Kea

Yes, I am trying to look out for my client rather than the nation of taxpayers. I want my clients to pay the least tax they can legally - I thought that's what we were all trying to do? Which brings me to the last part of the story. The $22K repaid to Medicaid when house was sold was a medical expense, but can it be deducted anywhere? Parents can't deduct it - they died a year before the money was paid. Clients can't take the deduction since parents aren't their dependents. I guess it would go on an estate return, but there is no income, so no estate return. I guess you and I and the rest of the taxpayers won't have to pay the "tax savings" on the medical deduction. Thanks for everyone's help.

I tend to lean towards putting it on the client's return, also. But there could be a gain (see my other post "basis of house"). An appraisal was done for significantly less than what the house sold for a short time later. That implies to me that it was a bad appraisal. Since the house sold within a year of date of death, I agree the gain should be small to non-existent. Especially in today's real estate market.

Client moved into nursing home in early 2007. At that time the county tax rolls valued his house at $40K. Medicaid put lien against house to reimburse expenses Medicaid paid to nursing home. Family did not feel the house was worth that much and hired an appraiser in Feb 2008. Appraiser valued house at $22K and Medicaid agreed to this value. Client died in Nov 2007. In October of 2008 the people living next door to that house offered to buy it for the amount on the county tax rolls ($40K). (In the meantime the family did make some repairs to the house, but not of a significant value.) Normally, I would use the appraiser's value as the basis of the house and then add the costs of the repairs. However, the FMV is what a willing buyer will pay a willing seller. Since (a few months later) the buyer offered to pay the county appraisal that seems to better fit the definition. In 2008, the value did not double over a few months. Not when most properties were decreasing in value. In this scenario, does it make sense to disregard the appraiser's estimate? I don't think the fact that Medicaid accepted the lower appraisal is a factor in determining the basis. Thanks

I don't know for sure, but I seriously doubt it. I don't think these parents would have known to do that. It was a simple estate with only a house and car.

My client is the sole heir of his late parents' house. The deed never transferred to his name, which implies that the house was sold by the estate and goes on Form 1041. However, the 1099-S was issued in client's name and social. Does this mean I should report it on the client's return? (Parents both passed away in 2007 and had not been required to file a tax return for the last several years. The only transactions after they passed away were payment of medical bills and sale of house.) Thanks

I wondered if it was a typo, so I tried 560 as well as 590 and didn't get very far. Estate tax publication is more relevant, but the estate tax limit is high enough that I don't have to worry about that aspect.

RCooper - Thanks so much. I'm printing pub 559 right now -- it looks very helpful. I'm not sure I'll need the 590, though. I don't think I'll have to worry about IRAs. Taxbilly - you snuck your post in while I was replying to RCooper. Yes, I am a member of NATP. Were you referring to "New Estates, Gifts and Trusts," or a different one? Thanks

I may have to do an estate 1041 for a client this year. I've only done one previously and it was very basic. (My uncle had about $800 in interest after he passed before everything transferred to my father.) This new one should be fairly simple, but perhaps a bit more complex than my previous one. The main reason I'm interested in doing this is to learn more about the 1041 before I do the one for my father next year. His will be much more complex, but I will have the rest of the year to learn more about it. I've been reading the instructions for the 1041, but was wondering if there was a good overall reference. Maybe something like the Pub 17 for 1040s? I have a business Quickfinders from a few years ago when I thought I might expand my business to include partnerships, but I never did that. I'm looking for a good, basic overview. Any advice is appreciated. Thanks

Silly me, then. I figured that showing the $10,000 loss on Schedule D would be enough to show IRS where the carryforward loss came from! But if it makes IRS happy to see it on the 1040, I'm OK with that. I'm just going to make sure that whatever software I use next year carries over the entire amount. (Granted, I would do that anyway.) Thanks so much.

I have a similar situation. I am using TaxWise, but was able to find the carryforward worksheet. It looks like it is calculating correctly to carryforward the entire loss. But the $3000 loss is still showing on line 13 of the 1040. Is that correct? Or, should line 13 be $0 since it will all be carried to 2009? Thanks

My sympathies as well. At least you can be at peace that she got to be with her family in the last week.

They are not in the business of recruiting their friends. I would put it on line 21 with no SE tax. I would treat the same was as a car salesman's "spiff."

True! But that goes to the client, not the IRS. Or, can I send that to IRS? It's a much smaller amount than the NOL refund!

Now that IRS has posted the new 2008 Form 1045 and instructions, I hope I can wrap this up soon. (I'm not going to wait for TaxWise to update since I probably won't be able to add it to my existing e-filed return. I e-filed the 1040 on 2/18/09 without specifying any elections. Just to make sure I'm reading the instructions correctly: I do not need to file an amendment to make the election to carry back 5 years. All I need to do is write across the top of Form 1045: "2008 NOL Carryback Election Pursuant to Rev. Proc. 2009-19." Since they had capital gains from mutual funds, I need to attach the tax calculation worksheet and state on the front of the 1045 CG (capital gains) worksheet. The original 2008 return had the following forms: Form 1040, page 1 & 2 Sch A Sch E (for the LLC that had the loss) Form 4797 As I understand it, I don't have to submit Sch E or Form 4797 with the 1045. Will it hurt to just submit the whole return? I will add to it: Form 1045 Schedule A (I don't remember if that got sent with the original return or not) Form 6251 the 2 K-1s. For 2003, the instructions imply that I only need to submit "new" Form 6251 and Form 8880. I plan to also submit: Form 1040, pages 1 & 2 Sch A (even though there are no changes) I don't plan to send the Sch C or SE Is that it?

You can go to the reports menu and pick "Acknowledgements." You still have to do that for each e-mail but it's a little faster. Anybody know a better way?

Catherine, I hope your Aunt Mary makes a fast, complete recovery. I know she appreciates your visits.

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Thanks David. It's nice to see IRS will have their version soon. However, even when TRX has their update, I doubt it will update in the return I've already e-filed. Do you know if you can duplicate a return in TRX? Can I even add a 2nd return with the same SSN? Thanks.

Aren't IRAs and 401(k)s considered separate property even in community property states? I'm not sure where I think I heard or read this - it's just one of those random pieces of info floating around the back of my head. (I really need to get in there and clean that out.)

I haven't filed a MA return for him (and don't plan to, if not necessary). He told me he received a letter from them reminding him to get MA insurance. He didn't specify a form #. He was already planning to call them to get that cleared up. Thanks!

My client has an NOL for 2008. The best year to carry it back to is 2003. I filed the tax return 2/18/09. The 1045 only lets me carryback to 2006. Can I do a 5 year carryback in TaxWise or do I need to print a blank form from TRX or IRS? The IRS website only goes up to the 2007 NOL. Thanks

Not to be too picky, but I checked out this link for an NOL I need to complete. The revision is 2/28 but 2008.

Thanks Catherine, I'll pass all these suggestions on to him. But for now, we sit tight and hope MA doesn't send any letters? He did mention that he got the insurance letter from them. When he explains to them why he no longer needs MA insurance, might that help take care of any potential state tax issues?

He said he can easily change the addresses. He lived and worked in TX for all of 2008. Is there anything else he should do / documentation to keep to prevent MA from taxing him? Thanks

New client moved to TX in 2007, but still has Mom's MA address on bank and brokerage statements. MA wouldn't consider these as MA sourced income, would they? I just want to verify that I don't need an MA non-resident return. Thanks.