Bill (Wisconsin)

Thanks Jainen for confirming my take on this. I think the client was hoping for option B as then he'd be able to depreciate the machinery in another Sch C, saving self-employment tax. Oh well...

Real case, but the numbers have been changed (in part to simplify calculations). Partner sold his entire interest in the partnership for $50,000 cash to another partner. His basis was $40,000 (including contributions and his share of profit/loss over the years). As part of the deal of him withdrawing entirely from the partnership he also withdrew machinery that he had contributed to the partnership years ago -- at the time of contribution the used machinery had a FMV of $8000 and has since been fully depreciated by the partnership down to an internal basis of $0. When he withdrew the machinery from the partnership the machinery had a FMV of $6000. I'm figuring he either: a) has a long-term capital gain of $10k, and his basis of the machinery is $0, OR has a long-term capital gain of $16k, and his basis of the machinery is now $6000, OR c) I'm totally off-base Is there any impact on the partnership? Impact on the purchasing partner would be his basis increases by $50k, right? Thanks, Bill

Joan, After 7 years with ATX, I just downloaded the Drake demo. Could you elaborate on the accuracy issues to be aware of? Thanks, Bill

Basis still zero -- no and yes. Take a look at this thread: http://www.thetaxbook.com/forums/showthrea...demutualization

Pub 541, pg 4 under Partnership Distribution: "Effect on partner's basis. A partner's adjusted basis in his or her partnership interest is decreased (but not below zero) by the money and adjusted basis of property distributed to the partner. See 'Adusted Basis' under 'Basis of Partner's Interest', later." "Effect on partnership. A partnership generally does not recognize any gain or loss because of distributions it makes to partners. The partnership may be able to elect to adjust the basis of its undistributed property." Those two paragraphs make me feel the transaction is handled as (, a partner contribution of $160,000 and a distribution of property with an adjusted basis of $145,000. But words like "generally" give me pause. The Pub talks that treatment of appreciated inventory gets special treatment, but I don't see how this asset could be "inventory". The partnership had been renting out this single family home. It seems that a tenant moved out, and the partnership cleaned it up. I'm not sure how the deal was arranged between the eldest son (a 12.5% partner) and the partnership (or at least the main managing partner, dad). Further, this is not a liquidating distribution -- son #1 (eldest son) is still a partner. Think I just found something at the bottom of pg 6 "Transactions between Partner and Partnership" point #2 -- it appears now this maybe should be treated as a sale. Further, the right column on pg 7 "Gains" -- since this is a family partnership (all partners each indirectly own 100% of the partnership), whether the gain is a capital gain or ordinary income seems to come down to why son #1 acquired the property from the partnership (gotta read through Pub 544 some more). Bill

I either tried an Import or a Restore, don't remember which... whatever I did, the e-file information did not come over. I don't believe the method I did is supported by Tech Support, but someone else had tried this and it worked for them. I have had no problems with returns since this move. If Import works for you, great. Bill

The procedure I followed a couple weeks ago: a) install ATX on the new computer find the ATX2008 folder and rename the Database folder to Database.OLD (or just delete Database if you're brave enough) c) copy the Database folder from the old computer That got the returns over. I did have some problems when I reinstalled the 2007 program that it didn't seem to have the most up-to-date forms, so I also copied over the Masters folder from old computer to new computer. Good luck, Bill

Yes, son #1 did transfer $160,000 of cash into the partnership at the closing when the partnership transferred the title to son #1. Bill

Partnership is LLP with Man and several children consisting the partners. Partnership owned 2 buildings at start of 2008. The Man (father) told me during 2008 the partnership sold one of the two buildings (had been a single family home being rented) to Son #1. Sale was for $160,000; land = $35,000; house was originally $120,000 with $10,000 depreciation = $110,000 adjusted basis. So, total adjusted basis of house and land is $145,000. My understanding is that Son #1 will be renting out this house. Is this treated as: A ) a sale (partnership to recognize $15,000 of profit) B ) a partner contribution of $160,000 of cash and a tax-free distribution of the house and land Any other help would be appreciated. I've worked with a couple partnerships but have not dealt with a transaction like this yet. Bill

Client (Schedule C) had an installment sale in 2006. He now knows the installment sale was originally calculated improperly (NO depreciation recapture originally reported) and is having me correct the 2006 & 2007 returns before working up 2008. The way the prices were broken down, there is a lot of equipment that was fully Sec 179'ed that had specific sale values -- those amounts should be depreciation recaptured in full in 2006 (Form 6252 line 12). There was also equipment that was sold for more than the original price -- on those there is depreciation recapture in 2006 and some capital gain recognized as payments are received. (I think I got that all correct -- first installment sale for me) Main question is: On Wisconsin 1, line 11 "Other Subtractions", ATX put in as code 53 the full amount of the depreciation recapture. [There had been no depreciation differences between Fed & WI for this equipment.] I couldn't find much on WI's DOR website regarding installment sales... is there any difference in how this gets reported on WI vs. Fed? Bill

First I enter the property taxes on Sch A (because if I enter it there it will auto-flow onto the Wisconsin return properly). I haven't been putting an X on Line 39x -- just click the bunny on line 40 and when the box opens up (as MCB39 indicates) I select the option she mentions. However, on that worksheet I then have to click the box next to the question regarding "did the client pay property taxes" and the amount appears from what I entered on Sch A. My wondering is: why can't the software see that I entered property tax and automatically check this box for me??? Bill

Yep, you understood correctly. Last year I had 1040 for about $364.50 & PRS for about $165 (the S/H is included in these figures somewhere). I had been seeing emails come in, but anything with CCH on I was just trashing. Got a call from ATX (Bonnie, I think) -- she said the prices were only good that day so she needed an answer right away. Told her that I would sign up as long as I could cancel before tax season -- in case I would actually get the time to test another software (yes, I told her that!). Knew that too (that ATX cannot stop the posts here) -- which is precisely why I reported my experience. I'm not on this board much as my day-job keeps me quite busy. If I do stick with ATX I'll be here more often then. Bill

I got a call from ATX (followed up with emails afterwards) offering me $695 for MAX plus $69 S/H. MAX is listed on the website for $1065. When the invoice came through, it said "MAX-Former 1040 cust $695". I don't recall if this offer was the same one as earlier in the season, but as I told the sales lady, "If I do actually stick with ATX for the tax season, it'll likely because I didn't have time to look at your competition". Bill

D, Not sure what you mean by "WI is not a taxable state". But, I had a client in 2005 that received Military Differential Pay -- it was on a 1099-Misc and reported as Other Income on Form 1040 Line 21. I don't know if differential pay for jury duty would be similar... Bill

No. No program can e-file amendmended returns, nor prior-year returns. Bill

FWIW, I agree with Jainen -- except my understanding the rule is you've established a method of accounting if you did the same thing for 2 years or more. The regs don't say "unless you accidentally forgot". Bill

I know that! I intentionally responded online for the benefit of peer review (as I stated "I'm far from an expert on F8903") and to hopefully help in getting the thread going (it had been a day and a half with no other responses). Bill

FWIW: This morning I talked with an agent with WI DOR and asked her about these scenarios. She is not aware of these adjustments (1/2 SE tax adjustment, Fed EIC being recalculated because of T/F deduction) needing to be made -- hasn't run across it in any of the audits she's performed. She said she'd run it past some others in the office and call me back if these changes do actually need to be made. If they would need to be made, then perhaps the amount of Social Security that's taxable would also need to be recomputed too (if there is a change in depreciation for WI purposes). Bill

I have e-filed multiple states, with Wisconsin getting the credit for taxes paid to other states. With multiple states, you can piggyback one state, but the other states have to be State Only. For Wisconsin, to get the credit for tax paid to other states, before 2005 it had to be paper filed, but last year they added a Schedule OS so most of the return could be e-filed (Form W-RA with the attachments to substantiate tax paid to other states needed to be mailed in -- similar to mailing Fed Form 8453 with certain attachments). Sorry I can't help with Ohio specifically. Bill

Correct, you cannot bunny-hop to Sch OS. But, "WI Sch OS" is in the list when you click "Add Forms". I filled in lines 1-4 of Sch OS and the computer took care of the rest. One in the same. Got annoyed with the layout of the ATX forum, and the TTB worked well for me. Besides, barely had time to keep up with just the TTB forum as it was. In this case it was obvious -- when I amended the federal return to change from Lifetime Learning Credit to T/F deduction, then the client qualified for EIC (albeit only $20 for WI in this case). But it was enough for me to question what correct procedure is. Seems like the few of us answering the question are split. Perhaps I'll call the friendly Green Bay office this coming week and see what they say. Bill

D, Not sure what you mean. I did several out-of-state returns (ND, HI, GA, MI, MO, PA, AR) this year. I used the PRS in ATX. Though 2 weeks ago I had used up the first 10, and not wanting to buy 5 more ($85?), I did a easy HI by downloading their fillable PDF. Don't know if I'll continue with ATX though for next year. Last summer I meant to test-drive a couple other softwares, but this summer definitely need to! Bill

Wisconsin Sch I (eye) adjustments -------------------------------------------------------------------------------- Ran into a couple scenarios that I want to see how other Wisconsin-filers are handling. They're somewhat similar in how much does Federal income need to be recalc'ed for WI purposes: 1) Difference in depreciation between Fed & WI on a Sch C -- stems from taking the 50% bonus depreciation in 04. Last year's return from a new client -- the preparer not only calculated the difference in depreciation and properly recorded that on Sch I, but then also calculated how much different the deduction for 1/2 of Self-Employment Tax would have been and included that difference on Sch I. I was not aware of any need to recalculate the 1/2 Self-Employment Tax deduction -- is that supposed to be done / does anyone else do that? 2) Tuition for out-of-state school. Entered this on the Tuition/Fees Deduction for Federal; this deduction resulted in client now qualifying for Earned Income Credit. Backed out T/F Deduction on Sch I, and did not do a Form 1 line 11 subtraction since it was out-of-state. But this resulted in client qualifying for EIC on WI (4% of the Federal EIC - 1 child). Are we supposed to recalculate what the Federal EIC would have been without the T/F Deduction (which WI does not recognize and therefore is a Sch I adjustment), or do we just blindly take the Fed EIC and multiply by 4%? Any insights or cites would be welcome! Bill

You're quite welcome. Bill

Grab the Instructions for form 2848 -- on page 2 there is a heading for "Revocation of Power of Attorney / Withdrawal of Representative". Bill

Daniel, I'm far from an expert on F8903 (so take this with a grain, or two, of salt), but here goes.... I am presuming here you have the K-1 from the S Corp. The S Corp can report it two different ways: 1) If 12P & 12Q are filled in on the K-1, enter those amounts on F8903, Lines 7 & 13, respectively. Lines 1-6 will be empty, as will line 12. (I'm guessing lines 17 & 18 would also be blank for you) 2) If 12P & 12Q are not specified, then the S Corp must have provided numbers that go on the other lines. I have one S Corp that provided figures that I could plug right into Lines 1, 2, 3, & 12 -- in that case I left Lines 7 & 13 blank. (The ony other lines blank in my case were 4, 17, & 18) Don't know if this helps at all or not. (I'm new to this board so don't know if private messages can be sent -- if you'd like to private message me that would be fine.) Bill