DANRVAN

I think you are on the right track David. I have not dealt with ROBS but believe the 401k is considered a trust type of entity.

See Rev. Proc. 2018-40, if client has less than $25 million in gross receipts your cohort is correct.

TCJA changed that for "small business" with tax years beginning after 12/31/17. It is now an auto change for qualified tax payers.

1120 is required for any taxable year whether there are income and expenses or not. That should be spelled out in 1120 instructions.

Compensation for 401k is broadly defined in reg 1.414(s)-1. There is a lot of flexibility and also safe harbor rules. As others have mentioned, you need to read the plan for details.

Sounds like you are on the right track. Surviving spouse has a two part basis in the assets: 1/2 of original basis less accum depr. and 1/2 fmv on date of death. In the case of building #3, it is reported by surviving spouse on the final joint return. Surviving spouse basis will be $174,000 ($9,000 + 165,000) with accum. depreciation of $9,000 + amount allowable on $165,000 from date of death to date of sale.

You might be thinking of losses from sale of "personal use assets" not allowed. However gain is reported. Basis is usually higher than fmv in most cases so there is no gain.

Like many tax issues, it depends on the facts and circumstances. The concern is whether the income is capital or ordinary. What exactly is the client selling? if he/she is selling a future stream of income, based on present value calculations, it is ordinary income under the "substitute-for-ordinary income doctrine." The courts have applied that doctrine to the sale of rights to lottery winnings. If on the other hand, the taxpayer is selling a perpetual easement with exclusive rights to the land the tower sits on, that is the sale of a capital asset.

But notice it is taxed at ordinary rates. However, it does offset capital losses so it is a hybrid of sorts. Capital gain taxed at maximum ordinary rate of 25%.

They allowed some of the loss? Then sounds like IRS decided he was in the business of farming, but disallowed some of the deductions as not ordinary or necessary; or as unsubstantiated. Disregard my reference to Schedule A above if he was allowed to report a loss.

Meant to say F instead of C.

was that allowed on Schedule A or C?

It is ordinary income subject to max of 25%

And Happy Thanksgiving to you Elrod, and to to everyone on the board! We have a wild herd of those hanging around our barn, you are welcome to one.

And Happy Thanksgiving to you Bill. Thanks for the invite!

I am not following you Pacun. As previously posted, a sibling does not have to be younger than taxpayer's spouse per section 152(c)3(A) to be a Qualified child. Also, if twin #1 was born before midnight and #2 after midnight, then Rev. Rul. 2003-72, 2003-2 CB 346, 07/19/2003, IRC Sec(s). 21 indicates twin #2 is in fact younger than twin #1 for EIC purposes. Even if they were born before and after midnight in the same year, you can make the argument that twin #1 will always be one day older per the revenue ruling.

Judy, there are so many health insurance issues stuffed into the tax code it is easy to see how someone could get it crossed over. Not for me, I come from a line of cattle ranchers on both sides, I can smell the prime rib already!

Judy I think you have some references crossed. Section 35 pertains to HCTC while section 162(l)(1) covers SEHI.

But then you still have the question as to whether twin #2 is considered to be younger than twin #1 by the IRS. As mentioned above, they might be the same age per Rev. Rul. 2003-72, 2003-2 CB 346, 07/19/2003, IRC Sec(s). 21 If they were born before and after midnight you would have a definite answer.

Rita, at first I agreed with you but then had second thoughts. The link you referred to is not consistent with other sources. From pub 501: "Child must be younger than you or your spouse........... However, if you are married filing jointly, the child must be younger than you or your spouse but doesn't have to be younger than both of you." That is also consistent with section 152(c)3(A) and the language in the 2008 Adoption Act which set forth the age restriction. It looks like they can.

Retract that, can't be the same age, dependent has to be younger. Also it appears for EIC that if born on the same day they might be considered the same age if born on the same date: ***************************************** Rev. Rul. 2003-72, 2003-2 CB 346, 07/19/2003, IRC Sec(s). 21 Earned income credit—point of attaining given age. Headnote: For purposes of various IRC provisions, IRS concluded that child attains given age on anniversary of date that child was born.

So disregarding age of spouse vs brother, you are asking if younger twin can be Q-child of the older twin since he was born later? I think so. But how about if it was the other way around? I think there is an argument that they are the same age and therefore twin #1 is not older than twin #2, but I don't have anything to back it up, just off the top of my head.

I agree with that, the court analyzed both the favorable and unfavorable factors in reaching a decision on the profit motive as it has in other cases. However, somewhere in the past I recall this case referred to as a model for beating the IRS, which it is not. While there were some other favorable factors (and some unfavorable, like less than desirable records and lack of a separate bank account) the pivotal factor in the case was the abandonment of the activity.

One of the key factors in that case was that the taxpayer abandoned the activity because it was not profitable, the tax courts have a history of recognizing that as a factor in determining whether or not the taxpayer was engaged in an activity for profit. That was also a factor in Engdahl (retired doctor raising and showing horses), Canale (motorcycle racing) and Morrissey (bank exec, weekend drag racing). Morrissey actually argued his own case and won. So in order to use these as model cases, the taxpayer needs to quit the activity due to lack of profit.

Those are the black and white cases with a lot of gray in between.