BulldogTom

Client son filed 2024 return through HRB software. Found out it was wrong and filed an amended return through HRB software. Got another tax doc they forgot about and now need to correct again. If they filed an amended return, can I file regular 1040 and will it be considered a superseding return or do I need to amend the amended. This is a new one on me. Thanks Tom Longview, TX

CA cannot tax retirement income if the recipient is a non-resident. They lost that case a long time ago. If your client was a part year resident, that might be a different story. Remove the CA in the state box and delete the CA 540NR. Your client does not have a filing requirement. Tom Longview, TX

I suffer from auditophobia (I just made that up). I enter my sales from my accounting software and I enter the 1099s and I have a line item under my sales for "less 1099s received" as a negative number. It is only a couple extra key strokes but I can show that I have included any 1099s in my tax return if I am ever audited. Hey, I never want to have to ask one of you to represent me at audit and then have you think I don't keep good books and records. Tom Longview, TX

I got one as well from Block as expected and properly recording the CC sales. ATX 1099K form entry and linked to my Sch. C. Just like a 1099NEC, just a different form entry screen. The trick this year is to know if it is legit reportable income or personal in nature (like paying friends for personal expenses or selling stuff on eBay for a personal loss). Tom Longview, TX

If you are using ATX, you would enter the 1099K, assign it to other income, and at the top of Schedule 1 there is a box for amounts that are in error on the 1099K or for personal sales with losses. At least I think that is the wording. But in any case, enter the 1099K and then put the $1,300 in that box and it should go away. I have not had to do this yet so please let me know if it works as advertised. @jklcpa if this does work, you may want to pin the instructions for this year as it is new and I think we are going to see this question come up a lot during the tax season. Your call, just a thought. Tom Longview, TX

And now I am up and filing. Just a day or 2 later than normal efile start. Tom Longview, TX

CA forms are a little later than normal this year. I have a few returns stacking up for e-file waiting for forms approval. These are usually ready by the efile start date. I am thinking the fires in SoCal may have something to do with late CA forms, but you never know. Tom Longview, TX

Still get 1099s and W2s? Or is that going away as well? Tom Longview, TX

Yeah, me too. It is what makes Max worth the price. Tom Longview, TX

I would not worry about a single part year return. In Bindley quoted above, the rule is that the benefit of the work was received in CA. In your case, you could argue that the benefit of the work is received in OH, where your client sits at the time you deliver the work papers. If your client was in CA when you delivered the work, you would be subject to the rules above. At least that is how I read it. FYI, I have a lot of clients in CA and I apportion my income in the state and out of the state. Tom Longview, TX

I was thinking the same thing, but not being familiar with the process I wasn't sure if there would be a code or something that was emailed to the employer to authorize sending. Tom Longview, TX

How do you find this stuff? I skimmed the pages as well and I never saw anything. I suck at searching. You are the best, as always. Tom Longview, TX

If Florida taxpayer qualifies for extension until Oct 15 2024 of filing and making IRA contributions for 2023 return based on federally declared disaster, and before that due date, another disaster hit, does that Oct 2024 deadline for 2023 return get extended into 2025? This is a real taxpayer, but not my client. Taxpayer wants to make a 2023 IRA contribution and claim that they are still able to do so under the disaster declaration as their due date of the return was extended a second time. I know that they could have made the contribution up to Oct 2024, but I am not sure you can "Stack" those declarations. Tom Longview, TX

Shedding tears of sympathy for you is all I can do. I am not experiencing that. Tom Longview, TX

Attorney was on the email they sent me. Tom Longview, TX

I asked that question and I am waiting for a response from the client. Tom Longview, TX

That is what I told them. I cannot guide or advise them in this transaction as I don't have the skill or experience to do so. Tom Longview, TX

Non tax reason. They are teenagers and the Grandparents want the mother to have control until they grow up. In an SCorp, you own the shares you own the votes. In a partnership, you can split control from profits. At least that is what they expressed to me. Tom Longview, TX

IRS would say it was in connection with the work and therefore wages subject to payroll taxes. If the employer is not paying those taxes, the employee should. However, the correct approach would be to file an SS-8 for a determination from the IRS. Could you argue that the employee is not in the business of moving and therefore not subject to SE tax? Yes. But the substance of the transaction is going to make that a moot point if the IRS audits, because it should have been properly classified as wages, which would probably be the result of an SS-8 determination, so I don't think I could take that position on a return. Putting it on the C is convenient but most likely improper because there is no business associated with the income. Taking deductions against the income for the cost of the move is definitely improper. The client should be advised of this and given the option to amend the return that includes an SS-8. Client's choice on how to proceed. We only advise the proper way to file. In ATX, you can code a 1099 as subject to SE tax. If it was my client and I got that 1099MISC, that is probably how I would have proceeded assuming the client did not want to go with the SS-8. Tom Longview, TX

Thanks Lee. I saw that in my research. Very helpful. Lets me know I am not able to advise the client on the F type reorganization option. I think I am on the right track with how the taxation goes if they liquidate the corp and then fire up a new LP. Just looking for some re-assurance that I am applying the related party rules correctly. Tom Longview, TX

S Corp is looking at succession planning. 3 shareholders right now, Grandma (40%), Grandpa (40%) and Mother (10%). Grandma is the President. GM & GP want to pass their ownership to Grandchild #1 and Grandchild #2 eventually but keep M in control of the company. S-Corp owns highly appreciated real estate that generates rental income. There is only a small amount of debt on the property. Taxpayer plan is to convert to a Limited Partnership. GM & GP would form trusts holding their partnership interests. The trusts would then pass the partnership interests to GC#1 and GC#1. I don't think there is a way to get a non-taxable re-organization of the company from SCorp to LP? If I understand the general rules correctly, the SCorp needs to essentially buy all the outstanding stock from the shareholders in a liquidating transaction. The SCorp will calculate gain or loss and that will increase the stock basis of the shareholders, and then the shareholders will calculate gain or loss on the sale of their shares to the corp. Do I have the basics correct? However, since the parties are all related, they don't get Cap Gain treatment on the sale (§1239). Am I interpreting this correct? Assuming FMV of 3MM and Adjusted Basis of 700K, the Corp would distribute income of 2.3MM to the shareholders via their K1 and the shareholders would pay tax at ordinary rates on that amount. The 2.3MM is the sales price for their shares, assuming basis of of 200K plus the 2.3MM distributed, would produce a loss on the redemption of their shares of 200K which would be capital in nature. Finally, the shareholders would contribute their stepped up basis property to the new LP and continue in business. Am I anywhere near on the right track? Tom Longview, TX

I have a lot going on personally and professionally so I don't have the time (bandwidth) to devote to this client at this point in the tax season. That is all I am saying. Tom Longview, TX

HMMM....I have it on 2 computers, but I used 2 phones. Same app on each phone. Which authenticator are you using? Tom Longview, TX

Clients - CA MFJ currently CA residents. Exchanged 1 rental property in CA for 2 rental properties in ID in 2021. Have rented and reported rents every year on ID properties. They now want to move from CA to ID and convert one of the properties to a primary residence. California conforms to the §1031 provisions, with a clawback provision and reporting requirements for exchanges out of the state. I understand all those provisions. Rev. Proc 2008-16 generally provides a safe harbor of 2 years rental on exchanged properties converted to primary residence or personal use. Does CA conform to this safe harbor? My clients are good with the timeline for IRS purposes as they have over 3 years rental on the ID properties and it will be over 4 years of rental period if they make this move. Reason for the move: Irrelevant unless audited, but they have been taking care of their mother in CA and are no longer able to do so. The mother will be moving into assisted living which terminates the need for my clients to continue to live in CA. I am not worried about the IRS, but I cannot find anything that says CA will abide by the Safe Harbor provided in Rev Proc 2008-16. Total deferred gain is over 400K, so I don't want to screw this up. Thanks for your comments in advance. Tom Longview, TX

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