jainen

>>If somebody could answer lion's question, i would get my answer too<< Here's your answer to the question, "Can an S Corp be a shareholder in/receive K-1 income from an S Corp?" There is nothing to prevent an S-corp from distributing profits to another S-corp. However, doing so automatically terminates S status, which is the situation described in the original post. Since it happened last year, there is no honest way to correct it now. Prepare two short year returns--one for the S-corp prior to the distribution, and one for the successor C-corp.

>>Have a client who has an S corp<< No you don't. Your client has a C-corp. >>can i issue k1 in this S corp B's name?<< No. You should issue a 1099-DIV.

>>understaffing of the tech phone line<< Can somebody please tell me why tech support is so important for ATX users?

>>>>Jainen, you're right.<< Thanks, but it would be arrogant to stuff my shirt like a big know-it-all. I just reported what a similar reference said about it. I took a first look at The Tax Book this year. There seem to be quite a few topics where, like this one, Quickfinder offers a more useful position or at least better explanation and support. (Of course, neither books tries to be comprehensive, and I might have a little bias because The Tax Book message board gave me a cold shoulder.)

>>Warms my old cockles<< Would those happen to be ballcockles? 'Cause if you've got any extra, somebody was looking.

>>Isn't the rule that a taxpayer has 90 days to put money into a qualifying account after withdrawal if not a direct rollover?<< Something like that. How long did she take? In any case, the 1099 just shows the distribution. It's up to the taxpayer to explain what happened after that, using a marginal entry on line 16a. >>she received a severance package<< What did she get? Probably wages and sick pay included in the W-2.

>>that violates the 'no foreign ownership'<< Of course it does. How can you even consider such an impossible option? >>He has to have employee status to keep the H1B visa<< It doesn't matter what his status is under the tax code. He has to meet INS requirements. If he doesn't want to talk frankly with them, he should ask his own embassy for help.

>>live with them for part of the year<< How big a part? She must be a U.S. resident to be claimed as a dependent.

>>No statement is required. TTB pg 8-18<< Quickfinder doesn't agree with little brother on this point. It says make a formal election for the $5000 being deducted currently as well. The reason is a little unclear but runs something along the lines of, it's important to identify all startup costs because by the time IRS decides you have treated them as current expenses it will be too late.

>>Jainen... the arrogant stuffed shirt contrarian know it all<< Okay, I'm sorry. I'll send you that thank you letter. It's directly related to what I'm doing at my desk when nobody is looking anyway.

>>What do you LIKE about ATX?<< I like that I can use it at my desk when nobody else is looking.

>>can't understand why the auditor did this<< The auditor made a mistake in the taxpayer's favor. Not only should the commute between home and hall be twice seventy, but the trip from hall to worksite should also be treated as commute if within the general area where he usually works. You can take credit for effective representation in getting the auditor mixed up.

>>Substance over form<< The substance was NOT that the kids gave money to the parents who then decided to buy windows. As Kea describes it, the intention from the beginning was to give them windows directly as a gift. One of the most important elements of the gift was that the money was not an issue, right? It was a nice thing just in itself. The kids might even be offended if the parents looked at this gift as some kind of tax dodge.

>>clearly she could have been better off to rent it, even at a lower rent than her carrying costs, rather than not rent it and have to pay all of them<< That is not at all clear, kc. A seller needs every possible advantage in a depressed market, and having an occupant is a real hindrance. It is vastly more difficult to schedule times for showing. There may be leasehold rights that can't be terminated without a fight. The tenant may fail to maintain or may even vandalize a home he is being kicked out of. The owner has no access for painting or sprucing up the place to best appearance. A renter facing eviction won't wait til the last minute, but will move at his own convenience, leaving unpaid utility bills and other headaches. My scenario makes more sense than believing that at the very time she has it listed, nobody at all wants to live in a suitably price house that people used to want to live in.

>>But my question is can a brother claim his sister<< Get out your Pub 17 or any basic tax reference and step through the requirements. Since she earns more than $3400 she can't be a qualifying relative. She could be a qualifying child if she is in school at least five months of the year and meets the other requirements. I'm not sure you are describing everything correctly; I don't see any way for the parents to be able to claim her whatever they choose.

>>just relinquish all control to another and have nothing to do with it at all?<< Yes. That's when they say, don't call me with any problems, you figure it all out and just send me a rent check every month. Active participation isn't a very high standard. Reviewing the management company's notes once a year is probably enough. Don't confuse it with material participation, though.

>>Am I wrong that if she finds a tenant willing to pay what she wants for rent, she will rent it? << It isn't wrong to think she "would" rent it, but that doesn't make it rental property. I mean, if I can find someone to rent my own shack for five grand, I would definitely sign the lease! So why can't I deduct all the maintenance and utilities and so on until then? The market dropped and she can't find a tenant because she needs to cover a mortgage payment that is higher than competitive rents. So she took it out of service as a rental to make it easier to sell. The fact that she was still hoping for a miracle is irrelevant. If the software can't handle it, you'll have to calculate by hand and override. But don't use two full months because real estate is mid-month convention.

>>auto replacement cost for the son<< They bought him ANOTHER one?

>>Is "a sheet of paper with the figures" not acceptable as enough information to prepare a Schedule C?<< No single sheet of paper is enough if the information on that paper is not reasonable. The story of this tavern has far too many obvious inconsistencies to be accepted at face value. Why didn't the owner consider herself to be the proprietor? Is it actually a partnership or corporate association with her boyfriend? Who paid the expenses? Why acquire a retail establishment without any inventory? Why buy so little new inventory, and then give so much of it away for free? Why are there no acquisition and start-up costs? For that matter, why are the expenses so low -- $12 for supplies? Why is the documentation so thin for such a highly regulated activity?

>>This post was on quickfinder.com<< I usually only respond in one place. Once I replied to a post on competing boards, taking emphatic but exactly opposite positions. I was excoriated in both threads; that was fun!

>>the superdelegates haven't voted yet<< Would the superdelegates include the IRS Chief Counsel? Because he voted way back in 1996 when he posted PLR 9825024. Although revenue from personal services such as nursing or housekeeping is not gross rental income, if that is less than 20% of the total then indeed a nursing home "qualifies as residential rental property as defined in Section 167(j)(2)B of the Code."

>>her relative later filed bankruptcy so that my client couldn't get her money<< The bankruptcy had nothing to do with her money; only debts specifically identified by the court are affected. Not putting in a claim is proof that she wasn't owed money. Since your client never had an agreement to be repaid anyway, she lost nothing when she wasn't repaid.

>>The relative filed bankruptcy to get rid of this debt that she owed my client.<< You mean that when your client paid the creditor, the debtor signed a new loan agreement with your client, and then immediately (within the same tax year) convinced a court to discharge it?

>>a dune buggy/atv that he uses to entertain clients<< His dune buggy is not deductible, period. Although costs of an entertainment ACTIVITY can be allowed (subject to strict substantiation of business purpose), Section 274(a)(1)B prohibits a deduction for entertainment PROPERTY such as a yacht, lodge, car, airplane, or apartment. That includes operating expenses as well as depreciation. So if he can document that the entertainment was directly related to or associated with the active conduct of business, and that the entertainment was not lavish or extravagant for the purpose, 80% of his permit might be 50% deductible. But the big toy, no.

>>how far back would you really file?<< That depends entirely on what the client wants to do. Although the IRS typically only goes back three years, there actually is no time limit if you never filed. Many kinds of problems could require all ten years, including criminal charges, immigration, divorce, contract disputes, property sales, and credit reporting. Sometimes a new religious commitment or a 12-step program calls for getting things straightened out. Even if you can't claim a refund, you CAN claim deductions and exemptions and tax attributes to reduce the amount owed.