Lee B

Client sold a house originally intended to be a rental but it was never rented, purchased in 2020 and sold in 2022. Sold for $435,000 with a basis of $415,000. Received Down Payment of $49,000 took back a Promissory Note for $385.000. The Promissory Note is interest only with a balloon payment due in 2029. With down payment in 2022 and the balance of the principal in 2029 would you handle this as a Installment Sale?

Some years ago at a CPE Class, I was talking to another EA who had a good sized construction client with a number of vehicles. His client ended up in a very nasty audit where his client made no attempt to keep any mileage records and decided not to make any attempt at reconstruction. The auditor denied all vehicle related deductions and made it stick. It cost his client in the high 5 digits in additional taxes.

Before you go to a manger, you need to guide your client through the reconstruction of his mileage records. If he is in construction, he has records of jobs with dates worked, bills for supplies picked up etc. This auditor is bit over the top but her position is correct. If you don't push your client to reconstruct his records he will never learn the importance of keeping them.

"If assets in a 529 are used for something other than qualified education expenses, you'll have to pay both federal income taxes and a 10% penalty on the earnings."

I would file the PTS return in the state where it was originally formed and still located.

More than likely someone in the payroll dept didn't want to deal with the hassle of dealing with these other state reporting requirements.

Difficult situation, especially since Florida doesn't have a state income tax. The two CA employers are very unlikely to redo their W 2s and all of their Payroll Reports. How do you get the CA WH back without corrected W 2s? Really glad I don't have this return.

To me it's pretty clear what you need to do.

This article in The Tax Advisor covers all of your options: https://www.thetaxadviser.com/issues/2014/sep/tax-clinic-06.html

"Attempted Adoptions of U.S. Children In general, the dollar limitation requires you to combine the qualified adoption expenses you paid if you made more than one attempt to adopt one eligible U.S. child. When you combine the amounts you spent, complete only the “Child 1” line. Don't report the additional attempt(s) on the “Child 2” or “Child 3” line. Complete the “Child 2” or “Child 3” lines only if you adopted or tried to adopt two or three eligible children. Example 1. You planned to adopt one U.S. child. You paid $10,000 of qualified adoption expenses in an unsuccessful attempt to adopt a child. You later paid $8,000 of additional qualified adoption expenses in a successful adoption of a different child. Complete only the “Child 1” line because you made more than one attempt to adopt one eligible child. Example 2. The facts are the same as in Example 1 except that both attempts are unsuccessful and no adoption is ever finalized. Enter $18,000 ($10,000 + $8,000) on the “Child 1” line because you made more than one attempt to adopt one eligible child."

Quickbooks takes up a lot space and probably has modified your Windows Registry which potentially could cause problems.

Ask to see her final 2021 & 2022 pay stubs, it should tell you who paid for the third party sick leave benefit.

There is an outside chance this might work: 1. File 2017 and wait until it has been processed. 2. Then file the 2018 return and hope the refund will be applied to 2017.

"Taxing of Third Party Sick Pay Payments: If the employer pays the entire insurance premium, then the sick pay payments received are 100% taxable to the employee. If the employer pays a portion of the premium and the employee pays the balance with after tax dollars, then the sick pay payments are taxable in the same proportion as the percentage of the premium paid by the employer. If the employer pays nothing and the employee pays the entire premium with pre-tax dollars, then the sick pay payments received are 100% taxable to the employee. If the employer pays nothing and the employee pays the entire premium with after tax dollars, then the sick pay payments received are not taxable to the employee."

Then try 711510

"Spectator sports arenas such as racetracks or sports clubs should use code 711210"

The big problem with this approach is that it only works as long as both co owners are both happy and are working together well. There are no legal documents or agreements spelling out rights and responsibilities. The only resolution for disagreements is retaining an attorney and going to court. I have already experienced the downside to this approach several times.

711219 according to the NAICS Lookup

It's been 3 or 4 years since I posted this story. Early in my practice I picked up 3 brothers as clients. Two brothers were restaurant owners and the third was a W 2 employee . Together the 3 brothers each owned 1/3 of a commercial rental building. The CPA who previously prepared their tax returns treated the rental as a joint venture with each brother reporting 1/3 of the income and expenses on their personal returns. I followed along and did the same for two years until the IRS intervened by sending the 3 brothers a letter insisting that they had to file a Form 1065. They backed that up by saying that the "monthly late failure to file penalties" would apply.

I get the impression that no Form 1065s were ever filed, that both 50% owners have been treating it as a joint venture? My understanding of a joint venture is a short term project or short term objective.

From my reading, it appears that Qualified and Non Qualified Annuities are sometimes treated differently with respect to the 10 % penalty

"We’re nearing the halfway point of this year’s tax season, which ends on April 18. 2.6% - The slight boost in number of returns filed at this point in the season, compared to last year 9.9% - The increase in number of returns already processed at this point in the season, compared to last year 98% - Portion of tax returns filed electronically this year so far"

There are so many different annuity variations and riders that it can be difficult to figure out how to handle each one. You have to refer to the issuer, the original contract and any subsequent modifications.

As a practical matter the IRS is going swamped with 1065 and 1120 S forms filed without these forms especially since the final guidance IR 2022 - 38 wasn't issued until February 16th. "Let's wait and see what happens?"