed by the programmers as well, but iirc Drake's state input will allow an override to that line.

One of the amendments agreed to was to make this $10,200 apply to 2020. Below is the link to the actual pdf containing H.R. 1319, and the amendment is Sec 9042(c) wtihin that document. https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2021/03/05/Amendment_UI.pdf

Yes, probably was something to due with the SS worksheet error in calculating taxable amount. If you already had the 8879 signed, keep in mind that you don't have to redo that if the change in tax < $50.

No, on the donor's return just handle this as removed from service and make sure that depreciation is correct for the year. You don't want to record a sale and trigger depreciation recapture or PALs to be allowed as if it is a sale. Reporting the gift on Form 709 is enough of a trail for the IRS to know that the property is no longer in the donor's hands. Son will have dual basis if FMV is less than donor's basis at the time of gift, for purposes of calculating gain/loss if son ever sells. If son is keeping it as a rental, for depreciation purposes his basis is the adjusted basis at the time of the gift, and the depreciation starts over with the appropriate method, convention, and life. If there are PALs, those are NOT passed through, but those PALs will be an increase to son's basis. Son will need details of basis so that if he ever sells the property, he will be able to calculate any gain that should be ordinary gain due to depreciation recapture that donor would have been subject to had the property been sold instead of gifted. TP will probably use unified credit instead of paying gift tax, but if any gift tax is actually paid on this transaction, then that would add to basis.

If you see a member sharing private information such as EFIN or client data, either in a post or screenshot, please use the "report" function and I will remove the private data and try to leave the rest of the post intact as much as possible. The forum sends me an email immediately with every reported item, but if you try to get the poster's attention in a followup post, in all likelihood the person will not see that before the 5-min editing window has lapsed. Thx.

MOD NOTE: Please note that I moved the OP's post out of an 8 year old topic that he had revived with his current post, removed all references sharing his EFIN, and lastly, I hid another post that quoted the original OP from the original 8-yr old topic that was something about duplicate submissions and having two ATX databases.

Not sure what you are referencing when you say "the same as the one you have listed". I have a pinned topic where one of our members gave the main addy for AL DOR as 50 Ripley St in Montgomery. If you have updated information, please provide.

Agree with Catherine. I've had clients sign the form and forget to send it. If it's mailed back late or takes longer than the 3 days, I scan the envelope and any note that comes with it where the client says "oops, sorry I forgot to send this."

Not really, Tom. I'm just like everyone else here, working and trying to do the best for the clients and our members here. Many times I look for some reference to steer the person in the right direction without doing all of the research because, after all, I'm busy too and that is the other person's job and responsibility and not mine, so many times I use pubs to give someone that start and don't feel the need to drill down to the regs or code while realizing that it isn't the most authoritative source. I'm wrong plenty of times, lots I don't know, and areas I don't ever want to deal with, but it does amaze me when people will argue without providing some sort of evidence to the contrary to back up their side.

Well, I went back as far as Rev Proc 2007-40 found as part of this IRB 2007-26, that has many other references the tax code regarding e-filing, and it also includes this in section 5:

Why, when I gave the correct response and the cite that contains the rules that you agreed when you signed up to be an ERO? As EROs, we are governed by the rules in pub 3112 and pub 1345 that I referenced in my first post, and before you argue that an IRS pub isn't authoritative, Pub 1345 references back to the actual underlying law. Maybe you should read it sometime.