Lee B

Copied from Pub 537: "Example. In 2016, you sold land with a basis of $40,000 for $100,000. Your gross profit was $60,000. You received a $20,000 down payment and the buyer's note for $80,000. The note provides for four annual payments of $20,000 each, plus 8% interest, beginning in 2017. Your gross profit percentage is 60%. You reported a gain of $12,000 on each payment received in 2016 and 2017. In 2018, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2018, 2019, and 2020 are reduced to $15,000 for each year. The new gross profit percentage, 46.67%, is figured on Example—Worksheet B. You will report a gain of $7,000 (46.67% of $15,000) on each of the $15,000 installments due in 2018, 2019, and 2020."

Not enough information, but it would be questionable.

You have to recalculate the capital gain percentage

I would do a more in depth look at whether she can be claimed a a dependent. 1. Disability Income is not considered to be wages. 2. You need to look at where the disability income went, for example if a chunk of it went into savings, that doesn't count as support.

"Box 1—Wages, tips, other compensation. Show the total taxable wages, tips, and other compensation that you paid to your employee during the year. However, do not include elective deferrals (such as employee contributions to a section 401(k) or 403(b) plan) except section 501(c)(18) contributions. Include the following. Total wages, bonuses (including signing bonuses), prizes, and awards paid to employees during the year." I am sorry but the CFO's glib sophistry doesn't pass the smell test.

IRS Pub 4681 is a good reference for what to do.

The most troubling thing is your reference to a "long-time client"!

David, basically this is correct. However, you should read the article referenced in Judy's post. Also, you need to make sure all of the assets were transferred to the S Corp, some assets may have been held back by the owner.

That's not what Judy is saying. The way that you started your original post is correct. You contribute assets in exchange for stock, so the assets that you contribute are recorded on the S Corp Balance Sheet. One issue that can be a tax trap for the unwary is if the S Corp assumes liabilities in excess of the assets value, taxable gain can be triggered.

I would definitely consider it Investment Property. Then there is the question of whether there were any 2017 or 2018 expenses that need to be capitalized. If so, would filing 2017 & 2018 late returns offset the late filing penalties for the S Corp?

That's the thing about opinions, everyone has one.

If you do you a side by comparison with and without SEHI included in Box 1 W-2 Wages, you will see why the SEHID needs to reduce QBI, otherwise as minkcpa says it ends up creating a double dipping deduction.

I am using Drake and it was that way last year too. I am going to assume Drake is handling it correctly.

.Net Framework is a subset of Windows related software that ATX needs to run it's programs.

Copied from Investment News: "For the first time in a decade, the income brackets used to determine Medicare premium surcharges for high-income retirees will be indexed to inflation starting Jan. 1. As a result, some retirees may experience a reduction in their Medicare surcharge costs next year. Beginning Jan. 1, the income related monthly adjustment amount brackets used to determine high-income surcharges for individuals and married couples will be indexed to the consumer price index based on the 12-month CPI change from September 2018 through August 2019. In August, inflation increased 1.7% over the previous 12 months, according to the CPI data released last Thursday. As a result, the income brackets used to determine Medicare surcharges in 2020 will increase by 1.7%, rounded to the nearest $1,000. In general, that means income tiers will increase by $1,000 to $3,000 for individuals and by $2,000 to $6,000 for married couples filing jointly, according to a new analysis by HealthView Services, a leading provider of retirement health care cost data for the financial services industry. Medicare premium surcharges for 2020 will be based on income reported on 2018 federal tax return." Therefore next year the IRMMA brackets will be indexed to the nearest $1,000 based on the change in CPI form September 2019 thru August 2020.

See Pub 5137 A gift certificate for a specific item may be de minimus and not a cash equivalent.. A gift card with cash face value which can be used to purchase different items is a cash equivalent.

The $ 895 should have been reported on a W - 2, not a 1099, therefore her income should be reported on Schedule C, subject to SE tax. The fact that she did this once doesn't change the character of the work.

My take is that the second Schedule C may not be elgible for QBI. On this point it got pretty deep in the weeds. Glad I don't have a client in the situation. Good Luck !

I may be wrong, but I would start up where you left off, in order to keep track of depreciation for purpose of calculating exclusion of gain on future sale of this home.

First, I would allocate the total price between Land and Bldgs. Then I would divide the the Land total by 4 and the Bldg total by 4.

According to an article I read this morning, last year there were more than 1 Million refunds with EITC & ACTC that were subjected to "enhanced electronic scrutiny" which delayed the refunds until mid March. A similar number of delayed refunds are expected this year. I just love the phrase"enhanced electronic scrutiny."

I have a client who had post tax HSA contributions deducted from his pay for a number of years. I had to get his final paystub each year and compare it to his W-2 to make sure.

I much prefer Catherine's answer, since netting may not even change their taxable income if they take the standard deduction and probably trigger an IRS letter due to no match of the 1099s.

Copied from the Instructions for Form 5695: "For purposes of both credits, costs are treated as being paid when the original installation of the item is completed"

I have seen these same valuation issues happen before with commission salesmen receiving non cash prizes valued at retail list. I currently have a client who is a retired Airline Stewardess who receives a W -2 for the free flights she still receives as part of her retirement benefits which are valued at the upper end of what a passenger would pay. These are normally W-2s or 1099s coming from large companies who have their own accounting/tax experts who have researched this area extensively. They aren't going to change. While you may strongly feel this is a rip off, you are doing your client a disservice, because you aren't going to win!