David

The father already owns the rental property and has a mortgage on the property. He has been reporting the rental on his Sch E. The father wants to son to have 50% ownership in the LLC. The son isn't contributing anything. The rental property will be the only asset in the LLC.

Yes, the trustee's residence is CO. No one except the decedent was or is a CA resident.

Rental property is owned by TP and reported on Sch E. He wants to set up an LLC for rental properties and transfer this property to the LLC. He also wants to make his son 50% member of the LLC. Does he simply do a deed of transfer to the LLC? Does the mortgage have to list the LLC or can it stay in the TP's name? Are there any tax ramifications to the son since he wasn't the original owner of the rental property and since the mortgage isn't in his name? If the LLC is listed on the mortgage I would think that the TP may have relief of debt which will result in a taxable event. Thanks.

Thanks for your help with this. The only income was interest and dividends. According to the CA instructions, interest and dividends are not considered CA source income. So it appears that a CA return may not be required. Or am I interpreting this incorrectly? Thanks.

Decedent, who was a CA resident, had a revocable trust set up in CA. Of course the trust is now irrevocable upon date of death. The trustee and 2 other beneficiaries are CO residents and the fourth beneficiary is a NV resident. The revocable trust was set up by a CA law firm and the trust document states that the validity, construction, and all rights shall be governed by the laws of the State of California. The assets are under the limit requiring an estate tax return. I have 3 questions: 1. Is the trust identified as a Decedent's Estate, Simple Trust or Complex Trust on Form 1041? 2. The trust document doesn't say whether distributions are required to be made to the beneficiaries. For this type of trust is it understood that distributions are required? 3. Since the trustee resides in CO, is the trust tax return filed in CO, CA or both states? This is the initial year of the irrevocable trust and there is about $11K of interest and dividends for 2013. Distributions were made for amounts greater than the income. So there will be no trust tax due. In this case does a state return even need to be filed? Thanks.

"Clients are asking you to alter your times. And you are unwilling to do so..." I don't mind accomodating the clients IF they truly can't get here during the day. But I know that they are able to get to other appointments during the day. It escapes me why they think they can tell CPAs that they can't come in until later in the evening but they would never even think of asking an attorney, doctor, dentist, etc. to do so.

"I would stay and do the return if that was the only time that the client had..." But that is my point - that ISN'T the only time the client has. They seem to be able to go to the doctor, dentist, their kid's school, etc. during the day.

I encourage existing clients to email or drop off their documents instead of setting up an appointment to meet. But many still want to have the face to face meeting.

This isn't one of the burning issues but I'd like to get some feedback from the community. This year I have a lot of clients who say they can only set up an appointment from 7 pm or after during the week or only on weekends. Have any of you come up with a polite way of asking how they are able to go to their doctor, dentist, chiropractor, etc. during the day? I do offer appointments up to 6 pm during the week. But I prefer to work from my home office on the weekends. Thanks for your feedback.

Several financial advisors have told their clients that an S Corp owner can write off their LTC insurance premiums. I have researched LTC insurance premiums and don't see anything that gives S Corp owners any special treatment that is different from other self employed taxpayers. Is there something I am missing? Aren't LTC insurance premiums paid by self employed (Sch C, 1065, and 1120S) deducted the same as health insurance premiums? Does the LTC plan have to be in the name of the company or can their be a "reimbursement" arrangement? Thanks.

TP rented a couple of rooms in his primary residence for 9 months. He has to suspend the loss because of high income. Is he able to deduct 100% of the mortgage interest and property taxes since he would normally be able to deduct these on sch A? Or does he have to allocate part of the mortgage interest and property taxes to the rental and suspend those expenses along with the other suspended rental expenses? Thanks.

Yes, that's what I thought. But it seems as though the program is adding the excess of depreciation taken over the 76% business use portion of the original purchase price. I am leery of changing a calculation made by the program. When the business use drops in latter years does the difference between the amount of depreciation taken vs. the last business use percent of purchase price get added to the gain? If the program is not calculating this correctly, how do I change it? Thanks.

Business purchased a truck in 2006 and used it 100% for business from 2006 - 2010. Business use dropped to 77% in 2011 and 76% in 2012. Purchase price was $28,900 and the TP took $28,600 depreciation through the years. This was mostly driven by sec 179 + 100 business use. No depreciation was taken in 2011 and 2012 since business use dropped to 77% and 76%. The truck was sold for $6K. The program is calculating a gain for $11,100. The reason why is because it is giving credit for only the 76% business use in 2012. The cost basis at 76% is only $22K. The gain is calculated by taking 76% of the $6K sell price plus the difference between the depreciation taken of $28,600 less the revised cost basis of $22K. Is the calculation correct? Shouldn't the gain be based on a prorated business use through the years, thereby giving the TP credit for those years of 100% business use? Thanks.

Yes, that is my understanding as well that we can e-file 2011 tax returns. I am getting the same error message. How do we get around the 2013 date when the client has just signed the 8879 in 2013?

I can't figure out from the 2012 ATX program how to export a client list so I can send out tax season letters to my clients. In the past there was a reports option in the return manager that allowed one to export the client list to excel. The reports option is not available in the 2012 program. Also, no searches in the program help addressed the client list. Has this feature been dropped in the 2012 program? If so, how do you plan to send letters to your tax clients in future years? I exported the client list from my 2011 ATX program. When I tried to open the excel file I get a message that says "Office File Validation detected a problem while trying to open this file. Opening it may be dangerous." Have any of you experienced this? What do I need to do to get a client list to create letters and labels? Thanks.

KC, Thanks for your tip. He usually comes in by himself and has to email me the e-file authorizations after his wife also signs the form. If, by chance, they both show up, I wouldn't get an accepted or rejected notification immediately from the EFC, would I? Doesn't it take some time to find out if the state e-file was accepted by the EFC? Thanks.

Thanks for your help. How do I know if CO will accept 2011 e-files before the client comes in? I would like to have the state return printed and ready if he has to paper file. Thanks.

I thought e-filing was not available for 2011 individual tax returns. However, on the ATX website it appears that the new e-file system allows 2010 and 2011 individual tax returns to still be e-filed. Am I reading that correctly? I have a few clients who are receiving refunds for 2011 and I'm wondering if I can e-file instead of paper file their returns. Thanks.

I am e-filing an 1120S along with Form 2553 seeking late S election. I followed the instructions for attaching a pdf to the e-file return. However, Form 2553 does not show up on the list of e-filed forms. Is this normal and attachments don't show on the e-filed forms list? How do I know if the attachment went with the return? Thanks.

H & W are the only SHs of their S Corp. S Corp pays SH's and full time employee's health insurance premiums. H doesn't receive a paycheck from the S Corp since the W is the only one active in the business. The H & W's health insurance is a family coverage in the name of the H. Can the S Corp pay or reimburse the W for the family coverage health insurance premiums and include those payments on her W-2 even if the policy is in the H's name? Or does the S Corp have to process a paycheck for the H for the amount the S Corp reimbursed/paid for health premiums and include that on his W-2? Thanks.

I am trying to attach form 2553 to a first year tax return for a corporation that wants to get relief for late filing to be taxed as an S Corporation. I have followed the instructions regarding creating a pdf and attaching it to the return so the form 2553 can be included in the e-filed forms. However, form 2553 is not listed in the "E-filed Forms" tab of the EF info form. I must be missing a step. However, I have followed the instructions for creating a pdf form to be e-filed. Can anyone tell me what the problem is? Thanks.

Restaurant business client has several locations and the company pays health care premiums only for the managers at each location. Wait staff, cooks, and others are not provided health insurance coverage. Does the business qualify for the credit or does the business have to offer health care benefits to all employees in order to qualify for the credit? Thanks.

Thanks for your help. My new client's former CPA told him to make a sec. 754 election to get the step up in basis. Is this because the previous CPA thought my client would continue as an LLC instead of electing to be taxed as an S Corp? I just don't want this to backfire and the IRS not allow the step up in basis if the election isn't made. So the step up amount isn't reported separately and depreciated separately? Someone had mentioned before that that is how the step up would be handled. Instead the asset is revalued (even if it was previously fully depreciated) and depreciation starts over? KC, you mentioned using Form 8749. I can't fnd that form. Did you mean another form? Thanks.

Thanks, KC. I use Intelliconnect tax research and I couldn't find near as much information as these links. I must not be using the search feature correctly.... Since my client bought out the other 5 LLC members, the LLC was technically terminated. It appears from reading the information in your links that the sec. 754 election should have been made with the final tax return filed for the technically terminated LLC. The date on the final tax return was through 7/31/11 and I prepared that tax return. Since the election wasn't made it appears that my client can make the election on his new tax return with a short year of 8/1/11 - 12/31/11. However, I read that when a partnership is technically terminated, a step up in basis is required. Am I reading that correctly? Therefore, a sec. 754 election doesn't need to be made in order to apply a step up in basis? Another issue is that my client wants to elect to be taxed as an S Corp. He kept the same company name and EIN. We filed the extension as an S Corp and plan to elect the S Corp status utilizing one of the appropriate rev-procs when we file the 1120S. The sec. 754 election appears to use all 1065 related forms. How do I file the sec. 754 election when filing the 1120S? After reading through the information in the links, it still isn't clear if the step up in basis is allocated to every single fixed asset (the company has hundreds of assets) or if the step up is allocated to class of assets - e.g. 5 yr., 7 yr., etc. Those who have dealth with a sec. 754 election, please let me know how the mechanics of the allocation work. Every example only shows 3 or 4 assets and none are fixed assets. Do the existing assets continue to be depreciated as before and the step up is one lump number for that class of asset, say 5 yr property, and depreciation starts only for the step up amount? Sorry to ask so many questions but it seems as though the examples and research material only show allocations to 3 or 4 basic assets and not real life assets such as hundreds of fixed asset items. Thanks.

New client bought out other 5 LLC members in 2011 and is making a sec. 754 election. I have never dealt with a sec. 754 election. None of the research information explains the mechanics of adjusting the basis of assets. The client has hundreds of fixed assets. Surely, the basis of each asset doesn't have to be adjusted does it? Is the 754 adjustment entered as a one line adjustment described as "Sec. 754 adjustment" for each class of asset (5 yr, 7 yr, etc.)? If so, does depreciation start over effective with the 754 adjustment? What about assets that are already fully depreciated? Are these adjusted as well? Is the adjustment allocated according to the original cost of the assets or the nbv? It seems as though only the basis of fixed assets would be adjusted since other assets and/or liabilities would remain at their current value. Is this correct? Thanks for your help.