DANRVAN

They have filed 1120-S for 2023? Were they SMLLC that became S-Corps?

She need to talk to an attorney to answer that, my guess is the IRS could seize any property that was separately or jointly owned by deceased spouse. How much balance due are you talking about?

Have you considered filing 1040-X as MFJ to decrease the overall tax liability? Was there any tax savings by filing MFS?

per ATX: Business Returns: Business returns are not affected by this schedule as IRS has not yet announced the business cutover schedule and will do so at a later time.

per ATX: In order to allow the states ample time for processing these returns, the Wolters Kluwer E-File Center (EFC) will stop accepting individual returns (both federal and state) for the current processing year on Saturday, November 30th at 10:00 pm Eastern Time. 1040 E-file submissions for Tax Years 2021, 2022 and 2023 are included in this change. Because not all state agencies process returns in “real-time”, this schedule should allow sufficient time for agencies to post their acknowledgements for the WK EFC to pick up. After the shutdown occurs, the WK EFC will not accept individual returns (federal and/or state) until IRS comes back online in early January 2025. However, preparers can continue picking up acknowledgements through mid-December.

Actually it sounds to me like there is a much clearer picture after mom's death. As I understood OP, the question was whether mom received a step up basis upon death of daughter; or if she retained her pre-gifting basis due to a life estate and a gift that was bequeathed back to her. That is now a moot point since either way mom had ownership at the time of her death and therefore her estate gets a step up in basis.

As I read it, he not inheriting anything at this point in time. The house will be sold on the behalf of mom who is still alive, possibly the funds will be used for her long term care. If the court allows reimbursement for his time, I question as to whether the activity would rise to the level of a trade or business subject to SE tax.

This is an unusual situation. Usually an implied life estate is used to establish a stepped up basis when the house is sold after the death of the transferor. But in this case the transferee died first and the house reverted to mom. So as I see it, there is a question as to whether the life estate terminated between the time mom went into nursing care in 2020 and death of daughter in April of 2021? Otherwise there is no step up in basis.

The facts here indicate an implied life estate, as held by case law. Also in RR 78-409, IRS held that an implied life estate existed even though adult son and DIL were given title and resided in the house along with decedent. The authority comes from sec 2036(a). But not if she held a life estate. Even though she went into a nursing home she might still have an implied life estate to the house with the right to come back and live in it.

I meant to say the amount of QBI allocable to the amount in box 7. If the farmer paid zero wages there is zero QBI reduction.

That is correct. The only input needed is for the amount in box 7 of the 1099 to calculate any reduction in the QBI deduction per sec 199A(b)(7). The entry is made on the "activities" tab for form 8995 in ATX. Input the amount from box 7 in the second column from the right titled "payments from coop.." In the last column you enter any wages that were paid by the taxpayer which are allocable to the amount in box 7. The entries will flow to 8995A schedule D to calculate the 199A(b)(7) reduction, if any. That would be double dipping!

You can refer your client to RP 2019-46. section 4.03 which list the separately stated items that can be deducted in addition to SMR, including parking fees, tolls and interest.

Was asking out of curiosity, no it does not make it deductible. No different than if company required hi octane gas and premium tires.

Geeze, I can't even take a coffee break without getting a notification! SMR specifically covers car insurance. Tax deductions are only allowed by legislative grace, I don't know of any exception to the rule in this case. Is it required? Does it cover anything that normal car insurance would not?

The allocation method should be in the stock purchase agreement. His team should insist on a 1377(a)(2)election as part of the agreement, otherwise he is at the mercy of the buyers come tax time. But that is not a concern of yours.

I believe buyers would have to form a corp to buy the existing corp and elect sect 388. It is up to the seller's advisors to consult him on this matter.

In order to elect an interim closing of the books under IRC 1377(a)(2) all affected shareholders must agree. Otherwise the pro rata method is used.

Are you talking about loan fees, which are amortized over the life of the loan, or actual closing cost? If we are talking about actual closing cost, I am not aware of any that would be allowed on E but not A (if that is what you are saying). Nondeductible closing cost are capitalized and become part of basis to the property. IRS seems to agree per https://www.irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals/rental-expenses/rental-expenses : "Question I purchased a rental property last year. What closing costs can I deduct? Answer Generally, deductible closing costs are those for interest, certain mortgage points and deductible real estate taxes. Many other settlement fees and closing costs for buying the property become additions to your basis in the property and part of your depreciation deduction, including: Abstract fees Charges for installing utility services Legal fees Recording fees Surveys Transfer taxes Title insurance Any amounts the seller owes that you agree to pay (such as back taxes or interest, recording or mortgage fees, sales commissions and charges for improvements or repairs)."

Deductible closing cost include: prepaid interest, points, property tax, origination fees, and mortgage insurance premiums. Otherwise they are capitalized.

OP asked how the fmv of the equipment is accounted for. If he is unable to repo the equipment the defaulted note is treated as bad debt.

You do not amend the 2021 return. You report it as a separate transaction where a portion of the note was given up in exchange for the equipment. You need to know two things; the FMV of the equipment and the basis of the portion of the note that was wrote off (including any related legal expense...etc). Since the installment method was not used you do not adjust the basis to reflect the gross profit percent. If the FMV is greater than the basis your client will have a gain on disposition of the installment note, which is ordinary income. If the basis of the note wrote off is greater than fmv of the equipment the loss is a bad debt (business) since the entire gain was recognized in the year of sale. The basis of the repossessed equipment is the fmv. The rules are different for real estate. So gain or loss was determined on the liquidation of the S-corp and the note receivable was transferred to the shareholder?

I knew a SMLLC could be a Sub S shareholder but never imagined, or heard of a corp owning a SMLLC. Maybe there is a legal purpose, but for tax and accounting I don't see any advantage since it goes back the the owner's tax return.

Please post a source, I don't think I have ever seen this before?

A SMLLC owned by a Sub S? I don't think it works that way; a disregarded entity owned by a corporation?

and the concept of a pass through entity vs a fully taxable one.