DANRVAN

However, as explained in RR 2009-9. Ponzi scheme type of losses are still deductible since they are not subject to the disallowance of sec 165(h)(5)(A) for the years 2018-2025. Personal theft losses which are disallowed fall under sect 165(c)(3). Since Ponzi losses result from a profit motive transaction (other than from a trade or business) they fall under sect 165(C)(2) and are not subject to the limitations of sect 165(h) so they are still deductible as an itemized deduction. You should also be aware of the safe harbor under Rev Proc 2009-20.

It is a gray area and depends on facts and circumstances. If the client went through a broker it would help his case. Take a look at RR 2009-9.

Not if you are going to comply with the tax code. See section 162(a)(3), Exactly.

Bare land is not deductible. Interest and property taxes are deductible.

A log which list every job in chronological order. It starts fresh on January 1 and has columns for date in, client name, extension if applicable, date out, amount billed, check box for paid, and a check box for efiled. I am a one man show so the responsibility is all mine.

Because children had a remainder interest in the property. I don't have time to search for the tables right now.

They get a share of mom's basis as I stated above. Mom received a stepped up basis when dad died. So children receive a portion of mom's basis which was stepped up on dad's date of death. Why would you go back to cost basis if mom had 100% step up?

So it sounds like dad passed away and mom received a stepped up basis (100% if community property state). Then she created life estate and house was sold while she was still alive. So children, including your client, received part of proceeds based on their interest, which should have been allocated per life expectancy tables. Since it was a completed gift, children receive a share of mom's basis. Mom's basis should be prorated in the same manner as the proceeds. So children receive a portion of stepped up basis from death of first parent in this case.

I agree with Lion. You have no idea if this taxpayer would benefit from becoming an S-Corp. Most likely not if business and personal account is intermingled.

Exactly. Winding up the business takes time.

You are correct, I said that backwards; left brain vs right brain. If he had 5 vehicles but one was strictly used as a spare when one of the other four was not in use he could continue to use SM.

Looks to me like they should be deductible, but aren't you past the three year window to amend a 2018 return?

Did you get the transcript?

I have been using ATX for about 20 years and have no reason to switch.

Your software should take care of that Pacon. With ATX you use the fixed asset module to input the actual cost data. Then it allows you to toggle back and forth between actual cost and SM on a year to year basis. Does he use all 6 at the same time? The rule states you cannot use five or more simultaneously. So for example if he had five vehicles, four used all the time but kept one as a spare he would be allowed to continue using actually expense method. Not sure what you mean here.

I am curious if any other assets are held by the LLC. Is there a business activity operated by the LLC?

This is not clear to me. Sounds like there might have been a completed gift if children were on the deed and received proceeds from the sale. Mom received step up basis but is still alive? Do you mean from husband's share?

It appears you are referring to a single member LLC. An LLC has no meaning for tax purposes, it is a creation of state law. So for tax purposes it does not make any difference if the investments are held under the client's LLC .

OP indicates parent is paid rent by insurance company.

Looks like I misunderstood. So what you are proposing is a distribution payable by a note to shareholder #4? I don't believe you can call it a distribution until the shareholder is actually paid cash.

Are you proposing a loan to shareholder # 4 and call it a distribution? A loan to SH #4 would need to be repaid, so I don't see how it could be classified as a distribution.

Then the entity has a second class of stock and not eligible for S Corp status.

To the child yes, but to the "landlord parent" it would be income.

That is why I wish there was a mandatory requirement to provide a detailed depreciation schedule with the client's copy of the tax return. I am currently trying to track one down from an independent preparer that has seemed to have vanished.

Under the circumstances, it is worth a shot to seek abatement of penalties.