jklcpa

Yes, the payer of the third party sick pay is acting as agent for the employer and the payment is considered wages to the extent it is subject to withholding and includable in income, so it does qualify as earned income for EIC.

Agreed with the others. This is clearly an ethical violation for CPAs here, and both the State Boards for Accountancy and for Law, and the DE Bar Association would quickly find out and put a stop to it, especially in my small state where everyone knows everyone. This happened to a public accountant with an EA that lives close by in my small town, and he was ordered to cease and desist by court order that he flagrantly ignored and ended up with fines for nine violations totalling of over $35,000. He was also brought before the State Board of Accountancy on 3 separate times resulting in cease & desist, lost his license to practice for 2 years the first time which he ignored and it was finally permanently revoked. His fines in these instances totalled over $582,000 that was based on revenues that ultimately went back to aggrieved former clients. He was writing wills, trust and estate documents, giving legal advice related to those, and other legal work too that the DE Bar Association had been watching for a while before all of this transpired. He used to come to the CPE breakfast seminars and was pretty much lobbying our state representatives to give him a CPA license because he wanted to issue financial statements beyond compilations. He'd sit at my table and once asked me if I'd speak to my state rep on his behalf. My response was that we'd each tested and worked hard for those hours of experience to qualify, that we each had hurdles that we overcame, and that we'd EARNED the certificate and he should do the same. If you want to read about all that he did, his case is always included in my DE ethics course. I've wondered if his case is in the courses for other states too, or if it's only in ours because he was licensed here: Estep case.pdf

FYI for all, when posting please remember the forum policy of limiting the discussion to only the tax law and its provisions, and that all commentary related to politics, politicians, or their motivations will be hidden or deleted. Thanks.

cbslee, thanks for the update.

Uh, I edited Abby's post to remove some symbols that were setting off my AV software making it think there was a script running on the page. It wasn't happening before Catherine's and Terry's posts, so that is strange, but I removed the colon symbols. Still not helping with my AV that is now chiming every minute even though I told the program this page is a safe link. Thanks, Abby. Grumble, grumble.

The cap is only for the flat dollar portion of the calculation. The determination is the greater of - 2.5% of the excess household income over filing threshold OR the amount calculated using the flat dollar amount for the family's size, flat dollar amount capped at $2,085 for 2018.

Two ways: Click on Jack from Ohio's name that will take you to his profile page and click on message - Or, from any page, click on the envelope in the upper right of the screen and fill in "Jack from Ohio" as the recipient. This envelope is also where you'll see the indicator when you receive messages back to you. -

Use the search function within General Chat and search for "Puerto" and you'll see some past posts with general information on this.

Ah, sorry, I do see that in the instructions now. Sorry I couldn't help.

I'm not familiar with this credit but took a look at the form, its instructions, and the fields available on that page. From looking at the instructions, it appears that the identifying number field is for an FEIN that would be 9 digits, not the 10-digit COR you are trying to enter. Did the IL DOR say that the 10-digit COR # is what is expected on that form? Did this taxpayer go through the entire process of registering for an account and applying for the credit on the MyTaxIllinois site?

Attorney is wrong. Executor can sign the return as a representative of the estate. It's possible the IRS would create a SFR and there may be no assets in the estate to collect from. Would the standard deduction + the extra for being over 65 be enough to also eliminate tax? If not, I'd file a return with the medical deductions to eliminate the tax bill. Now, what about the state return?

The error message is correct; it does not need to be reported. From the recipient instructions for Box 1 of 1099R:

It's more like a combo of the (old) tie and a new-not-improved big giant clown bow tie with the expansion to include up to six schedules. lol

Relief from a partnership liability is considered a deemed distribution and treated the same as cash received in liquidation would be.

Joan is correct. Here is the NOLO site that explains that rule: https://www.nolo.com/legal-encyclopedia/tax-exclusion-vacant-land-around-home.html

I think your problem is that, as you said, the loan has a reduced basis during the year when repayment occurs and the loan basis may have been restored at year end. The repayment with loan basis at less than face value does create taxable income to the shareholder, and its character is dependent on the loan itself. If the loan has been formalized with its terms then the income triggered by repayment will be capital gain. If, on the other hand, if the loan is open ended and not formalized, then the income from repayment will be taxed as ordinary income. This is an older article from Journal of Accountancy that is still on point and has more detailed explanations with code and reg references that helps to explain it, starting with the paragraph immediately before the heading "When Debt Basis Is Gone" through the end of the article: Avoid the Tax Trap When Repaying Shareholder Loans I also found this CCH KB article, that also describes the formula of how it handles debt restoration and the "net increase". It also talks about checking a box if the preparer desires to have the debt basis restored before loan repayment, contrary to the regs. I also see that it may be linking to the same article I provided above but its link is not working. I am not sure how current the KB is, can't find a date on it, fwiw: How do I treat shareholder basis loan repayment versus net increase for year?

There are a couple of preparers here that handle DE returns, so I'm sharing this technical information memorandum that was issued today on how DE expects reporting of itemized deductions as it relates to the $5,000/$10,000 SALT limitation and the reduction on line 47. This is NOT being handled similar to the Pease limitation was in the past, and this memorandum has numerous helpful examples. This is also being sent by DE DOR to the software vendors. I couldn't find a direct link on the DE DOR website yet, so I printed to pdf and am sharing here in that format. tim_2019-1_v._3_-_itemized_deduction_limitation_of_10_000_for_salt_paid.pdf

These should help: § 1.1038-2 - Reacquisition and resale of property used as a principal residence. Pub 537 for installment sales deals with dispositions of installment obligations, repossessions, and resales- starting on page 12

For the depreciable basis: In converting a personal residence to a rental, the basis for depreciation is the lower of (1) the adjusted basis on the date of conversion, or (2) the property’s fair market value (FMV) at the time of conversion (Regs. Sec. 1.168(i)-4(b)). Remember to break out the nondepreciable land component from both the total adjusted basis of the property and from the FMV so that the amounts used in #1 and #2 above are only the depreciable components in deciding which is the lower amount. To calculate gain or loss on sale: If a residence converted to rental property is later sold at a gain: the basis in the converted property is the original cost or other basis plus amounts paid for capital improvements, less any depreciation taken. If the sale results in a loss, however, the starting point for basis is the lower of the property’s adjusted cost basis or FMV when it was converted from personal to rental property (Regs. Sec. 1.165-9(b)(2)). This rule is designed to ensure that any decline in value occurring while the property was held as a personal residence does not later become deductible on the sale of the rental property. Taken from a Tax Advisor article

The way to request the waiver is to NOT pay it and properly fill out the 5329 as described in the instructions. If you fill in the 5329 and pay the penalty, then you aren't actually requesting the waiver on that portion of the missed RMD. FWIW, I've never had a waiver denied or penalty assessed if I've properly filled out the 5329 as instructed and attached the statement of reasonable cause with how the TP rectified the problem. As an example, if the RMD was $4,000 and the actual distribution was $0 AND you want to request the waiver on the entire RMD, you would fill those two amounts in on lines 53 and 53. Then on line 54 "RC $4,000" to the left of the box in the text area, line 54 in the amount column itself will print as -0-. That will cause line 55 to calc as -0- and filing this will trigger IRS to review the form and your attached statement.

This doesn't fall under the first time penalty abatement if this is for a tax year that you are filing now. Fill out the 5239 and see the specific instructions for lines 52-55 of how to indicate waiver of the penalty. Return must include a statement of reasonable cause, and it's always a good idea to state that the taxpayer is aware and has/or will immediately rectify the situation.

Are you a tax professional able to use the IRS PPS line?

Correct, capital loss dies with the individual and is NOT available for use by the surviving spouse. Rev. Rul. 74-175 provides that "capital loss carryovers expire upon a taxpayer's death and cannot be used on the estate's income tax return. The decedent cannot transfer a capital loss carryover to the estate because the decedent and estate are separate tax entities. A taxpayer's capital loss carryovers also cannot be transferred to the surviving spouse."