DANRVAN

I caught that part Lion EA. My question is what are the plans for the garage. Is this a commercial garage like a repair shop? Is there other replacement property other than a garage?

What are his plans for the garage?

So B also wants property, then they need to look at a 1031 followed by a corp split. The exchange is completed before the split and two separate replacement properties are picked out by the respective shareholders. The replacement properties are valued in proportion to each shareholders interest. After the split each shareholder owns 100% of their respective company which holds their property. That is a simplified explanation, you will need to do more research to determine if that is right path for your clients.

Would that be an actual distribution of cash, or would it be a redemption of B's stock so A becomes 100% shareholder? There could be a cash flow concern with making the payments. The shares of B could also be sold to A on an installment. It is not clear here what the objectives are. Is the idea to get shareholder B out?

You might be surprised on how that would work out. Say for example the only asset of the corp was bare land in a prime location, basis of 100,000 and fmv of 200,000, clear title. So B's stock value of 25% = 50,000. First option is for A to buy B's stock for 50,000 out right if he has the cash, either before or after 1031 transaction with zero boot received. If he does not have the cash, the property can be sold through a partial 1031 and 50,000 of cash received, which is used to redeem B's stock. Then a gain of $50,00 is recognized. A's 75% share of the gain is 37,500. Assume the gain is taxed at 15% federal and 10% state for a total of $9,375. So now instead of spending 50,000 to become 100% owner of corp worth $200,000, he has paid $9,375 in taxes to to become 100% owner of a corp worth $150,000. A third option is to complete the 1031 in whole, then borrow 50,000 against the replacement property at the corporate level. The $50,00 is then used to redeem the 25% stock owned by B. In that scenario A has not spent any money personally to become 100% owner in a corp worth $150,000, including a note payable of $50,000. Also, "A" does not incur a tax bill under that option. Hope I am not overlooking anything here, but if you run the numbers for your client he or she will have some solid footing to make a decision.

If shareholder A is 75% and wishes to "own" 100% of the property as sole shareholder he will have to pay a price one way or another. So his choices are basically to buy out the shares of B or pay tax on his share of the gain if proceeds from the sale are not fully invested in replacement property. Gain is recognized at that point and allocated to the shareholders since less than 100% of the proceeds were reinvested. Then the cash from the sale is used to redeem the stock of B and A becomes 100% shareholder. That would involve a corporate reorganization coordinated with the 1031 where each shareholder ends up with a separate company; which in turn hold their separate replacement properties. Does not sound like the direction your client wants to go.

There are not any specific rules for that. You just follow code 1031 and apply it to the entity level which is the corporation. Then you follow the rules for shareholders. Your client has the advantage of owning 75%, so that puts him in the drivers seat.

I don't see why. As long as the property remains in the s-corp after the 1031 there is no gain recognized. Your client can buy out 25% shareholder either before or after, but replacement property must remain in the corp.

And Merry Christmas to you Eric, thank you for all you do!

Thank you for the reminder Lee!

I have paper filed a few this year with form 1310 and they received refunds in a reasonable amount of time Well, he would probably be glad to receive a much larger refund; wait time included. ( I know I would). Thank you for your comments!

I don't see any tax ramifications in your situation. Sounds like you reimbursed your kinfolk for travel and lodging; maybe threw in some extra to express your gratitude for helping you out. They in return gifted you the pot pie for what ever reason. Unless I am overlooking something I say forget it. Glad you made it back to the forum!

I had not heard of or thought of doing that. However, this is for a deceased taxpayer with a small refund due and PR probably does not care to write a check to find out. I will keep that in mind for the future, thank you for the tip Catherine!

The credit is available in the year the system is placed in service per sec 48(a)(1). However, the percentage of the credit depends on the date construction began and the date placed in service, see Notice 2018-59. There is a safe harbor for determining the date construction began which is also explained in Notice 2018-59.

Thank you for your replies. So a paper return is shall be.

Does anyone know how far back we can e-file personal returns with ATX when the system opens back up in 2022? I have a 2018 that just came in.

I knew that was what you meant!

and sales of public traded stock is prohibited per section 453(k)(2).

That appears to be a redemption that would be treated as an exchange under sec 302(b). If it is treated as an exchange, it can be reported under the installment method. Once you get to that point, you follow the installment sale rules such as related party sales and nondealer rules of section 453A.

Not for 2021. It appears Section 9661 of ARPA 2021 eliminates the 400% FPL repayment cliff and replaces it with a max. repayment of 8.5% of household income for 2021 and 2022.

For the energy credit the reduction is 50% of the credit, per sec 50(c)(3).

The solar panels qualify because they are property for which depreciation is allowable; provided they meet the rest of the criteria for qualified property per sec 48(a)(3). The reference to allowable depreciation distinguishes it from the residential energy credit under code sec. 25(D).

Hate to drag this on, but then why leave it blank and withhold the information requested by the IRS? Here is a second "opinion" per https://www.thetaxadviser.com/issues/2013/dec/casestudy-dec2013.html "......the effective date of the S election could be entered."

I have to disagree, otherwise why would they ask the questions? My interpretation is the IRS wants to know when the entity was incorporated and in what state. In the OP, the incorporation date is the same as the effective S-CORP election date, that will match the incorporation date on 1120-S. And possibly receive a rejection or request for additional information? Have you filed one that way before?

Date of incorporation that will show on 1120-S.