G2R

Hello, Client gets hit with the Net Investment Income Tax -- Double checking the 8960 form and ATX has a calculation for Part II, Line 9b. I'm trying to see how ATX came up with this number. The instructions say it's obtained by "any reasonable method." Ha! Thanks for being so specific Mr. IRS. I'm not questioning ATX's calculation, I'd just like to know how it was reached for my own knowledge. Any idea how to find out how ATX calculated this number?

Thank you! This is what I did with the DPAD in previous years so it made sense to follow the same method. Thanks again EricF.

Nope, all crops lost during a hurricane.

Logically, I'd agree. In theory, the crop insurance proceeds were awarded based on lost revenue. Revenue that would have been QBI qualified, so I don't see why the insurance proceeds wouldn't. But it's such a large number, if it were denied, it'd be a huge change to the return. And no where can I find a publication on this specifically. So if any farmer CPA out there how more insight, I'm all ears.

I'm going crazy trying to find an exact publication that I can reference down the road if need be. I have a clients that does construction both domestically and internationally and everything I'm reading says wage in connection with QBI income. I assume the property basis is the same but cannot find this specifically written anywhere. We used to file the DPAD so I feel the answer is somewhat similar and I can just use my same methods from previous years, but I'm just spinning in place trying to double-triple-quanta-quasi-check myself. Here are simple details: Total income is 2 million. Wages were $800k. Unadjusted Property is 100k. 35% was domestic income. So K-1 inputs would be: Code V: (2 mil x 35% domestic) 700k Code W: (800k x 35%) 280k Code X: (100k x 35%) 35k Sounds reasonable?

I reached out to ATX about this and their exact reply was "okay The amounts must be entered manually on the Activities tab of the worksheet. Automatic calculations are planned for the end of the month"

Got a client who's a farmer, and he received $1.5 million in hurricane crop damage insurance proceeds last year. Is the 1.5 million qualified for the QBI deduction or do we have to remove the insurance proceeds from the QBI income total?

I agree, I believe I followed everything EricF said to do about and the information in not flowing from the K-1 to the 199A wkst. Has a solution to this been found?

Hello, I cannot find where ATX is reducing the 1120S QBI on my client's 1040 by the section 179 on the corresponding K-1 schedule. Is this something we have to do manually? Speaking of entering manually, any reason ATX doesn't automatically enter the numbers for the K-1 schedule directly to the 199A wksht?

BulldogTom, Thank you for your valuable insight. I really do appreciate it! My client has already contacted their employer and has been told they are refiling the payroll returns and California taxes are no longer being withheld or reported. Crossing my fingers that this is true and crossing my other set of fingers that come tax time, California still doesn't link my client to their arrears

Thank you JKLcpa -- that article is EXTREMELY clear as to how this situation works. I've added it to my files as well. Big time thank you for the additional information.

Just got off the phone with the Employment Development Department (recommendation by the Franchise Tax Board as they did NOT know the answer to this question.) Luckily the EDD did! They referred me to this publication de231d: https://www.edd.ca.gov/pdf_pub_ctr/de231d.pdf Then she explained that since the services were not performed IN California, nor was the employee a resident of California, the employee was not liable for California state taxes and should NOT have W/H being taken out. Hope this helps someone else down the line!

Have a client that lives and works from home in Georgia. Never steps foot in California. The company he's working for is based out of California and is currently withholding California state taxes for him. From what I'm reading on their website (which is HORRIBLY insufficient), the source and taxation of the income is dependent on the client's presence in California, not he employer presence and thus they should NOT be withholding these California state taxes. Can some please confirm this for me?

I know this a very specific niche market, but I hoped there might be a few on here that have corporate clients in NYC. Two opinion questions really. 1. Obviously being taxed as an S-Corp is usually more advantageous than LLC Single or C-Corp because of SS/Med and double taxation. However, with NYC not recognizing the S-Corp status and charging the corporation tax on all NYC profits, that's nearly 9% due for those profits. I was wondering if anyone had any experience with Single member LLC's actually being MORE tax advantageous than the S-Corp simply because of the NYC taxation of S-Corps. 2. S-Corp client (lawyer) has a few clients that have offices in NYC, however the lawyer never travels to NYC. All his work is done from the office which is outside NYC. Since he doesn't have nexus in NYC, is he still required to pay NYC corporate tax on the revenue earned from NYC clients?

Judy, that is EXTREMELY helpful information. Thank you so much for taking the time to explain this.

I'd rather be the discreet mouse than a trailblazer when it comes to tax returns. While I can't find it specifically stated on the IRS website (I think they are still trying to interpret their own laws for 2018), it seems many of my financial advisory websites agree this unique scenario would be acceptable. Thank you everyone for your valuable insights!

I agree, HELOC loan secured by primary residence used to buy a second home would not be deductible under the new rules because it's personal usage, however, I think if the proceeds are used to buy a rental property, even though the HELOC is on the primary residence and not secured by the rental property purchased, then the rental property can deduct the interest of the HELOC loan on the schedule E. Correct?

Thanks Judy! I agree, the SAFEST course seems to be capitalize the CC. I think I might just go with this approach so I don't have to sweat an audit. It's a weird situation given the natural disasters involved. However, I was under the impression that as long as the HELOC interest was used for rental property, then the interest would be deductible in 2018. If it was used for personal, then it wouldn't.

So here's a doosy. My client bought rental property in Puerto Rico in April 2017. They were fixing it up, getting it ready to rent and boom, Hurricane Irma & Maria hit. Minimal damage, but no power for months so obviously not rentable. Here's my question. The apartment was ready to rent in August and was going to be advertised for rent just before the hurricanes hit. (I don't have proof of this but this is what my client told me.) Obviously, it was never rented and finally was rented for the first time April 2018. Should I take the rental expenses for 2017 on their 2017 return despite the fact that it was vacant the whole time? If I do file the Schedule E and claim the rental, the client used a HELOC from their personal residence to buy for the rental property. Loan was taken out Nov 2016, and they finally closed on the property April 2017. Think I can deduct the fully year of interest on the HELOC on schedule E or only the prior 30 days before the closing and each month there after?

Hello, I've combed through the IRS publications on retirement plans and I can't seem to get a concrete answer. My client is the sole employee in his Sub-S. He has a solo 401k through that business. He has health insurance that he pays for though the business. Those premiums paid are included in his W-2, box 1 wages. The EMPLOYER match contribution for the solo 401k contribution can be up to 25% of wages. Are the eligible wages, salary wages only, or do they also include the health insurance premiums? As an example: Wages are $50,000 for the year, Health Insurance Premiums are $10,000. Box 1 on the W-2 shows $60,000. Box 3 & 5 show $50,000. Is the company allowed to contribute $12,500 in ER contribution, or $15,000? Or in other words, is it the Box 1 wages, or box 3/5? Thanks!

Quick Question -- When you only put the TOTALS for Boxes A, B, D, etc what are you using for the dates. When I paper filed returns, I'd simply type VARIOUS, but ATX doesn't allow this.