peggysioux5

Based on the information that TexTaxToo posted, it sounds like being the wife took no distribution in 2024 and she is the sole beneficiary then the IRA is now deemed to be her IRA.....doesn't she need to update the IRA into her name and social?

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New client’s husband passed away in September of 2023. Wife did nothing with the IRA account after husband’s passing and the account is still listed under husband’s social security number in March of 2025. She provided a statement for 2024 showing he should have taken RMD in 2024 and did not (I know, he passed away so difficult to take the RMD…..). If taxpayer (the wife who was 65 in 2024 so no RMD requirement for her at this point) now contacts the financial institution to roll over the decedent's IRA into her IRA, is there an RMD requirement for 2024 by her as beneficiary in 2024? Peggy Sioux

I found the following information in a Spidell article: DOMICILE FOR NONRESIDENT SPOUSE An interesting problem can develop for couples when one spouse is domiciled in California and the other spouse is a resident of and domiciled in another state. The nonresident spouse would presumably have California-source income because one-half of the California-source income of the resident would be attributed to the nonresident spouse. In this situation, the couple must file a joint return because the nonresident spouse would have California-source income. My question is "Why is it that the couple is required to file as MFJ and not be able to file as MFS for both federal and CA?" My situation is that one spouse is a resident and domiciled in CA and the other spouse is resident and domiciled in HI. One spouse does not want to file jointly for either federal or state due to liability issues of the other spouse.

Spoke with the taxpayer and he has no deferred compensation plan; the issuer of the 1099 Misc made an error as Tom suggested in his post.

Taxpayer received a 1099-MISC showing a figure in box 10 (gross proceeds paid to an attorney) of $480. Box 15, nonqualified deferred compensation shows an amount of $1610. IRS states: Box 15. Nonqualified Deferred Compensation Enter all amounts deferred (including earnings on amounts deferred) that are includible in income under section 409A because the NQDC plan fails to satisfy the requirements of section 409A. Do not include amounts properly reported on a Form 1099-MISC, corrected Form 1099-MISC, Form W-2, or Form W-2c for a prior year. Also, do not include amounts that are considered to be subject to a substantial risk of forfeiture for purposes of section 409A. For additional information, see Regulations sections 1.409A-1 through 1.409A-6; Notice 2008-113, available at IRS.gov/irb/2008-51_IRB#NOT-2008-113; Notice 2008-115; Notice 2010-6, available at IRS.gov/irb/2010-03_IRB#NOT-2010-6; and Notice 2010-80, available at IRS.gov/irb/2010-51_IRB#NOT-2010-80. I have never come across a 1099-MISC with an entry in box 15. In my research, I read that the amount should be included in income and there is a substantial penalty that goes along with the amount in box 15; however, I see nothing in in my tax software that references the penalty that applies to 409A. Any help would be greatly appreciated. Would the amount in box 15 be considered self-employment income?? What is the penalty percentage?? Taxpayer only included the figure in box 10 as income. Peggy Sioux

New S-Corp client, shareholders are husband and wife, took a cruise in 2024 to review S-Corp and yearly minutes for S-Corp. I realize the cruise would not be considered a normal and necessary business expense. Should the expense be considered non-deductible expense or a fringe benefit to employees/shareholders and added as wages?

Did you try a different web browser? IRIS seems to work better for me when I use Firefox, and does not work well with Edge.

The taxpayer consulted an attorney, but I do not know how experienced the attorney is....I have asked that the taxpayer forward the actual Domestic Relations Order so I can read the details of the Order. I currently have two summary letters from the attorney. Thank you all for your input and information.

Thank you for the information. I used the spelling of the election that the attorney letter provided. Go figure that the attorney had the spelling incorrect!!

If the taxpayer had retired, then the benefit payments to the ex-spouse would be paid from plan; however, being taxpayer has chosen to continue to work, he has to pay the ex-spouse the monthly Civil Service Retirement System benefits that is due her out of pocket. Seems unfair that taxpayer pays ex-spouse retirement benefits but not able to deduct the amount that he is required to pay by the courts. Hoping a tax professional is familiar with the Gilmore Election and how to handle the taxation of the result of electing the Gilmore Election. Thank you.

I have a client who works for the government that divorced back in 1995. Client is 71 and still working. Ex-spouse hired an attorney several years ago regarding her eligibility to receive client’s retirement benefits and was told at that time that until client retired, she could not receive the benefits. Ex-spouse hired another attorney in 2024 regarding her eligibility to receive client’s retirement benefits and being client is still working and not receiving retirement benefits, ex-spouse is eligible to receive retirement benefits based on the Gilmore Election. My client will now have to directly pay ex-spouse her community property interest for the amount she should be receiving if client had retired. My question is the taxation of the funds that the client is paying the ex-spouse. The notice clearly states the payments are not considered alimony. Is there a way to deduct the payments made to ex-spouse?

If CA LLC taxed as partnership wants to dissolve LLC, with business continuing after dissolution, is a new Federal EIN and CA payroll tax account # required? Taxpayer (owner of business) submitted dissolution paperwork to CA for LLC, but continued using existing federal EIN # and CA payroll tax account #’s. Taxpayer states he has confirmation of dissolution from CA; however, CA has notified business that business owes for several years of LLC tax (taxes for years after dissolution.) Would CA consider LLC not dissolved if business continues even if dissolution papers filed?

I completed Form 1310 listing daughter of former deceased client as the person claiming refund due to deceased taxpayer as she is the trustee of revocable trust that became irrevocable upon taxpayer's death. My question is this: Taxpayer is due a refund; when setting up direct deposit of the refund, does it matter if the bank account that is listed is daughter’s or trust bank account? Being 1310 lists daughter, wanted to confirm that there would be no problem if bank account for direct deposit is a Trust bank account. Or is direct deposit not allowed due to Form 1310?

I see the March 16th thread, but unable to locate the March 1st thread. Would you be able to provide the subject line of the March 1st thread?

Taxpayers had large capital loss carryovers from previous years. Taxpayers began handling their own tax returns in 2019 and inadvertently dropped the previous years’ carryover losses. Are amended tax returns required for 2019 through 2021 to reflect the correct carry-over losses or can I just calculate the correct carry-over loss to date and reflect on 2022 tax return? The change in tax liability for the years in question are zero to very minimal with a decrease in tax liability to the taxpayers. Taxpayer is dealing with a serious health issue and would prefer not going back and amending previous years if possible. Peggy Sioux

Taxpayer was eligible for employer health insurance in 2022 but declined coverage because Covered CA coverage was less expensive and better coverage. Employer health insurance met minimum essential coverage and was affordable; however, Covered Ca insurance agent stated taxpayer was eligible for the subsidy and set up subsidy for 2022. Taxpayer stated Covered CA agent was aware that taxpayer was offered employer health insurance. How do other tax professionals handle? Do you mark within tax software that taxpayer was not eligible for credit and therefore pay back subsidy or being insurance agent deemed taxpayer was eligible, no payback of subsidy required? 8962 instructions state: "However, employer-sponsored coverage is not considered affordable if, when you or a family member enrolled in a qualified health plan, you gave accurate information about the availability of employer coverage to the Marketplace, and the Marketplace determined that you were eligible for APTC for the individual’s coverage in the qualified health plan." Taxpayer states accurate information was provided to insurance agent. Again, how do other tax professionals handle? Peggy Sioux

Another tax professional provided the following information: being the house was in an irrevocable trust at death of grantor and the step-up happened at that time (many years ago), when the first beneficiary passed away without closing out trust, there is no secondary step-up for first beneficiary's children at date of first beneficiary's passing being the home was titled to trust and asset had not been disbursed to beneficiaries. Abby, did the lawyer confirm there was a secondary step-up at beneficiary's passing?

Residence was placed in trust with two beneficiaries. Trust became irrevocable at time of grantor passing. Prior to residence being sold while still in trust (many years passed from grantor passing), one beneficiary passed away leaving his 50% to his children. Would the deceased beneficiary's children receive a step-up in basis at their father's passing of residence so that when residence did sell, original living beneficiary would have a step-up in basis based on grantor's passing several years ago, but deceased beneficiary's children would have a step-up based on father's passing? If that is the case, would the sale of the residence by the trust list the residence as two separate assets - 50% for original beneficiary with lower basis and 50% for secondary beneficiaries with basis based on father's passing?

I have a new client who is a partner in rental partnership who has a 754 election from 2016 due to the death of her husband and step-up in basis for rental. I have not dealt with Section 754 election in the past so have been researching the handling of the election. The research that I found shows a deduction on the partner's tax return should be reflected for the depreciation of the stepped-upped asset on page 2 of Schedule E. The previous tax preparer shows an amount on K-1 on line 13 with code "W". However, there is no coinciding entry on partner's individual tax return and the amount on line 13 of the K-1 is not included in line 2 of the K1. Could other tax preparers enlighten me as to why the K-1 entry from line 13 would not flow to the individual tax return? The 754 election mechanics does seem to be complex so I definitely could be missing something. The other issue that has me puzzled is that even though the 754 election applied to wife, the previous tax preparer split the 754 election amount of depreciation between both remaining partners (again neither of those entries flowed to individual tax returns). Shouldn't the full depreciation amount be reflected on wife's K1 rather than only 50%? PeggySioux

Lifetime credit is for nonbusiness energy property. My question applies to residential energy efficient property credit which is not limited to lifetime credit of $500.

IRS §25D does not state credit is limited to one time. The Taxbook shows the credit available for either the principal residence or second home. My research leads me to believe a taxpayer is able to take the credit more than once; however, I would feel more comfortable if I found something in writing stating the credit can be taken more than once. There seems to be differing views between tax preparers.

Is the residential energy efficient property credit for solar a one-time credit? If a homeowner received the credit for installing solar panels on residence and later moves and installs solar panels on new residence (if credit is still available), would taxpayer be eligible to claim credit a second time?

Taxpayer has investments in two different accounts with two different investment companies, and one account shows accounting method of FIFO and second account shows accounting method of HIFO. Can taxpayer use two different accounting methods in the same year to determine gain or loss as long as taxpayer can substantiate? PeggySioux

Taxpayer was domiciled in CA when entered the military service. Taxpayer now lives in North Carolina due to permanent change of station orders. Taxpayer owns a home in North Carolina. She has an Alaska driver license due to previous order. Taxpayer still has CA state income tax withheld. CA states “California military servicemembers who leave California under PCS orders become nonresidents of California for income tax purposes and military income is not taxable to CA.” North Carolina states “Under the Servicemembers Civil Relief Act, if you are a legal resident of another state who is stationed in North Carolina on military orders, you will not be taxed on your military pay by North Carolina. To which state, if any, is the military income taxed? Taxpayer does not keep up home in CA while in military (joined right out of high school). Taxpayer stated at some point, she might return to CA. Taxpayer stated she purchased home in North Carolina being cost of rent is about the same as purchasing home. How would other tax preparers handle? Peggy Sioux