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That's creative and something I'd suggest not to do; he isn't self-employed. You should report what actually took place, not what he'd like it to be or some fabrication to keep him out of trouble. I would look closely at those distributions to see if they are the same amounts as his net paychecks were in prior years. In other words, was he paying the paychecks and not recording them properly in the books and not filing and paying the payroll taxes? Or did he do this himself instead of having a bookkeeper or hiring you to do it properly, or have a new bookkeeper that didn't know the difference between paycheck vs distribution? Or...is he starting to use his S corp as his personal checkbook?! You need to inform the client of the consequences of the S corp not paying him a reasonable salary, and discuss what has transpired thus far in 2018 before the year is closed.

Tom asked for recommendations for laptops and Abby's search was narrowed to only search for only Dell laptops, no other brands or desktops either.

The clients I have with NR4s are for income from dividends and the OAS so my experience is limited to that. U.S. citizens are supposed to report on worldwide income, and there are some special rules pertaining to pension income depending on the type of pension, and U.S. citizens that invest in Canadian mutual funds. Since you didn't say what type of income the $3K+ so it's is hard to give an answer on that. Whatever you report on the 1040 will need to be converted to U.S. dollars based on the exchange rate at the time. If the client doesn't have the amounts paid in UDS, you can look up the exhange rates here: https://www.fiscal.treasury.gov/fsreports/rpt/treasRptRateExch/treasRptRateExch_home.htm Canada's OAS is similar to our social security benefits and is reported on line 20a along with our SSA benefits and using the same formula to calculate the taxable portion. Your client has probably been receiving this for years and not telling you because he didn't realize it is reportable and could have additional taxable income in those prior years, depending on the exchange rate at the time and his level of income. If you tell us more about what type of income that larger amount comes from, maybe we will be able to better answer on that. If, for example, that is from dividends, that would be converted to UDS and reported on our Sch B. Canada does withhold tax directly on dividend income that would also be shown on the NR4, and that also must be converted to UDS and is claimed on Form 1116 as foreign taxes paid to calculate the FTC.

You all probably already know that a PLR is intended to be relied on for only the taxpayer that requested the ruling based on an exact fact pattern, and I posted it more for the code section references it contains in this one particular case so that those could be used as a basis for further research. I do think it's an interesting ruling with the IRS allowing the deferral.

With a quick search of the web I found what might be some useful info for you, especially in the second link, a PLR that has relevant code sections, that would be a place for you to start for further research: some general information from SEC on how long the states hold securities, in general: https://www.sec.gov/fast-answers/answersescheathtm.html and this 2009 PLR where the IRS ruled that the taxpayer was allowed to defer gain or income recognition by purchasing replacement securities using the escheat funds (proceeds) received from the state. https://www.irs.gov/pub/irs-wd/0946006.pdf Hope this helps you some.

See this IRS brochure (pub 4303) that answers the question of recordkeeping and what the statement must include, and has more information that you may find useful: https://www.irs.gov/pub/irs-tege/pub4303.pdf

Yes, that is correct.

Oh yes, that's been going on for years, and it's probably not Google that is calling. The ones I'm getting now have a spoofed caller i.d. that is supposedly from within the state's area code and may appear from a local exchange as well. https://support.google.com/business/answer/6212928?hl=en

I wanted to add a few more adjustments to arrive at E&P, list still not meant to be all-inclusive. Other adjustments to taxable inome to arrive back at E&P would be to disallow and add back artificial deductions that do not require cash outlay such as sec 199 DPAD, div recd deduction, and carryforwards (NOLs, contribs, cap losses), and to reduce E&P for income taxes paid or payable because these do no reduce taxable income but do require cash outlay. This reduction for taxes would not include any state or local taxes that are deducted as an expense on the return to arrive at taxable income. Remember, E&P is an economic measure of the corp's ability to pay out the dividends, and taxable income isn't fully reflective of that.

Your example appears to use $50K of E&P and retained earnings interchangeably, and that is rarely the case that these would be the exact same figure. Have you calculated current and accumulated E&P? It is more complicated and time consuming to calculate current year and accumulated E&P than merely looking at taxable income and retained earnings balances because it takes into account non-taxable items such as tax-exempt income, reductions for non-deductible expenses, and recalculation of depreciation using the ADS method. It is a corporate level calculation at its year end without regard for distributions, and is also not controlled by the owner's year-end. Second, is this a new corporation as it seems in your example? In general, in determining whether a distribution is considered a dividend or a return of capital, current year earnings and profits are considered first so that any distributions not exceeding current E&P would be considered a dividend only. Any current distribution that exceeds current E&P would still be considered a dividend to the extent the corporation has accumulated E&P available. It is only after current and any accumulated E&P has been distributed that the return of capital is determined. https://www.thetaxadviser.com/issues/2013/oct/kaiser-oct2013.html

For your item #3, the answer depends on whether this transfer is part of a tax-free exchange for stock in a newly formed C corp where tax attributes may be retained, or is this transfer into an existing C corp?

Sometimes we don't have to look and further than our own backyard. See the last 2 responses in this topic here on this forum:

Yardley, it IS taxable and is the child's, subject to the kiddie tax. I had this exact scenario years ago at the firm I worked for. Four minor children each received a huge settlement from a small plane mfr after it was found negligent in the deaths of both parents. The god parents had taken them in and adopted them as their own before ever knowing if any settlement would occur.

Ok, parent is a guardian for these funds of the minor child. The child is the legal owner of the assets with guardian having a fiduciary responsibility. Taxable earnings would be the child's. Why does the parent think the earnings wouldn't be, or wouldn't be taxable? Good info here on different types of accounts: https://info.legalzoom.com/difference-between-guardian-account-custodial-account-23481.html

I've never heard the term either and found only the one answer shown below from within a Yahoo Q&A when searching for that term related to bank accounts. From that, I'd report the income as belonging to the person whose SSN is on the 1099.

Yes, the limitation for a partnership is ordinary trade/business income or loss without t/e income and without the deductions for guaranteed payments or the 179 itself. Marie, do not override. If the limitation isn't met at the partnership level it will be a carryover and won't be on the K-1. Abby Normal's suggestion will work, if the partner really wants a higher deduction now.

haha, you know that's not true! You and some other exceptional members have corrected me when I'm wr...wr...wr... wrong (there I said it ), and I may not say it openly , but I do appreciate that you make sure the topic is explored fully and that we all end up with the correct answer. Don't I at least give those corrective posts a like? Believe it or not, I am still human and make mistakes.

Yes, you are correct that the basis of the property reacquired is the value of the note plus any expenses related to reaquiring the property, as long as the seller didn't receive any other cash or property, or previously write down of value on the note. Sec 1038(a) through (d) and also (g)

Dr Abby, the chiropractor... straightening me out.

It sounds like the TP's intention was for the property to be held as investment, and property doesn't always have to be rented to be considered investment property; it could be because of its potential to appreciate in value. Mortgage interest could be investment interest expense reported on the 4952, other carrying charges may be capitalized (requires an election), and obvious items that are required to be capitalized on any property would, obviously, also be added to basis.

Max, no, it is 3 years from the due date including extensions for the year of the loss. Again, from sec 6511(d)(2)(A): That same rule is also expressed in the section I first quoted from the IRS manual. Please see #1 below:

Agree with cbslee. Plus, ATX will cut you off from its server so those back year returns you'd prepare would be paper-only whereas those prepared in Drake could be e-filed. I think once you get used to Drake you won't want to go back to ATX anyway.

I wouldn't want to touch that one either, and yes, John put it very nicely. You post did make me laugh though as it sounded like those TV commercials with "but wait, there's more"

Max is giving the general rule for claims for refund or credit on amended returns under sec 6511(a) and (b)(2) or (c), but there is a special rule under 6511(d)(2)(A) that allows the claim for refund or credit if it is attributable to carryback of an NOL or capital loss. It must be filed on 1040X to be a valid claim at this point because using the 1045 alone would be a tentative filing that has a shorter SOL, and Edsel's client is already well beyond that date.

The window is still open for that. It's three years from the due date, including extensions, or the original return for the year of the NOL, so three years from 4/18/16 or 10/17/16. April 18th is not a typo; special rules kick in when Emancipation Day falls on a Saturday. You must file this on 1040X though and include the form 1045 as part of that filing. See #4 below. Also, Link to IRC Sec 6511(d)(2) as referenced. Stupid rules on Emancipation Day's effect on due date, for anyone that doesn't yet have a headache: https://www.irs.com/articles/tax-deadline-alert-2015-tax-returns-are-due-april-18-2016 From the IRM, easier to understand than 6511: