jainen

>>purchased an investment property<< It may have been an investment for the seller, but the buyer never held the property for capital growth from market conditions. He spent MORE on repairs than the entire capital purchase. The increase in value was directly related to his own profit-motivated activity. That is the very definition of business. Report the entire activity on Schedule C.

>>who cares where you were as long as your wife was in the US<< Well, I thought YOU cared, Pacun. Just yesterday you wrote, "We all need to take a class on international taxation." I was serious in suggesting sufficient time to study Pub 519. In plain language it says, "Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year."

>>should I be able to use that number on the 2010 tax return to file them MFJ<< You can use the number, but unless he had a green card in 2010 or otherwise met the substantial presence test in 2010 they probably can't file MFJ. Depending on your workload, you may need to put them on extension until you have time to study Pub 519.

>>she contributed nothing<< Maybe she didn't understand, because it looks to me like she contributed $5108 and (with additional information) can use the Simplified Method to exclude a percentage of each payment.

>>owned by a corporation that there were no taxes<< He was telling the truth. The LLC is a disregarded entity. It pays no tax on its income, nor does the individual who controls it through her corporation. Whether the corporation pays tax depends on a lot of other factors not necessarily related to the LLC. Your state (Nevada) has quite the reputation for corporations dodging taxes.

>>descendant of foster child is OK, but not foster child of descendant<< If you believe that, then you also believe "descendant of son is OK, but not son of descendant." A foster child is EXACTLY the same as a natural child, included in the very same sentence of Section 152. You may not think this is logical, but it is another example of the social engineering that permeates our tax system. The government has a strong interest in protecting foster children, encouraging them to be handled through official channels with generous benefits to the foster parents.

>> foster child would be a qualifying relative, not qualifying child. << Please explain further what Kleinrock is saying. Under Section 152, an eligible foster child is EXACTLY the same as a natural child, at least as a tax dependent. That means the younger woman, who is the twins' grandmother, is his own mother (for tax purposes) and she can get the CTC for him if otherwise eligible, but not HoH because she doesn't pay for the housing. HoH goes to great-grandmother IF she claims any of the three, subject to tiebreaker rules if they can't agree. I doubt that Kleinrock says the foster child can't be a qualifying child, but give us a quote and maybe we can decipher it.

>>I had to live in my car for two weeks<< Deductible as travel expense if he parked outside the metropolitan area. *** >>All movies have music<< Deductible if he plays show tunes. *** >>we can deduct our dates<< Deductible if she kept a log book.

>>He tossed me a $10<< And you posted that cheater's sawbuck in your ledger as taxable income, right?

>>reiterating the facts<< IRS doesn't much care about the back story. They want to know what you based your estimated numbers on.

>>what forms need to be filed, and where I can find them?<< According to its web site, the Collier County assessor requires an annual tax form for tangible personal property such as furniture or appliances in a rental unit.

>>All 5 live in my client's house.<< The two adults can claim the children in any combination they wish, except both at the same time. If they can't agree about the boy, he goes to the daughter because she is his parent under the foster child rule. If they can't agree about the twins, the claim goes to whoever has the higher AGI.

>>she is HOH since she has qualifying children who live with her but are not her dependents<< Sorry, Kea, that is not possible under the current law (since 2005). For a qualifying child of more than one person, the parent always wins under the tiebreaker rules. If the parent claims the dependent, the grandmother can not use the same qualifying child for HoH. A foster child is treated the same as a natural child--IF (and only if) she is an "eligible foster child," that is, placed through the official county agency as opposed to any kind of private arrangement.

>>a cash-basis client receives a $50K check<< Well, when it's a matter of INCOME, of course you have to pay the tax immediately. But we're talking about when you get a DEDUCTION. Not the same thing at all!

>>you don’t believe<< Oh, I still believe that, but I was talking about the tax code. I never suggested the FACTS be changed. Only under the accrual method could this payment be deducted in the year he was required to pay, wanted to pay, and tried to pay. Under the cash method, it can only be deducted when he ACTUALLY paid. In the long list of lame excuses, this one is an old classic. "It was my brother's fault!"

>>I'm taking the deduction for my client in 2010<< As our industry moves another little step towards licensing and regulation.

>>how many years does the IRS take your refund after you file bankruptcy<< Like any other creditor, the IRS is prohibited from all contacts and collection actions while the bankruptcy is pending, even if the tax in question is not eligible for discharge. There are strict limits on which taxes are eligible for discharge in bankruptcy. After the case is closed, the IRS can resume normal collections for up to ten years. Neither the IRS nor anyone else is allowed to pursue any collection action whatsoever for debts that were actually discharged.

>>He arranged to pay the taxes in good faith << Okay, I accept that--so if loss of the deduction generates an underpayment for 2009, he has reasonable cause to abate the penalty. It doesn't change the fact that payment was not actually made. He was required to, he wanted to, he tried to. But in the end, for whatever reason, his efforts failed. It's as simple as that, our old friend Substance-Over-Form.

>>if an auditor decided the earlier year is the correct one<< How could 2010 possibly be the right year? He didn't pay anything in 2010. There's no problem with having his brother deliver the check, but he knew there were no funds at the time he wrote it. Legally and ethically it was nothing more than a promise to pay in the future. That is what he intended, and that is what happened.

>>She was not listed on the card.<< The executor and the heirs are PERSONALLy responsible for debts to the extent of assets distributed, so the 1099C was proper. Even if there is no probate estate, the executor is required to post public notice and invite known creditors to make claims. In my opinion, she should either pay off the credit card company or report the cancelled debt on her own return. There is no statutory authority to use Line 21 the way you suggest.

>>I asked a reasonable question<< You might well be guessing right that the K-1s are in error, but you can't support that conclusion with what you posted here. If the CPA returned your call, what exactly would you ask? Do you want him to recalculate the return because you don't understand it? Do you want him to tell you what his instructions from the partners were? There isn't time for that right now. Either use the K-1s as printed and consider amending later, or go on extension until later.

>> I just got back from the vet to put Buddy down<< Oh dear. By the time I got to work on Monday my son called and said little Sparky wasn't breathing. Ten minutes earlier he had been licking water from my fingertips. Well, life goes on, so here's my final word on this thread. It's all just theoretical! Not a one of us would actually refuse to take the Office in Home expenses (as UPE on Schedule E, from the worksheet in Pub 587). Just explain the rules and tell her to modify the partnership agreement by next year. You know she's going to say, "What's a partnership agreement?" But they're pulling in a half mil--better spell out exactly who gets what and who has to pay what. P.S. No need to apolgize for getting mad at me. Everybody (including me) knows I'm a big jerk, at least in my online persona on this forum!

>>a good roofer who had one job go bad<< TWO jobs, as I recall from the original post. Personally, I don't see any reason to ask for any more documents from this poor guy. Give him the deduction--if the IRS has a question there will be time enough to answer it.

>> threatening to treat the loan as delinquent<< Nothing to threaten--by definition the loan has already defaulted if he missed a payment. Generally the terms of a 401(k) loan require payroll deductions; one of the most important and well-known risks is that losing your job means you have to immediately repay the entire amount.

>>What if it is not under the partnership agreement, can’t take them on the E, does it mean she can not take them on the A.<< She is not an employee, so she can't deduct it as an employee expense. Even if she WERE an employee, she could only take it if it were for the convenience of the employer. Pub 587 says "If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home." Similar reasoning applies to partners--it must be required by the company, not just something the individual partner wants. Although the partnership agreement may be changed, doing so retroactively would be too tax-motivated to stand.