Lee B

For stock, the official holding period has to be more than one year, otherwise it's ordinary income property with deduction limited to basis.

I like the title "Small Equipment"

You will need to look at the closing statement for this loan, especially if it was a refi. They may have taken cash out or paid off credit cards etc which would not be qualified residence debt Thus part of the debt cancellation could still be taxable or have to be excluded for a different reason i.e. insolvency. It's not always as straightforward as it seems.

More revised Repair Regs Guidance from Grant Thornton LLP via an email from NAEA: New federal tax developments from Grant Thornton’s Washington National Tax Office 2015-03 Feb. 16, 2015 IRS simplifies process for small businesses to implement tangible property regulations The IRS released a simplified procedure allowing certain small businesses to change a method of accounting under the final tangible property regulations on a prospective basis for the first taxable year beginning on or after Jan. 1, 2014, without completing and filing Form 3115, “Application for Change in Method of Accounting.” Rev. Proc. 2015-20 was released by the IRS on Feb. 13 and is effective immediately. A taxpayer is eligible to apply the simplified implementation procedures if it has one or more trades or businesses that have either: (a) Total assets of less than $10 million as of the first day of the taxable year for which a change in method of accounting under the final tangible property regulations and corresponding procedures regarding related changes in method of accounting is effective (b ) Average annual gross receipts of $10 million or less for the prior three taxable years, as determined under Treas. Reg. Sec. 1.263(a)-3(h)(3) (the small taxpayer election for certain repairs and improvement expenditures for eligible buildings) The revenue procedure applies to a trade or business only if it meets one or both of the previous two criteria. Background The final tangible property regulations include both TD 9636, regarding when costs incurred to acquire, produce or improve tangible property must be capitalized or may be deducted, and TD 9689, regarding certain depreciation rules and full and partial dispositions of tangible depreciable property. (For more on the final tangible property regulations, see Tax Flash 2013-13 and Tax Flash 2014-10). The final tangible property regulations generally apply to taxable years beginning on or after Jan. 1, 2014, although certain provisions are applicable to costs incurred on or after taxable years beginning on or after Jan. 1, 2014. The previous procedures for implementing the final regulations were included in a series of revenue procedures (Rev. Proc. 2014-16, Rev. Proc. 2014-17 and Rev. Proc. 2014-54), which were recently modified by and consolidated into Rev. Proc. 2015-14. These procedures generally require that changes in methods of accounting to comply with the final tangible property regulations should be implemented using Section 481(a) to avoid duplication or omission (except for provisions applicable to costs incurred on or after taxable years beginning on or after Jan. 1, 2014). Section 481(a) requires a look-back adjustment computed as if the business had always used the new method of accounting. Additionally, the procedures require businesses that are changing a method of accounting to implement the final tangible property regulations to complete and file Form 3115. Simplified procedures Rev. Proc. 2015-20 effectively allows small businesses that make changes in methods of accounting for the first taxable year that begins on or after Jan. 1, 2014, to elect to make the changes prospectively by using a cut-off basis. Thus, small businesses that must change methods of accounting to comply with the new regulations can make a Section 481(a) adjustment that takes into account only amounts paid or incurred, and dispositions, in taxable years beginning on or after Jan. 1, 2014 (i.e., there is only a Section 481(a) adjustment computed back to 2014 when a change is made in a future year). The election must be applied to all of the final tangible property regulations, including dispositions. Accordingly, businesses are not allowed to apply certain rules, such as the treatment of repair expenditures, prospectively, and make disposition method changes with a Section 481(a) adjustment. Additionally, businesses making this election do not have audit protection. Businesses making the election to apply the final regulations prospectively have the option of making certain changes in method of accounting to comply with the regulations on the federal tax return without filing a Form 3115 or a separate statement for the business’s first taxable year ending on or after Jan. 1, 2014. Special transition rules apply for eligible businesses that already filed the federal tax return for the first taxable year beginning on or after Jan. 1, 2014. Implications and next steps This is truly welcome relief for small businesses that do not wish to take advantage of the cash tax savings opportunities in the regulations because of the increased burden and cost of implementation. Allowing small businesses to elect to apply the regulations prospectively and waive the requirement to file a Form 3115 greatly reduces their burden in implementing the regulations. Businesses taking advantage of the simplified procedures must still apply the new rules to their assets on their 2014 tax returns. This may require changes in the manner in which expenditures for certain assets are recovered, such as current expense, deferred materials and supplies expense, and depreciable assets. Additionally, taxpayers will need to determine whether to make certain elections, such as the de minimis rule, the small business election for repairs on eligible buildings or the election to follow book capitalization of repairs — all of which require an annual statement to be attached to the tax return. Similarly, taxpayers that do not track dispositions of certain assets (for example, personal property grouped as one asset in the fixed asset system) should continue to determine whether to make a general asset account election, which requires checking a box on Form 4562, “Depreciation and Amortization.” Taxpayers considering the less burdensome implementation rules should be aware that the simplification comes at the cost of the missed opportunity to accelerate deductions on certain costs capitalized in prior years. Taxpayers will not be able to file changes in future years to accelerate such basis from years prior to 2014. The information contained herein is general in nature and based on authorities that are subject to change. It is not intended and should not be construed as legal, accounting or tax advice or opinion provided by Grant Thornton LLP to the reader. This material may not be applicable to or suitable for specific circumstances or needs and may require consideration of nontax and other tax factors. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Grant Thornton LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying or using any information storage and retrieval system without written permission from Grant Thornton LLP. Tax professional standards statement This document supports the marketing of professional services by Grant Thornton LLP. It is not written tax advice directed at the particular facts and circumstances of any person. Persons interested in the subject of this document should contact Grant Thornton or their tax advisor to discuss the potential application of this subject matter to their particular facts and circumstances. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed. To the extent this document may be considered written tax advice, in accordance with applicable professional regulations, unless expressly stated otherwise, any written advice contained in, forwarded with, or attached to this document is not intended or written by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code.

When you say history, I assume you mean each year's depreciation in detail rolling forward. Not available in ATX.

Information a little sketchy, but assuming the normal scenario: Premiums deductible on the books, but nondeductible on the tax return. Thus the nondeductible premium expense is allocated to the partners K - 1 s When and if a policy pays off, Proceeds recorded on the books but nontaxable on the tax return.

How did you generate a 20 k loss in 8 months ? I think you need to doublecheck your answers to setting up this property in Schedule E , due to the nonpassive result.

Ouch that's just wrong

Two different things Supplies & $200 - Equipment & $ 500

Interesting since governmental agencies are considered to be charities for this purpose. Jury Duty pay is usually Other Income Line 21 - no SE Tax unless a W-2 is issued for Jury Duty. Potentially, I can see the mileage but a quick look at my references didn't turn up any cites.

The supplies rule applies to things that cost under $ 200. If you adopt the $ 500 safe harbor then everything you purchase under $500 is expensed in the year of acquisition which may not be the result you want in the first year of business. Quite often deductions are more valuable in the second year of business.

Another possibility would be to follow the Repair Regs guidance on Materials & Supplies: "A unit of property with an acquisition cost of $ 200 or less" Example (7) Reg 1.62-3(h) Alexco purchases 50 scanners @ $ 150 each In the first year Alexco begins using 35 scanners and stores the remaining 15 scanners for use in a later year. Result: The scanners are non incidental materials & supplies 1. $5,250 is deducted for the cost of the scanners used the first year 2. $2,250 is recorded as prepaid supplies to deducted in a future year.

Yes, I have had several clients where that was the case. I reported the balance sheet on an accrual basis, then showed all the adjustments between cash basis income and accrual basis income on the M - 1.

Any assets not specifically listed in the MACRS Class Life List is deemed to be 7 year property. The gym equipment that only lasts 2 or 3 years will be dealt with by disposing of it, when it wears out and is replaced. (Any remaining undepreciated basis will be written off on Form 4797.)

For a similar analysis from Iowa State University: IRS Notice 2015-17 Provides Some Limited ACA Penalty Relief to Small Employers Kristine A. Tidgren February 18, 2015 Overview IRS has just issued Notice 2015-17, which provides some important guidance regarding the dreaded IRC § 4980D excise tax (for violating Affordable Care Act market reforms) and its applicability to small employers. It also provides some limited relief from the penalty in certain circumstances. Following is a summary of the guidance. Small Employer Reimbursement of Health Care Premiums While reaffirming that the reimbursement of individual health care premiums to employees constitutes an improper employer payment plan, the Notice provides transitional relief to small employers who are not “applicable large employers” (applicable large employers are generally those with 50 or more full-time employees). Small employers who continued to offer an employer payment plan will not have to file Form 8928 (the Form utilized to self-report violations and compute the penalty tax) and will not be liable for the excise tax through June 30, 2015. Beginning July 1, 2015, however, these employers may be liable for the penalty if they do not reform their illegal plan. The Notice states this transitional relief applies both to the reimbursement of Medicare Part B or Part D premiums (more on this below) and to the reimbursements of individual health policy premiums. This Notice does not provide transitional relief to small employers who offered stand-alone HRA’s or other medical expense reimbursement plans to their employees. Two-Percent Shareholders While we still have no answer to the big question of whether the reimbursement of S-Corporation two-percent shareholder-employees’ individual premiums will be subject to market reforms, this Notice offers relief: Unless and until any further guidance is issued and certainly through the end of 2015, no excise tax will be asserted for any failure to satisfy the market reforms by a two-percent shareholder-employee healthcare arrangement. Therefore, at least through 2015, Form 8928 will not need to be filed solely because the employer offered a two-percent shareholder-employee healthcare reimbursement arrangement. This does not apply, however, to reimbursements of individual health coverage premiums with respect to employees of S Corporations who are not two-percent shareholders. These arrangements would, however, be eligible for the transitional relief through June 30, 2015, as long as the S Corporation is not an applicable large employer. The Notice also provides that tax preparers may continue to rely on Notice 2008-1 for the tax treatment of two-percent shareholder-employee healthcare arrangements unless and until additional guidance provides otherwise. Fewer than Two Participants Who Are Current Employees – S Corporation The Notice provides that if an S-Corporation maintains a health reimbursement arrangement under which a two-percent shareholder-employee and a non-two-percent shareholder employee are both covered, this will constitute a group health plan for the current employee and will not fall under the "fewer than two participants who are current employees" exception. This is true even if the corporation attempts to reimburse the classes of employees through separate plans. The different arrangements are considered one plan for purposes of the “fewer than two participants…” exception. In other words, the reimbursement of the non-shareholder employee will be illegal. Fewer than Two Participants Who Are Current Employees – Family Coverage This Notice clarifies that if an employee is covered under a reimbursement arrangement with his spouse or dependent (who are also employees), this arrangement will be considered to cover only one employee. As such, a small family business with no other employees may continue to reimburse for a family plan and fall under the “fewer than two participants who are current employees” exception to the market reforms. Integration of Medicare Premiums The Notice states that the reimbursement of Medicare Part B or Part D premiums does constitute an employer payment plan violating market reforms and that the reimbursement may not be integrated with Medicare to satisfy the reforms. The Notice does provide, however, a method for integrating this reimbursement with an employer group plan (so as to make it permissible). That method is as follows: (1) the employer offers a group health plan (other than the employer payment plan) to the employee that does not consist solely of excepted benefits and offers coverage providing minimum value; (2) the employee participating in the employer payment plan is actually enrolled in Medicare Parts A and B; (3) the employer payment plan is available only to employees who are enrolled in Medicare Part A and Part B or Part D; and (4) the employer payment plan is limited to reimbursement of Medicare Part B or Part D premiums and excepted benefits, including Medigap premiums. Increase in Employee Compensation to Assist with Payment of Individual Market Coverage The Notice reaffirms that increasing an employee’s compensation and not conditioning that payment on the purchase of health coverage would not constitute an improper employer payment plan. Treating an Employer Payment Plan as Taxable Compensation Finally, the Notice reiterates what was made clear in the November Department of Labor FAQ: Treating premiums as taxable compensation does not “solve” the market reforms problem. Also, Rev. Rul. 61-146 continues to apply to exclude substantiated premiums from an employee’s gross income under IRC § 106. In other words, if an employer has to pay the excise tax for an improper employer payment plan, the employee will still be able to exclude the improper payments from income. The Notice states that further guidance with respect to HRAs and other aspects of employer payment plans will be provided in the near future. Stay tuned Personal Note: However I think I will wait a few days for the dust to settle down , before I start amending 941, 940, W -2/W-3.

I am basing my comments on the Forbes article mentioned several post earlier. I have been reading his articles for awhile now and find them very well thought out. http://www.forbes.com/sites/anthonynitti/2015/02/18/in-last-minute-move-irs-spares-small-employers-big-obamacare-penalties-for-2014/ Excerpted from this article: 2. No penalties on more-than 2% S corporation shareholders until further guidance is issued (or at least the end of 2015) The IRS and the DOL are contemplating publication of additional guidance on the application of the market reforms to the reimbursement of premiums for a more-than 2% shareholder in an S corporation. Until such guidance is issued – or at a minimum, until the end of 2015– the IRS will not assert the Section 4980D penalty on an S corporation that reimburses the insurance premiums of a more-than 2% shareholder. As seen in #1 above, a qualifying S corporation will not be required to File Form 8928 with their Form 1120S. 3. The IRS will continue to allow more-than 2% shareholders in an S corporation to deduct their premiums on Page 1 of Form 1040 pursuant to Section 162(l). In my previous post, I had surmised that because an S corporation that wanted to avoid the Section 4980D penalty would be required to distance themselves from any semblance of a “plan” providing for reimbursement of premiums incurred by its shareholders, the collateral damage would be at the shareholder level, with the shareholder being barred from deducting the premiums on Page 1 of Form 1040 under Section 162(l). My thinking was that Notice 2008-1 makes this Section 162(l) deduction contingent on the reimbursement being made pursuant to a “plan,” and in the absence of one, the Section 162(l) deduction would be barred. In Notice 2015-17, however, the IRS clarified that until further guidance governing more-than 2% shareholders is issued, the shareholders will continue to be permitted to deduct any premiums reimbursed by the S corporation on Page 1 of their Form 1040 as self-employed health insurance premium

To the extent that the S Corp has paid for or reimbursed the S Corp owner for his health insurance premiums, the rules go back to the way they were for 2013. Box 1 Wages, not subject to social security and medicare deductible as S E Health Insurance on line 29 page 1 Form 1040, until the rules are changed again ?

Yes

Survival Kit' Available for IRS Repair Regs By Michael Cohn February 18, 2015 A CPA has released what he is calling a “survival kit” for the Internal Revenue Service’s recently revised repair regulations for tangible property. Last week, the IRS relaxed the repair regulations in an effort to lighten the burden on some small businesses (see New IRS Procedure for Repair Regulations Reduces Burden (for Some) and IRS Eases Repair Regulations for Small Businesses). In response, CPA turned author Roger Upton has written his first ebook on the . repair regulations. “After working closely with the IRS to develop and finalize its tangible property regulations, I thought it was essential to author a survival kit for CPAs to reference during this year’s tax season,” said Upton, who is a partner at MS Consultants, an income tax consulting group that has prepared over 100 tangible property repair studies for clients. “The new regulations and procedures are complex, and 400 pages of new tax law can be overwhelming. I wanted to simplify the content and highlight the top considerations and tax savings ideas for CPAs to review that will impact the largest percentage of their client base.” Upton has written two versions of the ebook: "Tangible Property Regulations Survival Kit: A How To Manual" and "Tangible Property Regulations Survival Kit: A How To Manual LITE." They are available for $2,900 and $875, respectively, at www.fixedassetreview.com.

I will evaluate it on a case by case basis. Off the top of my head I have 3 for sure that require redoing Forms 940,941,W -2/W-3 and the state quarterly reports. Thank god, I haven't efiled any W -2 s yet. Plus I have payroll catchup work for the current quarter. What a mess !

Any depreciable asset that does not have a designated class life is 7 year property.

According to J K Lasser Profession Edition, Musician have been allowed to deduct the cost of Formal Wear According to The Tax Book, Musicians have been allowed to deduct costumes which were not suitable for everday wear.

Finally found an article on Accounting Today's website : This looks like a delaying action in the hopes that Congress will deal with this problem. Delaying implementation really doesn't solve anything except that we won't have taxpayers paying a $ 100 a day penalty for 2014. On the other hand look at all the gyrations everyone has gone thru to clean up S Corp owners health insurance. Are we going to go back and amend thousands of Form 941s, 940s, W -2s , W - 3s not to mention state quarterlys. What a frgging mess ! Treasury Delays Enforcement of Standalone Health Reimbursement Arrangement B inShare1 Washington, D.C. (February 18, 2015) By Michael Cohn The Treasury Department said Wednesday that it would delay enforcement of an Affordable Care Act prohibition relating to standalone health reimbursement arrangements until July 1. A standalone HRA is an employer-provided benefit that offers participants a spending account to reimburse them for qualified medical expenses. However, in light of the ACA’s ban against health plans with an annual dollar limit on essential benefits, standalone HRAs have been deemed impermissible. Notice 2015-17, released Wednesday by the Treasury and the Internal Revenue Service, provides transition relief from the assessment of excise tax under Section 4980D of the Tax Code for small employers (in particular, employers who are not applicable large employers) who reimburse or pay a premium for an individual health insurance policy for an employee. Notice 2015-17 also addresses the treatment for federal tax and for market reform purposes of arrangements reimbursing premiums of 2 percent-shareholder employees of S corporations. Finally, Notice 2015-17 addresses application of the market reforms to certain employer arrangements to fund Medicare premium payments or to provide a TRICARE-related health reimbursement arrangement. Business groups such as the National Association for the Self-Employed and the National Association of Home Builders applauded the move. “The announcement today by the Treasury Department that it has offered a short-term delay in the enforcement of a prohibition on Health Reimbursement Arrangements is welcome news for our community, but a long-term, legislative solution is still urgently needed,” said Katie Vlietstra, vice president for government relations and public affairs for the National Association for the Self-Employed. “America’s smallest employers need the stability of a permanent fix in order to continue to utilize this critical tool to help provide health care coverage to their employees.” The National Association of Home Builders also issued a statement in support of the delay. “While today’s announcement by the Treasury Department is a step forward in helping small businesses to provide affordable health coverage to their employees, a short-term delay isn’t good enough,” said NAHB chairman Tom Woods, a home builder from Blue Springs, Mo. “Congressional action is needed to make this change permanent.” NAHB CEO Jerry Howard discussed the issue of standalone HRAs in a meeting with Health and Human Services Secretary Sylvia Burwell on Feb. 5. In addition, NAHB is calling on Congress to advance legislation based on the bipartisan bill introduced by Reps. Charles Boustany, R-La., and Mike Thompson, D-Calif., in the waning days of the 113th Congress that would reverse the IRS regulation preventing small businesses from providing employees with standalone HRAs. “We look forward to working with Reps. Boustany and Thompson to re-introduce legislation that will require the IRS to reverse its regulation preventing small businesses from providing standalone HRAs so that they can provide better health coverage to their employees at lower costs,” said Woods. The NASE also backs the legislation. “We support Congressmen Boustany and Thompson’s plans to re-introduce their bipartisan legislation focused on offering a permanent correction to this issue,” said Vlietstra. “This bipartisan legislation would order the IRS to reverse its regulation preventing small businesses from providing standalone HRAs so that they can support their employees and help them obtain affordable health care. Their legislation, combined with the momentum by Senate Republicans and Democrats to address this issue, will help millions of small business owners and should be passed by Congress as soon as possible. HRAs have long-been used to help small business owners provide some level of financial support for their employees. As an unintended consequence of the Affordable Care Act, the prohibition placed upon the use of HRAs is detrimental to small businesses and their employees across the country. Although we welcome this temporary, first step, we look forward to working with members on both sides of the aisle in Congress on a more permanent solution to this situation.” Small business owners could have faced fines of up to $100 per day per employee for helping their employees purchase health insurance, according to Senator Chuck Grassley, R-Iowa, who proposed an amendment to fix this problem during a Senate Finance Committee mark-up last month. He said Wednesday that he is pursuing a permanent fix. “I’ve heard from several Iowa small business owners who feared they could be subject to thousands of dollars in penalties simply because they helped their employee pay for health insurance in 2014,” Grassley said in a statement. “For these and other affected businesses, the penalty relief is welcome news, but ultimately it only delays the inevitable. Small businesses are still prohibited from reimbursing their employees to purchase health insurance. It’s just a matter of when they have to come into compliance with the law. Small businesses and their employees still will be hurt going forward. Congress has to fix this problem. This is the kind of problem that Obamacare created because it was poorly considered and rushed into law

Unless you're seeing something that I am not seeing, this has to do with qualified non-profit health insurance insurers.

Bump