Yardley CPA

I don't deal with rental properties everyday but I have my share. I have researched the topic somewhat extensively, reading through IRS guidance and other articles. Hoping you confirm my understanding on how to handle these situations: - Fair Rental Days vs. Personal Use Days Taxpayer owns beach home. They rent it for 30 days throughout the year and they use it personally for 50 days. On Schedule E you would input those exact numbers. Just because the taxpayer owns the property, they do not have to indicate personal use as 365 days less the number of days rented, correct? Personal use is exactly that...the number of days the owner used it personally...correct? - Expenses Using the example above, 30 days rented and 50 days personal use. Are certain expenses restricted to the ratio of days rented / personal use? I have a client who receives a reporting statement from the realtor they use to rent the property. It lists a cleaning expense specifically for the weeks the property was rented. That entire expense can be taken on Schedule E, it does not need to be prorated, correct? Expenses specific to the rental period can be taken in full? I recognize other expenses will be and should be prorated. - Depreciation Depreciation is taken during the time the unit is rented. Once the unit switches totally to personal use, depreciation ceases. When the property is sold, recapture is based on the depreciation actually taken, correct? Thanks very much for reading through my long post. Appreciate your feedback.

Please verify my understanding on the digital assets question on form 1040. Client purchased digital assets through her Robinhood broker account. That was the extent of her digital activity, no trades or sale. It's my understanding that simply purchasing digital currency is a "No" response. Here is what I found on the IRS Website. I don't believe any of these situations refer to purchase alone, unless that is what "mining" means? Thoughts please. When to check "Yes" Normally, a taxpayer must check the "Yes" box if they: Received digital assets as payment for property or services provided; Transferred digital assets for free (without receiving any consideration) as a bona fide gift; Received digital assets resulting from a reward or award; Received new digital assets resulting from mining, staking and similar activities; Received digital assets resulting from a hard fork (a branching of a cryptocurrency's blockchain that splits a single cryptocurrency into two); Disposed of digital assets in exchange for property or services; Disposed of a digital asset in exchange or trade for another digital asset; Sold a digital asset; or Otherwise disposed of any other financial interest in a digital asset.

What about Abby? Isn't he a Maryland preparer? Not sure he is near Beltsville but he may be able to guide you? I guess your friend wants to meet in person and can't transact digitally?

That's how I would do it.

Please confirm (or correct me) my understanding of leasehold improvements. Homeowner has a barn on her property and plans to make improvements to barn to begin a small business. The plan is for the individual to form a Single Member LLC - Schedule C. After improvements are made to the barn she will start to conduct business within it. Am I correct that the improvements made to the barn increase it's basis and are not generally deductible as expense? I recognize this post is very basic in nature and not providing detailed information on the business or the types of improvements. For the time being, that's all the information I have and I will update as I learn more. With that said, generally speaking is my understanding correct? Improvements will add to basis of the barn and are not deductible until the business begins?

I'm sure you're not surprised.

I use VueScan and it has worked relatively well for me. https://www.hamrick.com/

Merry Christmas!

If you're comfortable using an online firm, it's a good deal. Personally, I wouldn't be but that's me.

Ours is a Grantor Revocable. Obviously, you must fund the Trust. If you don't fund it, it's useless.

I recently posted about this very topic and received some excellent feedback. With that in mind, my wife and I decided to move forward and establish a Grantor Trust. We are literally in the very midst of completing it and should have it all set by Christmas. One of my clients is an attorney with a large regional firm and I requested a reference from her for someone within the firm who deals with estate planning. After a Zoom consultation and a few follow-up meetings, they were able to prepare 2 sets (one for me, one for my wife) which we had to have notarized: Living Grantor Trust Documents Pass Through Documents Personal Property Memorandum Living Will Will Power of Attorney Certificate of Trust They provide all the completed forms in both an electronic version and a binder of paper copies. We'll keep the binder in our safety deposit box. We've sat with our children and explained what we've done and how it will impact them. God willing, we and they won't have to deal with this for many years. One set fee of $3,000.

Hi, Dan....a bunch of items to address here: 1. Is the son studying accounting? Does the Divorce Decree discuss who can take custody of their son and when? 2. So she owns the former joint home outright? This was done when in 2022, November or December 2022? Does the Divorce Decree discuss their home or real estate taxes at all? Does the husband plan to take any real estate taxes on his return? May not matter if they are both claiming standard deduction but worth asking in my opinion as there may be a state benefit. Any mortgage interest...sounds like it may be nominal at best for the loan your client took out but was there a prior mortgage? 3. I've never filed form 866-H-HOH. I'm not saying that I was correct in not filing the form, I just never have. I've never been questioned once when claiming HOH for a client and the IRS has never required any verification. So maybe others more versed in the form can provide guidance. 4. Guide to Filing Taxes as Head of Household - TurboTax Tax Tips & Videos (intuit.com) <~~ This may help on the HOH question. 5. I don't think you need any other documents as long as you have all the information/documents that impact her return. Good luck.

I appreciate everyone's input on this topic. I learned a bunch.

Here is what the attorney told my clients: Their trust is a "Revocable Grantor Trust" which does not file returns. During their lifetimes the trust is indistinguishable from them for tax purposes and uses their SSN. After they die, the trust becomes irrevocable and at that point returns may be required.

It's a Grantor Trust, so no 1041.

I do not know enough about estate taxes to comfortably prepare 1041's, so I always refer clients to someone else when an estate is involved. With that said, these clients would need to prepare a 1041 if the trust generated more than $600 in income, correct? The 1041 would then generate K1's which would flow to their personal returns? Is that correct?

A client asked for advice on establishing a trust. Since I have no experience with the topic, I advised they should seek counsel from an estate attorney. With that said, it got me thinking. Does anyone have experience with Living Trusts? I've done some research and read up on the topic, I have a fair understanding of the pros and cons. Was hoping to receive feedback from those who are experience with the topic and maybe have established their own trust. I know there are different types, I'm more interested in learning about Revocable Living Trusts. I'm not aware of any real tax advantages for trusts but would also like to learn more about how they can potentially be tax friendly if at all. The client who inquired is married, 2 children. One child in college, one child just graduated. Estate value of around 5 million, including life insurance.

Tom...I think your post meets all the requirements of a qualifying relative, except for the support portion. Assuming the stay in the care facility is temporary, then they probably do qualify as a dependent. If the stay in the facility is long term and is being paid for by SSI and Medicare, it does not sound as if though they meet the support test. In that case, they probably do not qualify. Just my thinking.

Thanks Judy and Terry. Much appreciated.

Thanks, Terry. I know there are ordering rules but what I'm wondering is if there are no STCL, can the STCG offset all the LTCG without limits. I'm researching it but can't find anything definitive. Hopefully someone has some experience with it. Thanks again.

Please verify my understanding that you can offset long-term capital gains with short-term capital losses? During 2022 client sold a rental property resulting in LTCG of about $100,000. Client also had STCL of about $77,000 in stock/mutual fund sales. I know that the STCL would first offset STCG, but assuming there are no STCG, the loss can be taken in it's entirety against the LTCG, correct? Thanks very much.

Glad that it ended up showing that MFS didn't result in savings because I don't believe you can amend a MFJ to MFS after the due date of the original return.

Good morning, BB...tips are included in income. Client expected that and has no issue at all with it saying..."I just want to make sure everything is correct." Refreshing.

MFJ client. Wife is a sole proprietor, hair dresser. Please confirm my understanding that tips she receives are included as part of her gross income?

Come on, Rita. What's wrong with you. A nice, elderly couple...fixed income...probably have a garden in their back yard that they tend to. Let them be.