Tax Prep by Deb

Just finished my last return, preparing three more extensions, and no where to be found for the next several days!

Kiddie tax the way I understand it it applies to investment income, not scholarships or grants. Although scholarships are technically earned income, they are reported on line 7 as wages as if they were earned income, so no they are not subject to kiddie tax.

I've heard that. I'm just over the hill from the bay and home values are recovering and prices are rising. I suspect that within another year home values will be back where they were before the bust. Great news for those who bought when prices were at it's lowest.

Thanks Tom, I have already done that and the doc's actually appear correct. In other words they make sense including the FMV of the home at the time of the forgiveness. I have done the insolvency sheet and it appears we can deduct about 1/2 of the cancelled debt. Was hoping for more but had a feeling I was seeing it right. There was talk earlier that maybe perhaps they will vote to change this and retroactively at that, so I'm watching to see if the guys in big chief in Sacramento will do so. I don't have many of these now, nothing like 4 to 5 years ago, but homes were I'm at are still under water. Getting better, but still not there.

Anybody?

Ok this one would be real simple had California conformed to Federal on Cancelled Debt. Client had a loan modification on a non recourse loan (acquisition debt only) that resulted in 199,400 being cancelled (1099C issued box 5 not checked) with a fair market value of 186,569. Balance on the loan after the forgiveness is $109,500. (doesn't look right to me, but these figures are on the 1099C and mortgage statement). With federal it is all excluded and basis of home reduced. California doesn't conform and it appears that because they kept the home we have to treat the COD as income unless insolvent. Is my understanding correct on this? Any thought would be greatly appreciated.

Just looked at my profile and it says I've been here since 4/12. Didn't take me long to find home!

I agree with the above!

Thanks for the reminder, and Thanks Eric for a job well done!

I just did a tax return for a client. The person I did the return for is in the hospital and unable to sign. The daughter has a Power of Attorney which stipulates she has the authority to sign and file her tax return. How is the done e-filing? Any help is appreciated!

I'm having a lot of issues with Covered California. The only 1095A that are right are the ones who had no changes at all.

Also what is stated on the W2 is what she claim at the end not necessarily what she claimed the rest of the year.

If they no longer qualify for the advance credit you only fill in the amount of the advanced credit they received and put nothing in the rest of the columns.

2% plus $25.00 clearly stated on my invoice. I usually assess it after 2 calls followed by two invoice reminders. I really have no intent on collecting it but it usually gets their attention.

It says that from 2014 on they do not conform to Federal. Prior to that they did. So again everything I see says we cannot exclude the cancelled debt of his primary residence. Unless I'm missing something.

I've actually had this situation also. Finally they remarried, then divorced and went their separate ways!

Can you point me to your source. Everything I checked said they did up to a certain year, but have not gone along with the more recent extensions. Maybe I missed something.

I have a client who moved out of California in 2014. Lived the entire year as a resident in Arizona. Was hoping to be completely done with California but received a W2 for some back wages when the City of Stockton filed for bankruptcy. He also short sold his California home and has 32,000 in cancelled debt that can be excluded from Federal because it was for his primary residence, the sale of which became final in 2014, Cannot be excluded from California because they are not going along with IRS on this (all monies from the loans were used to purchase and improve home) I am filing his California return as a non resident and will be paying taxes on the California source income including the cancelled debt. I am filing his Arizona return as a full time residence. My question is what do I do with the Cancelled debt for California based property? Do I include this in his Arizona income? For federal purposes I will be filing the 982, and excluding the cancelled debt. Hope I'm not confusing anyone, I am sooooooo tired at this point and would really like to get this one finished. Thanks for any input.

Sorry if I confused you. It is a passive activity, but they do actively participate in decision making ect... I just wanted to make sure in my first post, that I indicated that the agency isn't in 100% control. My clients are very involved in case that made a difference.

Thank you all for your replies. That was the conclusion I also came up with. If the management company hired these people then I would assume they would be the one to 1099 if needed. I like to put some of the responsibility on my clients so I will have them contact the property management and see if we can get a better breakdown. I have several questions for them.

OK, I need some opinions on this. I have a client (active participation, even though property management is involved, they do make decisions on renters as well as doing some of the repairs themselves, ect...) They receive a statement from the management that shows all the monies that came in, what they took for their commission and what they spent for repairs, ect.. and what my clients actually received. In the past I would take the total rent then deduct everything out, however this year I noticed the property management statement shows some large what they are calling repairs, the largest of which is around 4,000. I am quite sure my client did not file a 1099 to the person making the repairs as this was handled thru the property management. My concern is if I enter things the way I've always done it and answer that no 1099 needed, this will cause a problem. Any suggestions? Should we maybe 1099 the property management?

Yes. No problems so far!

Likewise I have many clients who use a POWERFUL box and I have never had a problem.

I believe I looked at the form you are trying to reference Lion, but I believe we are under the threshold, if it's the same one it stipulated it would be needed if over 15,000 and this was under that.

There was a bug in the form. They updated it and now it works! I posted on the other forum and at first they tried to tell me it couldn't be done that they had to file jointly and his wife couldn't be found, but after explaining to them that IRS had an example in their instructions that matched my situation exactly, they decided to take a second look and have now removed the error message!