Margaret CPA in OH

I did realize that cost seg is available and have asked for breakdown of appliances, etc. thanks. But, if no start up expenses, where do they go? Rental property basis doesn't seem correct but they are real, incurred in 2020, used in 2020 for this LLC only (whether strictly rental property or, eventually, other LLC activities) and will be ongoing. Thanks again for more info.

All good questions and comments! So everything is to be capitalized as rental basis? If no amortization of startup costs, what else? The costs are real and directly related to the business/rental. If added to rental basis, seems a bit extreme to recover over 27.5 years. Yes, as noted, brother lived there full time during remodeling to monitor contractor and for security all at $0 although he did pay $1000 security deposit for fmv rental beginning January 2021. I suspect client may have thought this was a way to begin deductions in 2020 but didn't know (or ask) about personal use by family or below market rate rent or ask about anything else, in fact, until Saturday. Brother paid for utilities except for security. Brother continues to live there in 2021 paying market rate rent. Client pays for ADT security only. Brother/tenant pays all other utilities. Thanks for comments and provoking more thoughts and questions!

As I think I mentioned, her Articles of Org. state that the purpose is for 'real estate investment and creative purposes.' Is it not active business when looking into real estate investments in this case? She finally decided on purchasing a rental property but what if the decision had been to invest in an ongoing real estate group that maybe develops properties? I just see your last thoughts and appreciate your comments. I will have to talk with her to see if there were any other activities which she pursued or considered that would be construed as a trade or business other than strictly a rental property. If not, you have been very helpful in guiding my thoughts. They are bending closer and closer to retirement!

My first thought was to capitalize all that for 2020 but I'm sure she used the ipad, phone, etc. (she says all business) to search for property for rental, to arrange for inspection, for contractor, security, etc. So those things, while leading to a rental property, were used in this part of the business actively doing so. Why would they not be expensed as start up costs? The rental, yes, place into service 2021, but if she was, say, looking into another type of investment (creative services, whatever that is), wouldn't they be deductible start up expenses? This is why I am asking for input. If you still think all should be capitalized, where is a good cite? I was thinking that she was actively looking into investments in real estate (per articles of organization) beginning early 2020 and ended up with a rental. It could have been some other investment, perhaps. I am inclined to believe the ipad and phone are, indeed, for business and have asked her to confirm. In her position, she seems to be pretty careful to not mix her medical life with anything else and has lots of money to invest. I can well imagine that keeping business pursuits separate is important and easier to track on a separate line for messages and computer for records. With her assets, I think it not too likely (could be wrong, though), that she is trying to commingle investment business and medical profession requirements. Thanks for the reply and thoughts.

Neurosurgeon formed LLC in late 2019 for "real estate investment and creative services." The only expense was $99 filing fee so I did nothing, LLC did nothing. January 2020, new Ipad, phone and phone line purchased, then logo design for $600, then business checks and Google LLC GSuite so big plans. I knew nothing of this until yesterday. She identified a rental property to purchase for cash in July, hired a contractor for remodeling, etc. and set up ADT security. All good so far, placed into service at market rate in January 2021. However, July 5 charged her brother a $1000 security deposit and rent of $0 for remainder of 2020 to live in house while work was done and to supervise contractor. So, personal days through 2020, no deductions, right? Begin depreciation in January 2021 (new furnace December 2020), right? What about other expenses like the security for 6 months and soft expenses like checks, Gsuite monthly fee beginning in September, etc? I am inclined to expense as start up costs the computer, checks, logo, etc. but begin depreciation of the rental January 2021. But what about the monthly security expense in 2020? Personal use? $1000 security deposit just really early for 2021 (and I know how to handle security deposits)? And, of course, no 1099's issued for contractor or logo design of $600. Also, since there is no mortgage, those costs usually amortized over the life of the mortgage should be basis now, right? It's still a faster write-off than 360 months of a 30 year mortgage. Or should they be expensed? Never saw this before. I was hoping to be coasting these last couple of years but new things and new clients keep popping up and, well, I find it hard to say no, especially to someone earning $790+k. She's only 44 but I want her to adopt me.

Aha! I will look into this 3 years! Thanks again! Off to handbells practice now.

Why would she get the 3 year spread on retirement distribution when it was not used for business? She specifically told me that she was putting it into her house but had anticipated the business thing would work out. I will have her provide the travel expenses. I am not ready to call this a failure yet nor is she. When the community board supports her 8-0 and funding because they thought it was a good idea, it seems early to call it a failure. We will know more after the 28th. I just think everyone pulled way back when COVID hit the fan. Thanks for the input!

Lion, she has described this exactly as an expansion of her existing business. Affected by COVID? Most certainly, however she stated that she withdrew a lot of money to put into her house thinking that the business plan would be approved and all would be wonderful. There was no 10% penalty as she took from her pension as a retiree (firefighter). The issue here is whether I can put those attorney fees and architect fees as deductible with zero income. Before everything shut down she also traveled to a couple of other cities that have 'container venues' to check them out as her outdoor farmer's market business isn't available over the winter. But before she could set up again with warm weather, well, we know what happened. Okay, I will input the deductions as a business expansion. Thanks for the support/clarification/reply. I feel better about it even with no income. She never tried to get any loans or grants or anything and had no employees. Remember it was fairly recent the sole props could apply. My guess is she won't want to go through with this and, frankly, I really don't want to deal with it either but will mention it. Her choice.

Client began business 4 years ago mixing specialty drinks at parties and, primarily, at a local farmer's type market in a stand. It was moderately successful so she thought she could make a start to her eventual goal of a facility for party space, food court, and she would be providing the drinks. Big planning began at the end of 2019 and in early 2020 she engaged an attorney to represent her and ideas to a local board in a community where she found a great space for development. She had an architect draw up extensive plans and made a well-received presentation. The board awarded her idea $8000 or so in support once she had a lease agreement for the location. That lease agreement has to be approved by a zoning board and is stalled and has been for over a year. She has these significant expenses but no income. The facility and all income was to be under the name of the original LLC as an expansion. I'm struggling to see how they can be deducted currently as it appears to be start up costs but they aren't really. She was in business already, this is the enlargement of the original plan. So deductible? What if the board withdraws the funding? If she can't get a loan to buy the containers (she wants to use shipping containers)? She has another meeting on April 28 for status but I want to complete her returns; just not sure if this is a different business but it isn't, just an expansion but she has no income for 2020 but...I could go on. Any insights out there? She is really hurting financially now having withdrawn more retirement funds than she should have with not enough tax withheld and jumping into the next tax bracket.

I had a couple like this but added his information to hers. She had not filed yet and was existing client. I found out about new husband's filing and convinced them to go MFJ because of AOC for her son. There was no problem doing it that way.

Just curious - were they still married at end of year so all gain is 50-50? Or was the title on the statement not changed or is the account still joint? If they were still legally married, is it better bottom line for them to file joint? Sometimes the dollars involved can be persuasive, sometimes not. With the example Judy showed, does that mean that each of them report the full gain and wife nominees out half? What does the ex husband report? If he reports the full amount, too, does he nominee out half?

Perhaps timely: IRS Posted Today Electing To Apply a 2020 Return Overpayment from a May 17 Payment with Extension Request to 2021 Estimated Taxes The IRS postponed to May 17, 2021, the date to file 2020 Forms 1040 and 1040-SR and to pay any related tax. The due dates for estimated tax payments for 2021 were not postponed. The first 2021 estimated tax installment is due April 15, 2021. If an individual taxpayer has a 2020 overpayment and elects to credit the 2020 overpayment against the 2021 estimated tax, the date on which the 2020 overpayment is applied against the 2021 estimated tax depends on: (a) the date(s) of payment, and (b) the extent to which an overpayment exists as of April 15, 2021. An extension of time to file has no effect on either the date of payment or the date on which an overpayment exists. To the extent an overpayment of the 2020 tax exists as of April 15, 2021 (because payments made on or before April 15, 2021, exceed the 2020 tax liability), and the taxpayer makes a valid election to apply the overpayment to 2021 estimated tax, the overpayment would be applied as of April 15, 2021, whether the 2020 return is filed on April 15, May 17, or October 15, 2021. To the extent an overpayment of the 2020 tax is attributable to a payment made after April 15, 2021 (including any payment made after April 15, 2021, but on or before May 17, 2021), that overpayment would not be available for crediting as of April 15, 2021, and would be applied as of the payment received date, not as of April 15, 2021. Example 1: Assume that an individual taxpayer: (a) owes $40,000 in income tax for 2020; (b) made no payments toward that tax by April 15, 2021; (c) owes $10,000 for the first estimated tax installment for 2021 due on April 15, 2021; and (d) paid $50,000 toward the 2020 tax on May 17, 2021. As a result, the taxpayer has a $10,000 overpayment for 2020. Because the payment was not made by April 15, 2021, no overpayment existed as of April 15, 2021, and the overpayment would not be available for crediting on April 15, 2021. Instead, the overpayment would be credited against the 2021 estimated tax installment as of May 17, 2021, the date of payment. The taxpayer's $50,000 payment on May 17, 2021, caused the taxpayer's payments to exceed the taxpayer's liabilities. Therefore, the taxpayer became overpaid on May 17, 2021, and May 17, 2021 is the date the $10,000 overpayment is available for crediting, even if the $50,000 payment made on May 17, 2021, was paid with an application to automatically extend the due date to file the 2020 return to October 15, 2021. An extension of time to file has no effect on either the date of payment or the date on which an overpayment exists. Example 2: Assume that an individual taxpayer: (a) owes $40,000 in income tax for 2020; (b) prepaid $40,000 of that 2020 tax during 2020; (c) owes $10,000 for the first estimated tax installment for 2021 due on April 15, 2021; and (d) paid $10,000 toward the 2020 tax on May 17, 2021. As a result, the taxpayer has a $10,000 overpayment for 2020. Because the taxpayer's payments as of April 15, 2021, did not exceed the taxpayer's liability, no overpayment exists as of April 15, 2021, and the overpayment is not available for crediting on April 15, 2021. The taxpayer's $10,000 payment on May 17, 2021, caused the taxpayer's payments to exceed the taxpayer's liabilities. Therefore, the taxpayer became overpaid on May 17, 2021, and May 17, 2021 is the date the $10,000 overpayment is available for crediting, even if the $10,000 payment made on May 17, 2021, was paid in conjunction with an application to automatically extend the due date to file the 2020 return to October 15, 2021. An extension of time to file has no effect on either the date of payment or the date on which an overpayment exists. Example 3: Assume that an individual taxpayer: (a) owes $40,000 in income tax for 2020; (b) prepaid $45,000 of that 2020 tax during 2020; (c) owes $10,000 for the first estimated tax installment for 2021 due on April 15, 2021; and (d) paid $5,000 toward the 2020 tax on May 17, 2021. As a result, the taxpayer has a $10,000 overpayment for 2020. Because the taxpayer's payments as of April 15, 2021, exceeded the taxpayer's liability by $5,000, an overpayment of $5,000 existed on April 15, 2021, and that overpayment is applied against the first 2021 estimated tax installment as of April 15, 2021. The remaining $5,000 of the $10,000 overpayment is attributable to the payment made on May 17, 2021, which is when this amount would be credited against the first 2021 estimated tax installment, even if the $5,000 payment made on May 17, 2021, was paid with an application to automatically extend the due date to file the 2020 return to October 15, 2021. An extension of time to file has no effect on either the date of payment or the date on which an overpayment exists. Link to the information: https://www.irs.gov/forms-pubs/electing-to-apply-a-2020-return-overpayment-from-a-may-17-payment-with-extension-request-to-2021-estimated-taxes

Yes, what I said - task manager. Report back later, inquiring (nosy, caring) minds want to know!

So sorry, jasdim! Like NECPA, mine has been fine so far. Well, there is that miscalculation in the health care expense deduction in the Ohio return that has been known and reported (but not to us!) for some time, grrrr.... But no other problems here. Check your task manager. Maybe that will pinpoint the issue. And this is assuming you have LOTS of ram, latest chip, all that jazz. Maybe you missed a few dance steps, too. Or maybe call for tech support and see if they or your local tech guru can remote in and check. So sorry, hope it gets better soon.

Sorry, I forgot to reread the beginning of this thread. Just a guess here that you may have to use a non-professional tax software. Otherwise, can't you paid with alternate currency? Love, chocolate chip cookies, bitcoin (heh, heh)?

If any client EVER acknowledges bitcoin transaction, they will no longer be my client. That is simply beyond my expertise or interest.

I'm not Judy but just remove the Paid Preparer information and leave the ERO information. They are separate in the system. If the return is open, Tools/Preparer/ERO>Remove Preparer

Apparently Form 843 is a possibility but she may choose not to go through that hassle. I think she is missing a document needed for that. I just feel for her, that the university put her in this situation. After a phone conversation with someone there in the international tax department, the explanation is that there was a software change just at that time and, as the university could choose to treat her as a regular employee and not give her Form 8233 to complete, they did. If she wants the $2100 deferred comp back, it will cost her 20% early withdrawal or wait until she is 55. Just wrong, in my opinion.

Ragnar Lothbrook is on his way. I am SOOOO happy to see another Vikings fan! My husband thinks I am a bit nuts but I loved that series. I just might have to have another go at it. Once I get the staples out, papers out of envelopes, all in order, etc.

Thanks, Pacun. It turns out the ITIN from 2017 expired end of 2019 (never really used as no 1099 issued) so an SSN was obtained. She should have completed a Form 8233 to get a 1042-S but, for whatever reason, that didn't happen. I am using only the 1040NR. I am just trying to find out what happened. She qualifies for exemption under the treaty, Article 20 (1), Visiting Professor, it is clear. She had a J-1 visa which expired May 30, 2020. She did not receive and will not receive stimulus money. I am more concerned about getting back her withheld income and Medicare tax as well as the deferred compensation to a retirement plan in which she should have never been enrolled. I have called the university international tax office now 3 times with no return call. Trying again tomorrow.

At the risk of jinxing myself, I have to say that, again this year, I have experienced none of the problems described by users here. I didn't in 2012, either. Guess I had best care for my lucky stars even while I do feel for folks with problems. Maybe my computer setup? The guy who builds them? My sweet nature and good looks? Dunno but I am really glad as I have enough issues with 'special' clients.

I think, in the defense of these folks, that this process somehow helps them feel organized and have a sense of control. Memories fade and gathering these documents once a year can be a scary thing for people who are number and tax phobic and worried about missing something and getting a nasty gram from IRS. Like jasdim, though, the hands on identifiers make me a bit, um, anxious except that "I'm billing time."

This is what I found https://toledo.oh.gov/how-to-pay-your-income-taxes/joint-economic-development-district-jedd I'm not sure what your question is.

Yes, that ratio can be a pain. I have several German clients (resident aliens, mostly, some with green cards) that are annoyed every year that they don't get full credit and some have substantial carryovers. I think much will never be used.

My package, ATX 1040, increased by 4.8% to $843.59. The list price jumped from $799 to $839, 5% and the processing fee increased by $3. My discount is still 15%. It does irk me that the other fees are up again, not by much but it adds up. I don't do business returns any longer but do need more than 3 states for a handful of outliers, good long term clients. That has increased, too, but I don't want to lose those clients. And it gets earlier all the time. Last year's renewal notice has a quote date of April 1. This year's 'document date' is March 6 although just received last week. As I wind down my practice, though, I will stick with what I've known since 1997. I am beyond nickle and diming and appreciate familiarity. And, frankly, I can afford this and still have enough to fund my dive trips, especially having saved money in 2020. Now going in March 2022 as Indonesia is still closed. I may even spring for first class tickets this time!