G2R

Husband set up a revocable trust with rental property in it. He died long ago and the trust became irrevocable. Wife was the sole beneficiary & trustee. She dies last year. Property is still in trust name and a trust return for the husband's trust has been filed every year to present. Trust docs say that if wife dies, then their 2 children are the beneficiaries. Does the transition from revocable to irrevocable status eliminate the secondary beneficiaries and property is now own by the wife's estate upon her death (regardless of the deed still listing the husband's trust), or is the irrevocable trust still alive and the 2 children are now beneficiaries and should receive K-1s until the property is transferred to their names? Note: the 2 children are also the beneficiaries of the wife's estate. Given the wife's estate must include these properties in her estate tax return, it seems logical that option #1 is the answer, but the property still being in the husband's trust name is tripping me up. And if it's #2, I don't see how ATX let's me split the income to the now 3 different beneficiaries without overriding. It only allows percentages. TIA!

Thank you Catherine. I appreciate that.

Thank you @Gail in Virginia -- that makes a lot of sense.

My grandmother passed away last year. I was named the executor of her estate. Because of COVID , she wasn't able to see anyone to get her tax returns filed for 2019 to present, including a trust that she is/was the trustee. I now have to file those back years on her behalf, including the trust return. My question is, do I file them and list her name as the trustee and sign POA (of which I was at the time). Or do I list myself as the trustee since I'm now the current trustee, regardless of not being the trustee during the 2019 or 2020 years? TIA!

Yes, ATX. As in delete the form and reinstall these forms? If so, that's more daunting a task that usual given the K2 data doesn't autofill to K3 for each shareholder.

I just went to file my client's return and this new error is popping up on the Checks. I just checked this return on Friday and I don't recall seeing this error message. I really do NOT want to paper file this return. I'm tempted to just add the K-3s as PDFs and still efile. Any suggestions? The ATX help site says to attached as a PDF... https://support.cch.com/kb/solution/000139480/000139480

Well, it's not good news. I found the ATX instructions for these forms. Not what I was hoping to read. Posting here for anyone who might in the future be looking for a better solution. https://support.cch.com/kb/solution/000139480/000139480

My one client that has international activity.... I've entered the data into ATX, including the international activity on the K-2 . Unfortunately the K-3 is still blank. None of the K-2 info is populating on the K-3 and there's only one K-3 even listed. (Unlike the K-1 where I can toggle between each shareholder's K-1 schedule.) There are 4 shareholders so I assumed 4 K-3s would generate to be included with the K-1 data. Is there a button I must select for the K-2 data to generate the K-3 numbers based on Shareholder ownership?

This is what I ended up doing. Thanks for the replies everyone. Yes, I tried this. It didn't change anything. Thanks for your input.

Hello! I've entered approx. $8k in startup costs for a client into ATX. I cannot figure out how to get ATX to allow the $5k deduction. Anyone know how?

Unfortunately this isn't going to happen. Bitter infighting amongst the SHs. Long, sad story. But thanks for the suggestion. This is what I was hoping wasn't the case. I didn't realize an actual cash transfer was a requirement. Thank you for your insight @DANRVAN.

What a great read. Thank you @cbslee. I appreciate it! I found a number of articles regarding the uneven distribution discussions and definitely gained a tweak perspective on them. The loan idea came about for two reasons. The left out SH would earn something on the cash he wasn't given like the rest. The amount of time that uneven distributions existed would be shortened. That's why I'm hoping it's not a violation of any existing rules. So far, I haven't found anything that says it is.

1120S has four shareholders. All were also officers of the company. Reasonable compensation was paid to all four. Three of the shareholders took it upon themselves to take large distributions in the previous year leaving one of the shareholders out. I've let them know this violates the S-corp rules and puts the S-corp status in jeopardy. The company currently doesn't have any remaining cash to pay the 4th SH his distribution. Can they draft a loan agreement between the company and the SH, with proper interest, for the distribution that should have occurred? And if so, can the distribution be recorded at the time the loan is drafted?

This is how mine flows thru. Hope it helps. Keep in mind, in my example below, the expenses paid for by PPP loan funds were expensed in 2020, while the forgiveness was given in 2021 so line 3 of the M-2 AAA column includes this fact. In my example the PPP amount was $3250. Also, to answer your question, I do not have K-1, box 12 data related to PPP. K-1 Basis stmt: M-2: see below for how I entered these data points. To get M-2 to populate: K-1:

I've been using TaxDome which is an entire online portal that offers e-signature with KBA ($1/signer), and so far it's been a breeze and my clients haven't had any real issues. It offers the audit trail download too. I haven't even begun to use the pipelines yet, but many have said they made a huge difference in the office workflow. Summer project for me is learning them. I use CamScanner. It takes the picture and converts it into a VERY CLEAR digital copy and offers PDF, JPEG, etc.

Yes, I have to add back the pre tax items the NJ doesn't allow to be excluded from taxable wages. Some of those items that need to be added back are EE paid health insurance premiums, vision, dental, etc. I'm looking to confirm that when I add those items back to wages for NJ purposes only, they are also now eligible items for medical deduction on line 31 of the NJ-1040.

The employer doesn't acknowledge the employee's NJ residency at all.

Client lives in NJ, works in NY. Employer does NOT provide a NJ wage detail on the W-2 so I have to calculate myself. It's my understanding that NJ only allows 401k to be deducted from wages But on the NJ-1040 I see a medical expense deduction for 125 Plans. Limited research suggests I can take the premiums my client paid for health, vision etc and deduct the amount over 2% of NJ AGI on the front page of the 1040. (Luckily they gave me the 12/31 paystub so I know they portion). Any NJ preparers that can confirm this? Previous preparer didn't do this so self-doubt makes me hesitate.

Thanks! That's where I ended up putting it and it flowed through perfectly! Thanks again for your reply.

Client overdrew his basis (S-Corp). LTCG will be recognized on his personal return. 1120S Return: In ATX, page 4, Balance Sheet, R/E line is directly linked to the M-2 AAA analysis. Because my client overdrew his basis, the balance sheet SHOULD list R/E as a negative value and the M-2 should be zero, but since ATX links the two, the balance sheet is unbalanced. Without forcing the entry somewhere, where/how can I make ATX display the balance sheet retained earnings amount (which will be a negative value) different from the AAA which will be ZERO?

Separate question. Is there any way to confirm an S-election status? I have two clients (new) that started businesses last year, that filed form 2553 (supposedly) but never got a letter from the IRS of the S-Corp approval. Is there a way to confirm without .... (gulp) .... calling the IRS?

I would paper file the extension with documented copies of the 2553 filed timely, certified mail. Then if you still haven't heard anything when you're ready to file, file the corp return with late election noted at the top of 1120S, and again, a copy of the timely filed 2553 with a note of all the history of trying to get this filed properly. What a mess.

Has anyone had ANY extensions be accepted in the last 24 hrs. I sent out a bunch yesterday and so far, they are all still waiting for acceptance.

Nice. I haven't seen this yet, but I am very happy to hear ATX did this.

I was wondering about this too. I do plan to attach it. I prepare many NY returns and CT-399 is a PDF attached requirement too so I'm used to the extra legwork. On a separate note, it would be nice if ATX pulled the Shareholder basis stmt info from the 1120S return to the 7203 during the K-1 import. Probably a big ask, but it would be nice since it's pulling the K-1 data anyway.