Terry D EA

You just gotta love Rita!! That back yard must be huge??? Maybe by April 10th you'll need to make the plots deeper to start stacking them. I just read this thread at the end of a very busy day and it finished my day off well. Thanks for the laugh's

You have to complete form 8962 for each tax payer. I think the IRS would frown on lumping them onto one form.

I think you have an ethical responsibility to inform the client they are required to file an accurate return. Yes, the issue of paying additional funds will be required but let the client be the one to decide to stick their head in the sand with fingers crossed the IRS doesn't question anything. I would not be concerned about loosing a client who I advised properly or pointed out an error. I would think that client would ultimately appreciate my knowledge and concern. It is good to tell them if they ignore and don't amend, and the IRS does question, then there will be additional penalties and interest that could be more than your fees and the amount the have to pay if they amend sooner.

I will second what Jack says. It is amazing what these kids today know. Look how things have changed. Younger folks used to come to us for advice and help with something simply because of our past experience. Now, its the other way around.

I agree. I stated the "not for profit" issue simply because it had been mentioned as a possibility to classify this activity this way to avoid including the income on the Drake discussion board. I know that this is not possible. Thanks for the clarification.

Yes, that is the correct form to use. Also, you will have no choice but to paper file the return. There are other steps that need to be taken as well. Such as file a police report, contact the credit bureaus;etc. Unfortunately, I have done this too many times and have to do it again for a client now. I wish these crooks would stop

You cannot discuss one's return, deductions, exemptions; etc with the other. I have one of these situations but both clients are very respectful of the other and are both dear friends. Fortunately, they do not fight and argue and treat each other decent. With that being said, that is the only reason that I provide service to both of them. They also agree that if a dispute erupts, then one of them has to leave. This may not be the perfect way to handle this but it is working. But... in your situation, I would definitely tell the guy he needs to go somewhere else. I also agree the 8332 needs to be signed and in your possession. The client I retained would have to provide the required documents and due to the fact you haven't filed the return and they have not picked it up, you can still separate yourself from that person as well. Furthermore, it would be worth it to refund the fee for the return you completed. Doing so will be much less expensive than paying the penalties.

Just to add to my post above. I think it would be a hard sale to label this as a not for profit activity when the rent received clearly more than the expenses, Just trying to rule out everything.

Judy, This too has been a bother to me. Like you, I have read several articles and wonder the same things. In my situation, this is a four bedroom home in an area where the FMR is $1477. My client is collecting $780.00 per month from his daughter. This is way below the IRS stated discount percentage and is not a rental but personal use. This equates to $9,360.00 in reportable income without the deduction of any expenses or depreciation. Yes, the mortgage interest and property taxes are deducted on Sch A. But in this case, there is no mortgage. This house is also the daughter's primary residence. I don't understand the imputed income either. It is possible the $780 per month could cover the utilities, property tax; etc. But, I have not found anything that substantiates the difference to be used as a gift. This client has been misinformed by someone. They even stated they "heard" that they qualified for the EITC. Well at 67 and 79 years old........

This has been tossed around a bit and if I remember correctly on this board as well. However, client rents a home to their daughter at a reduced rate. Reduced close to 50% of the fair rental value which makes this a personal use rental without the ability to deduct any expenses. I talked to this client about this last year about this being the worst form of rental there is but they apparently haven't changed anything. The rent received is taxable income according to everything I have read. I have read posts on the Drake board that because a definitive reference regarding the rent being taxable income was not found, then one does not have to report the rent as income. I personally say that is tax fraud by deliberately failing to report income. Does anyone have any references to share on this subject.

I agree. Whether the check was cashed or not is does not determine the eligibility of the deduction. The expenses is deducted in the year it was paid.

I agree totally and you should follow this suggestion

That is what I was wondering but couldn't find anything in the Ohio instructions telling me so.

I am trying to complete an Ohio non-resident return for a student who attended college in Ohio. The student is domiciled in NC so non-resident return for Ohio due to income from an Ohio source. I keep getting the message that because there is NRC in the return, attach the NRC documents to the return. What NRC documents are these? All I have for this client is one W-2 form. Jack or Margaret can you chime in on this one?

Earlier, I asked about the use of signature pads for electronic signatures. Well, I did purchase one and have it installed and up and running. I am now scanning all client docs used to prepare the return and have the 8879 electronically signed which automatically goes to the DM in Drake. All I can say is, my gosh what an excellent feature!!! All client docs, signature forms and whatever other document I need or use all electronically in one place. Good bye filing cabinet!!!

After cbslee's explanation, I will agree he is right and the total is taxable. As an evaluator for a National organization, I have evaluated a few job corps for a National Accrediation for their automotive programs. Students do receive this type of support so again, it is all taxable. Maybe if you pick his brains a bit about his past maybe he'll remember.

Agree with Pacun. Each property should be listed in each column.

Lower of cost or FMV at time of donation.

Yes, I do agree Judy has the best answer and did state so in my earlier post. Also, I do agree that during an audit you have to substantiate everything. I am glad you have taken the position that we are just discussing this.

I am doing as Lion has stated with this. Creating the 1099 Misc with refused and am educating my client on the need for the W-9 form as well. The IRS may still issue a penalty for the 1099. Better this way than trying to re-classify the expense when there are no supporting documents.

I don't think I ever said that "expenses were allowed to create a ordinary loss when there is no ordinary income." I am confused but totally agree with your first two statements which I thought that was what I was saying. Maybe I went about it the wrong way. Here is a link to a document from the IRS that supports what I am saying. Do you agree if there were not any ordinary business income in any given year, ordinary business expenses could cause a loss that can be carried forward? I stated the bottom line would be the same just quickly thinking if you deducted the expenses on the 8825 or took the same amount as a business or income, that outcome would be the same at the partner level. https://www.irs.gov/businesses/small-businesses-self-employed/passive-activity-losses-real-estate-tax-tips

I do not arbitrarily make changes to documents client's present to me just because they say so. It is the client's responsibility to bring me accurate documentation and have corrected those documents that are not correct. As you stated, the IRS has the right to question everything. They compare what is submitted to them with the return that is filed. I guess we could apply the same logic to donations. Client's document shows he gave 2,000.00 to the church but says he gave 10,000.00. So instead of corrected documents just change it to what the client says?????? I don't think so. Not being disrespectful or argumentative Pacun, just simply stating my position. I don't like my clients to get CP 2000 notices nor do I like dealing with them.

Well we certainly can agree to disagree and I respect your position. However, why cannot a partnership have ordinary business income/loss that is not a direct expense of a rental activity? I do agree the rental activities in and of themselves are passive activities. As I stated, a partnership formed in NC is required to pay and file an annual report fee that is not a rental expense but a partnership expense. One could expense everything on the rental 8825 and the bottom line would be the same. But I choose to pay attention to a lot of detail.

Pacun I totally disagree. The way the OP stated the 1099R was completed is correct. The broker is required to report the withdrawal as a taxable distribution. The amount rolled over within the 60 day window is reported on form 5498 thus making the distribution non-taxable. The advisor is correct. Only other thing to add is look at the new rules with the 60 day rollover and be sure the client has not had a rollover within that last 365 days.

There is no requirement to issue a 1099 Misc to Trustees of estates or an executrix administering an estate for the fees they charge. Even if they are in the business of administering estates and trusts the same applies. The executrix or trustee includes the fees received on line 21 of form 1040. There is a difference if the estate or trust was engaged in any non-related business activities including rental activities may have to issue the 1099 Misc for those related activities only. Not sure which scenario applies to your client.