Lee B

It appears that the key question is, "What is NY's legal definition of which transactions are subject to the RETT?

Is the easement permanent ?

I am getting a headache just reading your post. I hope everyone is still talking to each other after this is wrapped up.

My experience with trusts is that most clients just view it "legal stuff" and just do what they would have done if there was no trust.

https://www.taxconnections.com/taxQuestions/Can-I-please-get-clarification-on-the-revisions-to-Form-5471/349

Not reducing QBI by the 1/2 SE Tax would be a classic case of "double dipping."

Christian, If it was my client, I would file 2021 with the 50% penalty. Then file 2022 with the combined 2021 & 2022 RMD, which will match the 2022 1099 R. I would still try for the waiver, assuming you can assemble enough supporting documentation without the Doctors Letter, the worst they can do is say no!

AICPA demands IRS pick up the phone faster for tax pros "The American Institute of CPAs wants the Internal Revenue Service to pick up the phone faster on its so-called Practitioner Priority Service for tax professionals and make other fixes, pointing to a "plummeting" level of service in recent years. Taxpayers and tax pros alike have long complained about the difficulty of reaching the IRS over the phone and those complaints have mounted during the COVID-19 pandemic. Despite recent efforts by the IRS to ease the burden that the backlog has caused for taxpayers and practitioners, the AICPA notes that service levels for the practitioner priority service phone line had been in continuous decline for several years. The National Taxpayer Advocate's annual report to Congress found that the percentage of calls answered on the PPS line declined from 78.3% in fiscal year 2019 to 28.0% in FY 2021, with the average speed of answering the phone nearly doubling from 8.8 minutes to 16.1 minutes over that same period. Still, that was better than the level of service for regular taxpayers, where the percentage of calls answered by IRS employees declined from 28.7% in FY 2019 to 11.4% in FY 2021 and the average speed of answer went from 16.2 minutes in FY 2019 to 22.8 minutes in FY 2021. Many taxpayers have complained they were unable to get through at all. "We are hearing from tax practitioners everyday regarding their significant PPS line challenges and the impact those challenges have on their interactions with IRS on behalf of taxpayers," said the AICPA letter."

The correct way to do this is "unreimbursed partnership expenses" deducted of Page 2 of Schedule E, assuming that that the required language is present in the Partnership Operating Agreement.

My understanding is that he must withdraw the amount of the missed 2021 RMD plus the the 2022 RMD.

Tracy, The biggest potential taxable income offset would be available only by starting a Schedule C Sole Prop business. In your son's situation the focus needs to be on preserving as much of his Settlement proceeds, net of legal fees as possible. Given your original post, I am not aware of any significant tax offsets.

Assuming there is an attorney involved by far the biggest issue your son will have is the non deductibility of legal fees. Many articles out there about this problem. Here is one from Forbes: https://www.forbes.com/sites/robertwood/2022/02/17/how-to-write-off-legal-fees-on-your-taxes/?sh=32a25c77217f

This is why I posted about potential identity theft

I think most IRS employees are doing the best they can buried under a mountain of paperwork using old computer systems that don't communicate with each other. Most of the blame lies with our elected representatives, who pat themselves on the back whenever a tax law gets passed, giving no thought to what it will take to get the changes implemented.

Then this might be a sign of identity theft.

By your wording I assume you mean a Schedule M - 1 Adjustment?

Lat Fall I took an IRS CPE webinar where the main presenter was Erin Collins, The National Taxpayer Advocate. She said that they had stopped taking referrals from congressional offices because of a large backlog of taxpayer cases they were were working on plus a staff shortage of 500 positions. If will be interesting to see if your clients make any progress via contacting the offices of their congressperson.

https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue

First use the "Where's My Refund" Tool to find out what is the status of the return. Once you find out the status then you can evaluate your options.

Sounds like a business

Tom, in theory it would be possible, but for me it would require detailed contemporaneous notes.

Perhaps in your state they couldn't, but in my state they could.

If PTS documents had been drawn up and signed spelling out that A was a limited partner and B was a General Partner then I would agree, but those documents apparently don't exist.

I think it's clear that taxpayer B has SE Income. For me saying that Taxpayer B has SE Income and taxpayer A has investment property and Capital Gains would be a difficult position to support.

Legally a partnership agreement can be a hand shake, signed documents are not required. Doesn't matter whether it's a 1065 or a Schedule C (Joint Venture), it's SE income for both A & B.