Slippery Pencil

You referred to the code once, then I asked about it. In your response to that question, you referred to a pub, not the code. Based on your answer, your conclusion, "Bottom line, water is not a cost of using a OIH so it is not allocable", doesn't logically flow from your premises. How much gas is used as an ordinary and necessary expense in a home office? Most of a house's gas is used to heat water for showers and laundry, to cook, and to heat the rest of the house 8760 hours a year compared to 2000 hours the home office is used. Yet the gas is allocated based on floor space. A 150 sq ft office in a 3000 sq ft home doesn't use 5% of the gas, yet 5% gets allocated to it. Same with electricity. How much electricity is used by the washer, dryer, oven, fridge, kids gaming computers, etc compared to a home office. Stop taking water & sewer on your clients' home offices if you want, but please don't choose this hill to die on. Unless something like a pool was involved, the irs has not disallowed water & sewer deduction for a home office, so why would you?

And yet you never mention any code or anything about the code. You stated a position from the pub.

Pub 587 doesn't exclude it either. "Such as" means it's not an all inclusive list. Since it does include utilities, and water is a utility, it can be argued that the pub does include it. Water may not be deductible, but it cannot be logically concluded from the pub that the "bottom line, water is not a cost of using a OIH so it is not allocable". The OIH FAQ does include water, https://www.irs.gov/pub/irs-regs/office_in_the_home_faq%26av1.pdf Partially Deductible Real estate taxes Mortgage interest General repairs to home Water, sewer, garbage Home insurance Rent Depreciation on home Security system General repairs to home The FAQ doesn't include gas, electric, or utilities. If we go with the all inclusive view, then water, sewer, & garbage are the only OIH deductible utilities based on the FAQ. Thus we have conflicting guidance from the irs, neither of which is authoritative. So what do we do?

8829 Check box on Sch A input Which input sheet are you using?

How does 280A (c)(1) indicate that water is not a deductible home office expense?

Rentals are considered passive. Passive losses are not allowed. An exception is provided for rental losses with active participation for those with income below $150k. Drake should disallow (and is disallowing) passive losses. Drake should not disallow non-passive losses. Check the passive box and watch the software do what you want.

Westrock was WRK on the nyse. Though that isn't really helpful since you need to know the predecessor's info. The client has a trade confirmation from Schwab that has more info than the 1099. You can google the cusip # if you need more info such as a symbol or co. name. Though at this point you won't find anything w/ the symbol on bigcharts, etc because the company merged and the symbol no longer exists. Unfortunately for the client, if they don't have basis info, the irs says the basis is zero. That wouldn't stop me from using a reasonable estimate from the client, but they need to know it will be reduced to zero if the irs questions it.

Kiddie tax. Get the account statement. 1098Ts are notorious for being wrong. Also determine if the scholarships for the whole academic year were posted to the account in September 24 but covered both the fall & spring semester while the Spring 25 semester tuition was paid in January 25.

With how obnoxious NY is, it could. But don't worry about it and deal with it if NY sends a letter. And a nonresident return doesn't generate a state liability where there shouldn't be if it's filled out correctly.

I bought my Win7 machine Dec 2011. Had to replace the cooling system and reinstall Win7 in 2018. Seems to buffer videos longer than my Win10 machine, but otherwise seems to run ok, though I'm sure it doesn't have long for this world.

We know it hasn't been adjusted for inflation. You stated, "For high-income taxpayers, rental losses phase out and are totally suspended after $150,000." $150k is not high income, it's middle class. My comment, which wasn't relevant to your question, thus why I said, "as an aside", was just to point out that it's not just high income taxpayers who have their losses suspended. The unstated implication of my comment is that when a politician tells you a law will only affect the rich (or some other class of people you're not a part of) don't believe them. They will use that law to come after you in a few years. There are restrictions on rental losses for pass throughs. It doesn't matter where the rental loss comes from, the $150k and other restrictions apply. The restrictions are on the individual level. The full loss will show on the 8825s & K1s. The likelihood that Drake is handling this wrong is close to zero. It's been this way since 1987 and there haven't been complaints about Drake handling this wrong the past 37 years. It's April 8th. If Drake had a bug this year, we'd have heard about it by now. The likelihood that you're not entering something correctly in the software is close to 100%.

Pass through rental losses are subject to the same passive loss rules. As an aside, the $150k income limit adjusted for inflation is $430k. $150k is no longer high-income, it's middle class.

My main computer crashed 3/6. I usually have two computers. I've never had my main computer die, it's always been the older one. It took the repair shop a week to figure it out and get it running. Then it took me 4 days to load programs and data. I've had worse weeks in my life, but that one is near the top. Lost about 30 returns I was in the midst of and about a dozen completed returns from the previous two years that I hadn't backed up properly. I have PDFs and paper copies of the past years' returns, so I might rebuild those later in the year. Since I had the older computer, I still had internet access, but couldn't do any real work. Clients seem to be understanding. I can tell some were a bit anxious, while some who dropped their info off right before the crash aren't fazed at all that it took me five weeks to complete their returns after I told them 1 to 2 weeks. Because I was totally unaware of the shit storm I was in the midst of, one client emailed me last Saturday, "Hope you are having a super Saturday. Gentle check in on completion of my tax return. A kind reminder that tax returns are coming due. Please provide status. Much appreciated."

Even though they only work 8.5 months a year, 7 hours/day, teachers ridiculously claim their jobs are full time. She might fight back if you only take 8.5 months of dependent care. If a client takes a vacation day, but still puts their kids in daycare, do you not count that day? If you'd take it for that client, why not for another client just because they get twice the vacation time as average? I'm guessing the amounts billed are what qualifies for the dependent care credit and if someone pays the childcare center extra, the extra payments don't qualify.

NY doesn't know about it.

No, if I don't hold back, people get too upset with me. Plus there would be too much cussing for these forums. I think Brother & HP have switched places. Decades ago I heard lots of ridicule of Brother printers. Now they get pretty high praise while HP is scorned.

Code 4 isn't subject to the 10% penalty.

Back in the 80s, 90s, and maybe early 2000s, HPs were supposedly the best. Today they're worthless garbage. I've bought three. The first two were good but I don't think they lived up to their reputation. The third I bought in 2011. This was before HP required HP toner cartridges, tried to trick users into signing up for ink subscriptions, and remotely turned off printers, but it was still worthless trash. Takes forever to warm up when turned on, prints at half it's stated speed, noisily re-calibrates numerous times per day even if nothing has been printed, and nosily runs a cleaning routine numerous times per day even if nothing has been printed. Now that HP requires their own ink cartridges and is turning off peoples' printers, I'm surprised anyone still buys their junk.

line 24

How are you coming up with the average rental being less than 7 days? 49 weeks divided by 38 rentals averages to 1.29 weeks or 9 days per rental. I realize that simple calculation may not correspond to reality, but the second comment indicates it was rented all 49 weeks, clearly states several were more than a week, and hints none were for less than a week (most were 1 week).

Ha! This stupid law wasn't going to do a damn thing to help catch a single money launderer.

Neither date was a typo. The semicolon instead of a period between January & early in the original post ("early January; early 2024") was at best a poor choice. Stating "the husband died in January 2025" instead of saying "passed early January" and listing events in chronological order would have been greatly clarifying. But neither 2025 or 2024 were typos. Though your use of a period instead of a question mark is a typo.

I read the original post wrong. I thought the husband passed 2024, then the condo was put into the trust, then the condo was rented out.

Yes, Sch E. Also looks like she gets a stepped up basis on the inherited half of the condo.

Off the top of my head, the employer is correct that it's not their error and they don't issue a corrected W2. If it was an excess from one employer, then it would be the employer's error and their requirement to correct. The excess gets added back to wages, which off the top of me head is now line 1 (use to be line 7).