jainen

>>I'm in CT, 20 miles from public transportation, so need my 1997 Subaru, which replaced my 1988 Subaru. The garage is part of the basement of my house, so no additional expense. If I didn't have my home office and commuted to NYC where the work is, I'd have 40 miles round trip in CT with the highest gas taxes in this country, then a parking pass for hundreds of dollars per year, plus a train ticket for thousands of dollars per year, and then maybe subway fares. Don't see how I could leave the house to catch the 7:05 train and return 12 hours later without a sitter and preschool or a drop-off day care. Glad mine are finally grown, just the college/parent loans to pay off on my stepdaughter. When we moved here for the job, we searched NY, PA, NJ, and CT, for the cheapest combination of house prices, property taxes, transportation costs, etc. We didn't expect children in the mix, though, since we'd been married for twelve years with no child appearing. Then, after settling out here in the boonies -- Surprise! Well, driving ten miles to pick up a babysitter or 20 miles to the next town for daycare really put a crimp in our budget. Sometimes, children are not a choice, unless you're willing to do something rather drastic to eliminate them. We found his required (lactose intolerant) formula cheaper in San Jose even after paying UPS to ship it out to CT. And, I stayed home for a couple of years while I earned an MBA (fellowship paid), but really had to return to work to afford oil even with our house at 55 degrees daytime, 45 night. I used COBRA after my divorce, but it runs out eventually. The Imitrex for my migraines was $85 per shot without insurance. You just can't look at someone's income on their tax return and know how much they have left at the end of the month. Geography, health, so many things eat up our money.<< How responsive to your individual circumstances should the tax code be? With hundreds of millions of families in the country, each having comparable details, how responsive CAN it be?

>>a schedule C... a Schedule E<< Apparently this property is not held by the owner for productive use in a trade or business or for the production of income. Investment expenses (which can not include depreciation) go on Schedule A. Perhaps this arrangement is some kind of shareholder contribution to the company. I must assume that a liability shield was not one of the reasons for incorporating.

>>a portion of any gain or loss will now have to be allocated between the business and personal<< Yes, I agree that about 3/4 of the capital gain or loss must be treated as non-business because the vehicle was converted to that percentage of personal use before sale. The original question was about the depreciation expense, which must be recaptured anyway. I may be wrong about making a difference--it depends on the sale price. A three year old vehicle has probably lost more than half it's value, so depreciation (as limited by luxury car rule) is not going to generate any gains.

>>We all know that honest charities get a lot more 'bang for the buck<< I don't know that. I can name dozens of federal government programs that outperform any private projects, especially with income support (Social Security), health care (Medicare, Medicaid and VA), housing, early childhood education, college financial aid, grants to local law enforcement, environmental protection, financial regulation, and on and on. Every one of these functions has non-profit participants but nobody can touch the overall effectiveness that our cumbersome government achieves on a large scale. Not that large scale is always the best approach to social problems, but in my opinion we get a tremendous amount of value for our tax dollars.

>>Do I average it over the three years the vehicle was use?<< Because she sold the car, it probably doesn't matter what you use for 2008 expense. Depreciation of listed property must be recalculated as SL from the beginning, with corresponding basis adjustment and recapture for the disposition. Your software may have a cumbersome or even inaccurate procedure for this; since you only have the one car maybe it's easier to just run the numbers by hand and use overrides on the computer.

>>$250,000 is a nice income<< A quarter million dollars is way above average, my friends. Why, it's five times average, unless you twist the definition of family to include a whole lot of other sources of support. Even in New York City nobody with that kind of cash flow has any problem paying normal living costs. If they can't afford a bit of charity it's just because they covet an upscale lifestyle for themselves. Anyone who thinks a quarter million dollars is no more than comfortable is callously blind to economic reality and how they have been blessed. It's pretty refreshing to have a community organizer in the White House, someone who can see how normal people live.

>>what many would like to do<< I'm skeptical that many of us would like to pee in an elevator, kc, but I could be convinced if you would care to set up a poll.

>>maybe I can find something<< Try Section 1371[1], which says, "No carryforward, and no carryback, arising for a taxable year for which a corporation is a C corporation may be carried to a taxable year for which such corporation is an S corporation." This is the basic rule, covering a whole lot more than just Section 179. It doesn't get more straightforward than that.

>>date placed in service (1995 or 2009)<< The property was not "idle." After 03 you might call it investment or personal, but it was certainly not held for productive use in a trade or business. When it is again placed in service, start a new 39-year schedule in the normal way. The new basis is the lower of current FMV or adjusted basis. Software varies, but one way or another you will want to note how the adjusted basis and FMV were determined. You could probably make a reasonable argument for simply restarting the old depreciation schedule. That might offer a faster write-off for the balance of the original cost. (You would of course still need a new schedule for the recent improvements.) Before spending a lot of time researching that approach and setting up multiple depreciation schedules, find out if it even fits the taxpayer's long-term plans.

>>death of spouse<< IRS has been pretty sympathetic on this issue, following the code "where the failure to waive such requirement would be against equity or good conscience." For example, PLR 200906060 last February granted relief in the death of a spouse. The most relevant factors were the taxpayer's mental state and that the spouse had handled all household finances. The widow didn't even know the money was from an IRA until she got the 1099, but be careful of that because too much elapsed time is not allowed. Another important element is that she did not use the money, leaving it in a regular bank account until she was able to get her affairs in order. On the other hand, IRS denied the mental condition argument last October (PLR 200840057). The taxpayer withdrew money after a heart attack to cover expected bills later paid by insurance. As always, good documentation is essential--and it must actually match up with the problems and timelines claimed, showing that the 60 day limit was indeed beyond the taxpayer's control.

>>See jainen answer on quickfinder.<< If you wouldn't mind, please post a link or quote for that sententious wisdom. Even I don't know what it was.

>>giving to any other Church fund-raising event, where all the donors know what the money is going for.<< There is a difference between knowing where the money will go and directing where it will go. Neither is prohibited, but only one is deductible. I honestly don't understand the argument that he "only added the name after he was asked to." To me that says the chairman knew it was a directly designated gift, refused to accept it until it was openly labeled as such, and simply forwarded the check instead of posting it to the church account. Anything less would be money-laundering. It furthermore emphasizes that the taxpayer knew this was not the normal procedure for a donation. I'm still waiting for someone to explain why it was done this way. I've suggested two reasons--either the church was lying to their major donor about what they would do with his money, or the donor desired to get the church's name on the face of the check before he approached his tax preparer. (The tax preparer's immediate and lasting impression was the same as mine.)

>>he always is making payments to the IRS during the year to pay off the previous years' taxes so he can't make estimated payments<< That is something you can help him with. Last year's liability will only accrue interest after a certain point, while 2009 remains subject to underpayment of ES and late payment of everything in addition to interest. Since he is only in arrears one year and has the ability to pay, his basic collections option is a payment plan, whether formal or not. The IRS is not in a big hurry for 2008, so slow it down to make room for the estimates. The total he has to pay will be substantially less.

>>He is very generous to his church and gives to this particular fund on a regular basis.<< That's very admirable. Now please explain why he changed his procedure for this particular gift. I don't know the back story, but I know there is one. Unless you expect us to believe the committee tricked or cheated a major donor, it's obvious he understood this transaction was different and was not going through the church. So if not for a deduction in the top tax bracket, what other reason could he have for putting the church's name on the front of his check when he knew they weren't getting the money? I am not suggesting anybody had a nefarious purpose. Perhaps the committee's internal accounting controls prevented it from acting quickly enough, or the family's need did not meet the technical parameters spelled out in the church's bylaws. But that's the end of it. When he used the church anyway, it had the appearance of a tax dodge. Even conceding the innocence of his inquiry, your answer can only be (as indeed it was), this is not deductible.

>>tax avoidance - that was never the motive<< Look, his payment was clearly tied to the committee's promise of targeted help. The donor can now say that was not his original intent, but that is what actually happened above his signature. Even the chairman refused to accept it as a church asset, acting simply as an agent or intermediary in delivering the check. Making the church the first payee on a third party check had no economic substance other than appearing to document a tax deduction. This is a perfect example of why Congress changed the law so that a canceled check is not sufficient proof [section 170(f)(8)].

>>The check was made to the church<< Irrelevant--a technicality whose only purpose was tax avoidance. The substance of the transaction was a personal gift to an individual. That's what was intended, and that's what happened.

>>she might lose part of her pension and insurance.<< Unlikely, but I can't say absolutely not. Even Social Security has an element of needs-based testing. The terms of her specific benefits could be anything imaginable, and insurance coverage often seems pretty arbitrary anyway. She should at least discuss Medicaid with an estate planner.

>>every time I try to attach the rubber stamp to an email, it falls off the keyboard into the floor<< The keyboard is a useful accessory, but it is not backwards compatible. Try one of those new-fangled I/O devices, the "monitor." A rubber stamp still works perfectly on it.

>The Brother 5250DN that we use is completely customizable<< Well, no, I disagree on that point. Sure, you can set the text, but not the location or color which in my opinion are more important than the word. I mean, even just a big red X across the signature block would be a lot better than a simulated watermark. I prefer low-tech: rubber stamps.

>>which one to go with<< There is only ONE kind of study material, they are all the same, and it's all available free on the IRS web site. It consists of actual tests and answers from the most recent years. Commercial trainers add some level of commentary, but there is nothing tricky or arcane in the test so Pub 17 will serve you as well. In my observation, when there is something I don't understand I do better looking it up myself than reading a brief reminder anyway. It would be nice to get some insight into the structure of the test, whether you should guess, how to manage your time and energy, and other technical aspects but there is precious little of that sort of thing anywhere. In that sense a real classroom might provide more meaningful help than self-study.

>>State (WI) is looking for paperwork to set up estate return.<< I don't exactly understand this sentence, but it makes me mighty uncomfortable. If the government came down on this family within just a few weeks of the death, something important is going on.

>>which cannot be replaced for $2225<< This is also part of why insurance costs so much. You're in the car business so you know well how far above the real market owners value their old cars. At least here in California ancient Buicks in excellent condition but topping 100K miles can be easily acquired for $2225. That is obviously true in Ohio too since the insurance company thought (correctly) such a sum would encourage Annie to settle.

>>the rollovered amount is wrong because atx doesn't adjust<< There are tax prep programs that have more calculations and other features. For example, Lacerte competes heavily on that very issue. Another approach is to use standalone worksheet software like Tax Tools.

>>Gee, I missed that part!<< Oh yes, you missed it. Not that it matters to you--you weren't going to make a medical claim anyway because there were no injuries. But no insurance lawyer will sign away thousands of dollars WITHOUT a release. Don't tell us they never said, "Thank God nobody was hurt." After you agreed, they never mentioned it again and offered you a full settlement of all present and future claims. You decided to take the extra money before they changed their mind, when all along they were praying to the God they had invoked that YOU wouldn't change YOUR mind!

>>Is this why auto insurance is expensive?<< No, it is not the reason--not a crumpled fender on an old car. Why, your claims adjuster probably got a bonus for saving the company so much money! When you described the settlement offer, you forgot to mention that you had to sign a medical release. No doctors or lawyers involved--THAT is why auto insurance is expensive.