DANRVAN

Sounds like that was his principal place of business; and he did not conduct substantial admin or management duties from the 2nd location. If that is the case he can also deduct travel to second place of business.

And you are claiming on 3115 code 107.

Never too late to file but penalties and interest will apply.

1250 is sort of a hybrid, taxed at a maximum capital gain rate of 25%, thanks to the strong lobby arm of the real estate industry. The recapture should show up near the bottom of the tax worksheet for Schedule D.

I have seen a few.

The penalty is calculated on the date the liability is reported on 941 vs the date of the deposit. Since they are semi weekly, a Wednesday payroll liability is due the same day as a Friday payroll, which is the following Wednesday, so that won't make any difference. You need a copy of schedule B to figure out what is going on.

Report sales price = basis ?

I misunderstood and picked up in the thread that you had decided to call it an investment and a capital loss. I don't think there is a method or any reason to report a nondeductible loss on the K-1; or for that matter on the 1041

Not at all, that is a common misunderstanding. As Tax Guy Bill pointed out, 3115 is used to change from an impermissible accounting method to a permissible accounting method. Failure to claim any depreciation on an asset is an impermissible method, so form 3115 is filed to claim allowed or allowable depreciation under a permissible accounting method. Corrections due to calculations, posting or math errors are not accounting method changes and cannot be fixed on form 3115. So for example if an incorrect placed in service date was used, that mistake could not be fixed on 3115. I believe that rule has changed, but only applied to corrections made to change from an impermissible method to a permissible method as Bill pointed out. Previously, I think the impermissible method had to be used for two consecutive years in order to make the correction on 3115, otherwise the correction went on 1040X.

except for year of termination

Agree, GP is more equitable.

I question that. The tax attributes of deceased spouse do not carry over to surviving spouse. For example capital losses and NOL attributable to deceased spouse can not be claimed by surviving spouse after the final joint return for year of death has been filed. If business or rental property is solely owned by deceased spouse, then surviving spouse gets a full step up in basis. Furthermore, at the time of transfer, the property has zero adjustments for tax attributes, it does not retain it's character for recapture. If surviving spouse elects to file a joint return, then the only income and expenses reported by deceased spouse would be those incurred up to his date of death. Therefore the sale of the property after DOD is 100% attributable to surviving spouse (under the scenario above) and offset by her basis which does not retain the recapture attributed to the holding period of her husband.

Take care Bonnie and hope you get to feeling better soon.

retracted my post for further review.

Looks like you have a 1/2 step up basis to start with. Sounds like a prior tax preparer was involved, can you contact them for any additional information they might have? As cbslee mentioned, the county should have information on the original purchase price and likely a valuation of the land vs structures.

Judy thank you for all the time and effort you put into moderating this forum and keeping us in line!

I hope and pray a speedy recovery for both of you.

To determine basis of timber you need to know: -estimated age of timber sold -volume sold -growth rate for the species -price per mfb date of acquisition. You then work backwards to determine the volume and mill price at date of acquisition. There lies the basis of the timber sold which you subtract from the land basis. Another CPA I know uses the "Look Up" method. That is where you look up at the ceiling and pull out a number. That is evident from some of his work I have followed. A timber cruise or appraisal will estimate the value of the standing timber at a given time; but it won't tell you the basis of the timber that was loaded on a truck and hauled to the mill. A timber consultant or forester involved in the sale can be a great resource. Also need to consider the cost vs potential tax benefit.

Clearly meets the rules for penalty waiver and three year reporting.

For a self-employed person there are two routes available by sec 2202 and Notice 2020-50 as reflected by the instructions to 8915-E. First if your business was closed or your hours were reduced due to covid. That does not appear to be your case. Secondly if your self employment income was reduced. Your gross income was not reduced, but did the extra cleaning cost reduce your SE income and caused you to experience adverse financial consequences?

There was no extension by either CCA-21 or ARPA-21.

Yes for your wife if she was laid off or had reduced hours due to pandemic. Yes you experienced adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to covid; and there is no set dollar amount in sec 2202 or Notice 2020-50 that I can see. But in the case of the original post there is a narrow gate to pass through since he was laid of before the pandemic hit, and does not meet any of the criteria of sec 2202 or Notice 2020-50 in his inability to find a new job.

Agree, a lot of crazy and unfair stuff, but I don't get to decide tax benefits based on that.

You might have a case that you lost some self-employment income, which is a factor stated in sect. 2202, but can you consider $60 an adverse financial consequence?

I wouldn't either, but after exhausting any possible tax benefit allowable by the law I would have so say sorry you don't qualify.