jainen

>>for a sole propitiator<< The only one I know of is the guy who told that parable I was talking about.

>>she has life tenancy in the property<< You'll have to read the trust documents. Credit shelter refers to keeping the exclusion amount out of the survivor's taxable estate, so I won't guess why they did the life tenancy. Maybe it means this is a disregarded entity.as a grantor trust, Or it may be that income assets are in the survivor's share and the CST was funded with low-yield investments. Read the trust documents.

>>WHOM DID I MISS<< Exxon.

>>your story is better than the guy who screws up and then fixes it<< For a different perspective on this very old story, take another look at Luke 15:11.

>>they have high GPA's<< Back in our days, that meant, like, 3.5, 3.8. If that's all a kid could show now the colleges would just send a form letter. They want to see at least 4.5 (from advance placement and other fancy schedules), plus tons of extra-curricular activity and community service. So congratulations are indeed in order, because your teenagers didn't find their motivation just from within themselves, Dad. And you are right about the private money--that's why for qualified students it is sometimes cheaper to go to a prestige private school than the state university!

>>mortgage's count towards basis in allowing the capital to be negative<< I'm confused too. Are you saying this is a "gift" of no equity whatsoever but a half million dollars of debt?

>>does the donee keep the negative basis?<< According to Pub 541, "The partner's basis is decreased (but never below zero) by... " Perhaps you are confusing capital account (share of partnership equity) with basis (partner's investment). This error is so common we often make it deliberately when applying at-risk limitations in trivial amounts. In my opinion, half a million is not trivial and suggests that losses have been improperly claimed. A negative capital account sometimes means taxable relief of liability on disposition. Since this transfer would be a gift, recipient would have a dual basis depending on eventual gain/loss, as described in Pub 551.

>>what is this tool?<< According to the Department of Education: The IRS Data Retrieval Tool allows students and parents to access the IRS tax return information needed to complete the Free Application for Federal Student Aid (FAFSA). Students and parents may transfer the data directly into their FAFSA. If you are eligible to use the IRS Data Retrieval Tool, we highly recommend using the tool for several reasons: It’s the easiest way to provide your tax data. It’s the best way of ensuring that your FAFSA has accurate tax information. You won’t need to provide a copy of your or your parents’ tax returns to your college. If you do not use the IRS Data Retrieval Tool to provide tax information and your college requests a copy of your tax return or your parents’ tax return, you may be required to obtain an official tax transcript from the IRS.

>>corporation that starts on 09/01/09 and ends on 08/31/10....The IRS instructions don't help out much and have left me more confused.<< The Instructions for Form 1120 say, "File the 2009 return for calendar year 2009 and fiscal years that begin in 2009 and end in 2010."

>>if they try as hard as possible to legally reduce how much they pay, I respect that decision<< Solid agreement on that point, kc. It's the core of our profession. But nobody expects to find that Romney cheated. We want to know about his character, what you call lifestyle on Schedule A. Investment patterns in the face of economic downturn can also reveal a lot. One rumor (supposedly based on actual SEC filings) suggests tax returns would show that a large part of Romney's personal wealth came from abortion services. Or maybe refute the rumor--in any case financial analysis is a standard way of investigating anybody. With so much at stake, in my opinion, voters deserve some pretty comprehensive disclosure.

>>I don't think the presidential candidate's personal tax returns or tax rate will be any indicator of how problems will get solved in this country<< What else would you prefer? Campaign promises come and go, never with any personal commitment. Even a voting record is a poor guide because of the compromises implicit in the process. But a tax return is a factual declaration under penalty of perjury, showing the candidate's personal approach to economic theory. Of course there are other sources available for various viewpoints, but tax returns are real solid evidence. And note that Romney is himself using information directly from his own tax returns (e.g., the 13% brag). Obviously even HE agrees his tax returns tell something voters should know. And I guess some things he doesn't want voters to know.

>>Lame duck, last minute politics is the name of the game for several years now.<< More like brinksmanship. Except as campaign rhetoric, nobody cares that millionaires might have to pay tax on inherited wealth unless the family takes advantage of normal estate planning options. Next January 2nd defense and intelligence face a 10% budget cut, an intentionally disastrous law that was supposed to force the supercommittee to compromise. Have you heard either candidate address that?

http://www.fafsa.ed.gov/help/irshlp9.htm IRS will now transfer tax information directly to FAFSA. If financial aid, why not welfare aid? Mortgage companies? Credit cards? Employer? District attorney?

>>We don't allow government to accuse with no evidence and then make the accused prove that they did not do it.<< Get a grip, Tom! I feel your passion, but we are talking TAXES here.

>>everyone should be allowed adjustments, deductions, and credits under the law<< All things being equal, that formula will show that self-employed pay higher tax than investors. But the entrepreneur can deduct work expenses and health insurance premiums and even losses in ways the investor can't. And both can shift income and/or expenses to family members or other entities. So one taxpayer might reduce taxable income in a way not appropriate or even available to another taxpayer. It's under the law, to be sure. Just mighty hard to evaluate person-to-person, at least for me.

>>overall effective tax rate<< I have many awkward moments with clients concerning this calculation. In my software it means Line 61 total tax divided by Line 22 total income. That does not include non-taxable or deferred income, nor non-deductible or deferred expenses. Using AGI instead of Line 22 can bump it up. Allocating amounts to separate spouses is really confusing, and year-to-year comparisons are almost meaningless when bunching income and expenses. How do depreciation with recapture, AMT with credit, carryovers, and Lines 64-71 credits treated as payments change the "effective rate"? Not to mention shifting income or expenses to another entity. On a national scale, the IRS can assemble some useful statistics with these numbers. In my opinion, there are too many variables to be of much value in individual tax planning. Most of my clients, however, disagree.

>>Do you think I am reading this correctly?<< Dunno-- why don't you ask these guys? http://www.catchfirefunding.com/self-directed-401k.html

>>doubt if the trust is allowed to invest in the company<< In the early days of Internet advice (which of course is all still out there), some lawyers made a few bucks promoting a scheme to have a solo 401(k) invest in the beneficiary's own company. Maybe there is a narrow way to do it, but generally it's a prohibited transaction. It looks like cheap money, but can end up very expensive.

>>I'm out of ideas<< This has been my favorite thread in quite a while! Nobody ever had any ideas, at least nothing based on any relevant fact. And even an argument about whether to find out the relevant facts--an Internet troll's delight!

>>when we will know for sure<< We already know for sure.

>>not an attempt to evade<< That's not what I meant. If they are only going to offer whatever is left in savings, it wouldn't be a strong offer because the IRS can just take all that anyway (and thanks for the financial statement so we know where it is). But maybe, for example, a friend will help them out but would prefer not to have the IRS looking that way. If they can't bring any outside funds to the offer, it makes a much harder deal. In that case, it might be better to negotiate a minimal payment plan or the annual uncollectible status, or even bankruptcy. By the way, you don't get any sympathy points by saying this is "a large outstanding balance due to his failed business." Tax liability comes only from business success. They chose to not pay their liability when they had the money to do so.

>>does it need to be listed on the 433 form for the offer?<< Contributions to a 529 are subject to gift tax rules, and distributions are taxed (when applicable) to the beneficiary. The donor controls the fund only as a custodian. (Of course, if the money was transferred with fraudulent intent to hide it from the OIC process, that doesn't count.) Still, it might be useful to tell the IRS about the education fund, emphasizing the fiduciary role. The IRS won't accept an offer for an amount they can collect anyway. It's best to show them something that is otherwise beyond their reach. That 15K might be enough to stop them from looking elsewhere (like where the money would REALLY come from!)

>>the difference between a billion and a million<< A billion is a thousand times bigger than a million. Since the US. population is 300 million, a million tax dollars is less than a penny per person. A billion tax dollars is three bucks each. Now, a trillion is a thousand times a billion. So saving three bucks each would only reduce the federal budget deficit by 1/10 of one percent (assuming they don't just spend it on something else). That's why all this is just political scare tactics with little genuine fiscal impact.

>>This will save $122 million over ten years.<< Sure, big savings--let's see, that's 12 million per year, less than $250K per state. How much will it cost to add the new administrative procedure? A total waste, because the government ALREADY has the information over at Social Security and SEPARATELY at Justice .Department. But I guess some data processing company made a campaign contribution so there's a little earmark in a foreign trade bill.

>>IRS could flag all the prison addresses<< That's what I meant about wanting IRS to look closer at returns that aren't like mine. But actually, this time I agree with profiling. Anyone who lives in a gated community should be audited!