jainen

>>Works for me<< Does it work for your client, who is probably more interested in easing his own tax burden than easing your paperwork burden?

>>We have to create a Schedule C for each of them now and do the splitting ourselves.<< According to the IRS itself, in the instructions to Schedule C at http://www.irs.gov/pub/irs-pdf/i1040sc.pdf, that is the ONLY correct way to make the election for qualified joint venture. Some software may offer a checkbox, but there is nothing about a qualified joint venture that suggests the split should be 50/50.

>>the new credit is good throughout 2009<< My understanding is that the election to treat as a 2008 purchase has also been extended to 12/31/09, and they still don't have to recapture even if they take the credit on a 2008 return.

>>Basis of A should be 55,000 (40,000 + 15,000)<< No, depreciation reduces basis. I do think you need to know the trade-in value so you can determine if there was gain or loss to defer. You can calculate the basis of the new car the way OldJack says, adjusted basis (25000) plus new money (unknown without the trade-in value), or as Cost (30000) minus deferred gain (unknown without the trade-in value).

>>Followed the worksheets all the way through<< Doesn't the second line pick up income from Schedule SE?

>>If he files separately from wife, the only amount taken will be from his refund<< Why don't people support their kids? And who would marry someone who won't support his kids?

>>My question is procedural<< The procedure is to write the explanation and stick in your file. If and when the IRS ever has a question, you can fax it in and go on with life.

>>Paid Professional Care for hair<< This is just one of those wiggy rumors that go around, so tell her it only applies to wigs. The IRS is never going to change on this ruling--hair is "inherently personal." There are a few old cases where performers (even newscasters) might deduct extremely specific hair management as a costume cost, but that can not be applied generally. Anyway, the "result of 2 Sept. Audits" would only apply to the particular taxpayer under examination and can not be cited as precedent.

>>taxpayers who bought those homes in 2008 will scream loudly....<< That would be the Biblical response (Matthew 20:1-16). Like Jesus said, "the last will be first, and the first last."

>>it indicates the sale must be reflected on Schedule D either line 1 or 8<< I think the sentence you are referring to begins, "If you have a loss on the sale of your MAIN home." Anyway, Pub 523 does not claim to be either regulations or instructions. Still, you might as well do what it says, which is to enter -0- in column (f), if you believe this is personal-use property for which a tax loss is not allowed. In my opinion, the original intention was obviously changed by external events, and what actually happened is that they held it for its value, and sold it when the market started down. Treat it like a long term investment loss.

>>Mother gave guardianship of her child age 17 to a friend. Signed all the papers.<< If you are using the correct term, the child is now the qualifying child of the friend. Guardianship means the parental rights have been terminated, and the child is an eligible foster child placed in a new home by court order. I presume that's what "all the papers" means.

>>Estimated cost: $6.6 billion.<< My calculator doesn't have that many digits, but isn't that projecting eight million families, who never qualified to buy a house in the heady days of full employment and easy mortgage underwriting, will suddenly become happy homeowners this year? I think this new stimulus bill is full of grandstanding silliness.

>>it is impossible to find a decent eraser<< The problem is not so much the eraser but the pencil. And the users, too. We are altogether too casual about the way we handle what should be revered as the epitome of civilization. Nowadays graphite is apparently a premium item, so cheap sticks offer black clay with some kind of crusty gum binder. The eraser end is simply decorative. This is true of all the pencils with custom logos or slogans, any kind of special coloring like foil, and the bulk generics from office supply stores. It's also a problem for the thin, unsupported refills in mechanical pencils. I love writing with a traditional pencil. It is the fastest way to make squiggly lines, perfect for brainstorming, taking minutes of meetings, and annotating books. I still put genuine Dixon Ticonderogas at the top of my list. The eraser is barely useable for a few weeks after you open the package before it dries out and oxidizes. This suits me because I resharpen a lot and toss them when they get down to three or four inches. I also don't erase much, just line out and scribble changes in the margins and so on. I like the Pink Pearls but they also must be replaced long before they are used up. Even then, they must be kept immaculate which is a challenge because dust and oils get embedded in the soft rubber. Art erasers work well but they are really designed for a different purpose. Although they can remove marks more completely, that's not so important the way I write first drafts. I find art erasers to be too slow and messy for office work.

>>You ARE familiar with Star Wars, are you not?<< Time to dust off that old DVD gift set. Meanwhile, check out the buns on this princess if you haven't seen it in a while. http://www.youtube.com/watch?v=I7p96aiE32k

>>deduct it as a 179 expense<< That would be Suction 179.

>>83 people viewed my post, and 1 answered.<< I was counted more than once. I thought the single answer covered it pretty well without anything else.

>>he did not receive it last year<< Nobody else did either--the rebate credit was not available last year. The stimulus payment was related to the 2008 credit, but based on different facts as shown on the 2007 tax return.

>>POOF! they magically install... be sure the installation was done properly<< It's so hard to find a reliable genie these days.

>>they do qualify because they do meet the five tests [iRC 152c]<< Child Tax Credit is in Section 24, not Section 152. The child must be a dependent or meet one of the exceptions. Although there are only the five tests for QC, Section 152 also specifies that any dependent must be a citizen or resident of U.S., Canada, or Mexico. As I read the original post, the child in question does not qualify as a dependent because of this citizenship/residency rule. To claim the Child Tax Credit requires Form 8901, and you will see from its instructions the child is not eligible. http://www.irs.gov/pub/irs-pdf/f8901.pdf

>>Do I file JUST the PR return?<< Probably both, but you have to allocate the income to avoid double taxation. Read Pub 570 at http://www.irs.gov/pub/irs-pdf/p570.pdf

>>it leaves an asset on the depreciation schedule that has really been sold<< Technically speaking, this is the standard procedure (although the name of the asset is usually changed to something like "exchange basis"). You have to make an election to combine the exchange basis and the new basis into a single asset. The disadvantage, as OldJack says, is extra complexity. The advantage is that the old exchange basis can be written off faster than the new basis. Suppose for example bsd's equipment was seven year property and the old one had only one year left. That last $7084 can be deducted in full on the old schedule. Otherwise, the $7084 would have to be deducted over seven years just like the rest of the new basis. There are special rules for when the new asset is required to be depreciated on a different schedule, like trading a residential rental for commercial property.

>>the worksheet for the Recovery Rebate Credit<< The stimulus payment was based on the 2007 return. The Rebate Credit is based on the 2008 return. Since they use different facts, it is not surprising they produce different results.

>>Good luck getting help from jainen<< My post on that thread this morning explained why I hesitated on the main point. It also supported the general opinion on a side issue, and added an additional concern.

>>does not seem to be on the IRS web page?<< ... because that is not an IRS form. As I said, the Virgin Islands has a separate system. The pub I pointed you to explains "Where to get Forms and Information" on page 14. There is an address, a phone number, and a web site.

>>no where that I am to input the loan << New loans are irrelevant in a 1031 exchange, unless one party is ASSUMING an existing loan. There are two ways to figure the basis for the new property. Either subtract deferred gain (14916) from acquisition cost (57600), or add old basis (7084) to additional money needed (35600) regardless of the source. Both ways show the same result of $42684. Be sure this actually IS a 1031 exchange. Like kind is defined very narrowly for equipment--it must be in the same general asset class or same product class. Also, be careful of your terminology. The $14916 is "realized gain," not "recognized." And once again, ignore the loans in a 1031 exchange.