DANRVAN

I believe in that case higher AGI parent can allow lower AGI parent to claim the credit. See example 8 on page 16 of 2020 PUB 501. Going back to OP, "she" will payback advance CTC since she is not claiming the child. He will receive the full CTC. Where is the double dipping? Looks like a breakeven between the two of them.

So you are saying she received the advanced payments in 2021 but will not claim CTC for 2021? In that case won't she have to repay the 1,800, or am I missing something.

The exception was on the chopping block of the original Trump House tax proposal. Also the $1 million capital gain ceiling Biden proposed would have hit Springsteen with $499 million taxed as ordinary income. A never ending saga!

There is a special rule for musical works under sec 1221(b)(3) that allows for an election of capital gains treatment. The election process is spelled out in reg 1.1221-3. The special rule came about from the lobbying efforts of song writers and was wrote into law under TIPRA of 2005. They didn't think it was fair to pay ordinary tax rates while an investor could purchase their works and resale as capital gains. Probably already deducted since writers, artist and photographers are exempt from capitalization under sec 263(h). by capitalized cost, if any.

Best wishes to everyone here in the New Year, I look forward to a fresh start!

That is not correct, the max in that situation is $1,502 for 2021. That requirement has not changed. Only if they are self employed. Wages are also earned income. Optimum level runs way above the >$400 filing requirement for SE income so not sure what your point is. See the 2021 eitc chart for details.

Basically you file F if you are in the business of growing crops or raising livestock. You file 4835 to report income and expenses when your land is leased to a tenant on a % basis. If you lease your farmland on a cash basis you report your income and expense on schedule E. It is possible for a taxpayer to report on a combination of these. I can't see any reason in your example to report on F and subject his earnings to Self Employment Tax.

Peace on Earth and Good Will to all Ye on this forum!

There is a donate button on top of the ATX community screen.

He is partly right. 80% of stock must be acquired for a tax free transfer of property, but there is no requirement to hold 80% of the corporate value. I didn't not catch that on my first reply.

But how can you seriously ask if taking out a loan is going to increase taxable income? As Lion explained it has no effect on profit and loss. Accounting 101.

I am curious as to where you saw that phrase.

My intent is not to criticize, but it appears you are not willing to educate yourself before you jump into a specialized area of tax practice. It is obvious you are unaware of some important issues that you would learn in a basic course, so what else are you missing or going to overlook in this engagement? Sometimes being the best you can be means you tell your client you are not experienced in a particular area and refer them to someone who is.

That got to bugging me. For control purposed of section 351, there is reference to section 368(c) which basically defines control as possessing 80% of all classes of stock. That might apply to certain corporate reorganizations, but not to a a 351 transfer that I am aware of.

Estate tax preparation 101. Actually that should read 12 months or less for the initial return. And you are preparing the 1041 with out basic knowledge. To be straight forward, that is an ethical violation.

Lately it has been great. I call after 6 pm Pacific time and they have picked right up in the last two weeks.

I had a similar experience with a C-Corp. which cashed the check and wrote a makeup check for the estimated payment. As expected an IRS letter come with an estimated tax penalty. I made a call to the TP hotline and was able to waive the estimated tax penalty due to the circumstances.

Not that I know of. It is a standard procedure to prevent a cp 2000 while preparing an accurate tax return. Sounds like he receiving a crop share so the payments would go on 4835.

That means that in order for section 351 to apply, 80% of the stock and 80% of the value of the corporation must be held by the controlling group immediately after the transfer occurs. Otherwise the transfer of property is considered a disposal under section 1001.

Your post deals with some 1041 / estate issues that would be covered in a basic course, so hope you are asking out of curiosity. As far as that goes, your K-1 question would also apply to a partnership or S-Corp on a fiscal year. An estate can elect a fiscal year including an initial short year. A short year can be powerful planning tool to defer income or offset with expenses. So in your example assume the estate elected a full 12 month fiscal year on the initial tax return. Since the year started in 2021, you report on a 2021 form 1041. The K-1'S will also be reported on 2021 forms, however they will show the year beginning in 2021 and ending in 2022. The beneficiaries will report their share of income on their 2022 tax returns since the year end of the estate falls in that time frame. I am sure you can find your answer in the 1041 instructions. Also 1065 should have similar instructions in regards to fiscal year K-1's.

It is supposed to be subtracted on line 1(b) of SE.

That method will result in the correct amount of income reported on either schedule. Another method is to put the negative number under other deductions on Schedule F. However that would overstate the amount of gross farm income which might be used for other purposes on the tax return. Depending on the client, I would probably inform them of a possible CP 2000 and see how it matches up out of curiosity.

The IRS has taken the position that all CRP is subject to SE tax (except for taxpayers who also receive SS income). However, there is some case law that rules in the favor of non active farmers, specifically Morehouse in the 8th circuit. For active farmers, case law, including Wuebker, has held that for active farmers CPR payments are subject to SE tax. The 2008 farm bill brought into law the provision that any taxpayer who receives social security in not subject to SE tax on their CRP payments. So for non-active farmers there is some gray area which the IRS will challenge.

Sounds like your client is reporting on both 4835 and F and your concern is a CP 2000. I don't know if the IRS system will net and match the amounts from both 4835 and F to the 1099-G. To be safe, you can enter the full amount on line 3 of F and then back out the amount which is reported on line 3 of form 4835. Or, if your client is at low risk for heart failure, you can reported the exact amounts on each form, inform you client of a potential IRS letter and see what happens.

It depends on fact and circumstances. For instance if the replacement property consisted of multiple units, there could be a partial disposition with the conversion to personal use. On the other hand, if this is a commercial building rented out for high dollars, constructing personal living quarters might have minimal tax consequences with the continued use of the rental portion. If the garaged is converted to personal use then 1031 is probably shot to pieces.