Gail in Virginia

I don't think that the 1202 exclusion for small business stock would apply in this case because I don't think that is available for S-corps, only for C Corps. I was hoping something about the involuntary nature of the sale would offer some relief. But maybe I am wrong about 1202. Right now I could be wrong about almost anything.

Taxpayer owned minority interest in s Corp with multiple shareholders. New management had a personal problem with taxpayer and persuaded a majority of shareholders that taxpayer had to be forced out of ownership. Taxpayer sold half his stock to unrelated party and gave half his stock to a related party to comply with majority stockholders wishes. Taxpayer thought giving up stock for nothing would be a loss offsetting gain on shares sold. I don’t think it works that way. I have never had a shareholder forced out before. Is there any tax break available?

I thought that this was supposed cover everything - insurance, repairs, oil changes, etc. According to the OP, the TP only pays for gas, not the other costs of owning a vehicle. So I am not sure they could take mileage, even without the depreciation component. Not sure they can't..... I have not had this particular situation.

In another thread, Possi mentioned filing an extension showing a $2 balance due that would be deducted from the checking account to get the account on file with the IRS. I don't know if that will work but it might be worth a try.

To go back to what I understood the question to be, the T/P can give the ex-spouse the 8332 at any time. The bigger question is will the IRS flag the return because it wasn't done timely, and will they accept it if is done after the fact? Years ago, this would not have been a problem. I have not had it come up for quite some time, so I am not sure what the service's position is on this. But personally, I would try it.

So if she has the business miles, and knows what miles per gallon the car gets for gas, and the average price per gallon she paid for gas, maybe she could take some business expense for the car. But not as much as she probably thinks it should be.....

Was it an alternative fuel car? Did she have to buy gas for the car? Is she a statutory employee, or self-employed? It sounds like she is an employee, and there is no longer a place for employees to deduct business mileage. If she is self-employed, how did they add the personal use to her income? If she had to pay for gas and insurance, and they just provided the car, and she is self-employed, then she might could take the non-depreciation portion of the business miles. But if the car was total free to use and she had no costs, what is she deducting? Sorry, but I have more questions than answer on this one.

But if, and it is a big if, I understand this correctly, he can now structure his income to get that $2900 when he files his 2020 tax return. In which case the only thing that he lost was the time value of the money for approximately 9 to 12 months, which at an interest rate of .5% on $2900 can't amount to much.

Personally, I would expense the water heater as de minimis (under $2500 or 2% of the cost of the property), depreciate the refrigerator as an appliance, with bonus depreciation or 179 available , and capitalize the flooring as a restoration. I would not have used 179 on a structural component like a roof. However i an not an expert on rental property and did not look up cites for any of this, so someone else may know more and give you a better answer.

That is correct - we are only discussing the treatment on the VA tax return.

I have always done it that way as well, Christian. The administrative code actually says. "A. Lottery prizes subject to taxation. Any lottery prize of $600 or more shall be subject to Virginia income tax. To the extent included in federal adjusted gross income, any lottery prize of less than $600 shall be subtracted from federal adjusted gross income in determining Virginia taxable income. No subtraction is allowed for the first $599 of a prize of $600 or more." The instructions for Virginia returns say "Virginia Lottery Prizes - Enter the sum of all prizes under $600 awarded to you by the Virginia Lottery Department to the extent that you included them in your federal adjusted gross income." So IMO the law says one thing but the department of taxation will most likely enforce another.

But does the tax program think that it is passive? The software that I use has a box on the K-1 that if i forget to check for active participation, the K-1 is treated as passive. It has been a long time since I used Tax Wise and I don;t remember how that worked and it might have been different then anyway.

The IRS first said yes, but just announced that if you are getting SS or Railroad Retirement, you don't need to to file anything - they will use that direct deposit information for the stimulus payments. https://home.treasury.gov/news/press-releases/sm967

And if is passed as a gift, even though it might be long term, the part of the gain that is recapture of depreciation is ordinary income. And it sounds like that will be almost all of it.

I seem to remember in some of the early information that I heard somewhere, that they would not use banking information that was used to pay taxes but only information for depositing refunds. That may have been an unreliable source, early in the game before any official information came out. Right now I am an unreliable source myself.

This is a rural area with not a lot of financial support. I don't intend to advise on what they should do,; I may in some cases direct them to websites that they can read to get up to speed themselves. I would like to know at least enough to warn them of any tax pitfalls since they do rely on me for that. Since I do the payroll for some of my clients, I will probably wind up more involved than I want to be.

There are all kinds of options during this crisis that are not normally available. I understand Tom's point, and would hope that the increased unemployment would enable most people to navigate this difficult time without going so far in debt that they will never see daylight again. On the other hand, trying to navigate what is available and how to apply for it is often EXTREMELY confusing, and the people who need the most helpful often lack the resources or education to be able to figure out what is available to them.

Thanks for the warning Catherine! I have been getting the summary email, but have not had time to really look at it to see if there was anything of interest there (I would rather spend my time on this board!) and now I won't bother.

You might try updating the program even if it doesn't appear to need an update. Just for luck.

When the itemized is close like that, I almost always wind up checking to see what forcing the itemized will do since VA only allows you to itemize for the state if you do for the federal. Sometimes it is better to pay a little more on the federal to save a whole lot on the state. But I have not had the situation that you describe show up.

I do but I use a different software so I can’t help.

I don't believe an amended return will accomplish that. You have to cancel the payment that is set up, and I believe the method for doing that is addressed in the FAQ at the site that Judy provided the link. Then you set up a new payment date on or before July 15. Personally, I would cancel the first payment date and wait until it had passed to make sure that the cancellation took before I set up a new payment date.

I only had one customer that bought bonds in the right time-frame and cashed them in for education purposes (okay, it was me for my son's college) and every time I found that it was better to use the amounts from AOTC or even tuition and fees deduction than to exclude the interest. But YMMV.

I don't think that they need to do the form showing the valuation that is required for vehicles over $500, but it would still be nice if they gave a receipt that just said he had donated cars for nothing in return. Even Goodwill gives that for bags of used clothing.

I think that self-employed people who would be eligible for paid sick leave if they were employees instead of self-employed are entitled to a refundable credit against income tax BUT i don't know how you get a refundable credit before the tax return is filed. I really haven't worried too much about this since I am more concerned about getting current taxes out the door before I have to completely close my doors.