BulldogTom

The boyfriend is supposed to pay the costs of utilities and upkeep on the home. The taxes and mortgage are not addressed in the trust or the will. The home appraised at 125K DOD and is subject to a 30K mortgage at DOD. Loan from trustee to trust is documented and will be paid back upon sale of the home with the remainder to be split 3 ways by the sibling beneficiaries. I think I am asking 2 questions: 1. Is the Mortgage interest really investment interest to the trust, as there is no income and never will be on the home? (I think it is) 2. If the answer to #1 is yes, where does the carryover of unallowed interest reside, in the trust or with the beneficiaries? Thanks for your input. Tom Newark, CA

Trustee is given broad discretion to classify all costs as Income or Principal at his sole discretion. Trustee, who is also a beneficiary, is loaning the money to the trust to make the payments. (protecting the asset from creditors until the boyfriend moves or dies) Tom Newark, CA

Situation: Mom is living with boyfriend. Mom draws up a will and a trust. Says if she dies, boyfriend can live in the house for as long as he wants or until he dies. At that point, the home can be sold by the 3 children who are beneficiaries of the trust. Home has a mortgage on it. Mom dies. Boyfriend refuses to move or die. His choice, no moral judgments here. Trust now is paying the mortgage and the property taxes on the home. My take - the beneficiaries cannot take a deduction for the taxes and interest on the loan. All of it is investment expense or investment interest, and can only be carried forward until there is income to absorb the loss. Am I on the right track? Tom Newark, CA

I am having issues with fee collect, of all things. The software no longer thinks I am enrolled, but the bank and my ATX account both say I am. Need to get this resolved, because 15-20% of my clients use this product. But except for being a little slow, this year is working fairly well (if you don't count the Schedule B on the CA 100S issue that I am looking for an answer on). Tom Newark, CA

anyone? CA preparers run into this yet with your S corps? Tom Newark, CA

Naveen, This is off topic, but I have been thinking about you. Hope you are hanging in there strong. Let me know if there is anything that I can do for you. Tom Newark, CA

I am glad this helped you. I know what it feels like to be ready to throw up all over your computer when it is just not making sense. Tom Newark, CA

ATX does not populate the CA 100S schedule B when the depreciation flows from Net Rental Activities on a Form 8825. In the past, the only way to get the depreciation info onto the Sch B was to enter the assets by hand using the override. This year, the program is not allowing the override into those fields. Anyone have a solution for this. I need to get this return out to a client who is leaving the country on vacation. Thanks Tom Newark, CA

B. Jani, I will try to explain what I did, and try to interpret the rules as best I can, but as you can see from my expletive in the post name, I don't know it all. The difference between the two methods as I understand it is very minor. The alternative method is the same as the iterative method, but you just stop after the first calculation. In order to get the right answer, the entire front page of the return less the SE HI deduction and the 8962 must be complete. You can play with the schedule A after the fact, but nothing that affects AGI. Next, take the amount of out of pocket expense that the taxpayer paid out of pocket (Premium minus advanced credit from the 1095A), plus the amount of the max payback ($1250 or $2500 depending on filing status). Enter this on the front of the 1040 as the SE HI deduction. Then go to the 8962. The software will have the MAGI calculated for you unless there is a family member whose income you are adding to get to family AGI. In my case, this was a single TP, so it did not apply. Once you have MAGI calculated, enter the information from the 1095A into the 8962. At the bottom of the form, it will give you the amount the TP is required to repay. If the amount is $1250 or $2500, you are done. If the amount is less than those amounts, go back and add the out of pocket cost plus the amount just calculated on the 8962 to the SE HI Deduction on the front of the 1040. This will change your MAGI on the 8962 (it will make the repayment amount higher, because the SE HI is less, bringing down MAGI). ***STOP HERE if you are using the Alternative Calculation*** If you are using the iterative method, continue on. Go back and keep changing the SE HI deduction amount (which will be a little larger every time because of the increased repayment amount) until the amount of the repayment does not change more than $1 on the 8962. I hope this is helpful to you. Let me know if you have any questions. Tom Newark, CA

Great, this will be my busiest weekend of the year. Tom Newark, CA

Turbo Tax just announced that it will stop efiling to ALL STATES. Tom Newark, CA

Update - I am back in the game again. So, I still don't know the answer to the problem with the iterative method when it keeps bouncing back and forth. I think it is an issue that the IRS has not contemplated, especially with the added confusion of the taxable part of SS changing. Using the Alternative Method would have meant that the TP would have had to pay it all back, because if I am reading the Rev Proc 2014-41 correctly, you only do the entry one time and stop. So that was not a good answer. If I put a $2000 IRA contribution into the equation, I can use the iterative method and it actually was not bad. I think it took me 3 turns through the changes and I got to even on the amount of the credit payback and the amount of the SE HI deduction. Thank you Judy for that wonderful suggestion about contributing to an IRA. It saved my client about 4K. Tom Newark, CA

Judy, Why did you use $2500 as the max payback. He is single and I think the max payback for a single person is $1250. This is where I kept falling back into the over 400% trap. And thank you so much for taking the time to work on this. I appreciate you. Tom Newark, CA

Yes. That is the amount on Line 33a of the 1095A. And I like your idea about the IRA. I think he can use that. I don't understand the alternative method. I think I am going to read it one more time and then go to bed and see if I am smarter in the morning. Thanks Tom Newark, CA

I have tried to read Rev Proc 2014-41 and I guess I am stupid, cause I don't get it. TP is 63, Self Employed and draws SS. Went to Covered CA and got coverage based on his income 2 years ago (No SS at that time and a bad year for a construction contractor). They gave him an advanced PTC of $5,834. Premium for the year is $6,179. Income from SE is $31666 (the best year he has had since I got him as a client 5 years ago). SS Gross amount is $19,764. SE tax is $2,237. I have the return almost done when the TP brings me the 1095A today. I plug in the numbers on the 8962 and he has to pay back some of the credit. OK, we expected that. Then I go change the SE HI deduction based on the calc of the 8962, and he has to repay 100% OF THE ADVANCED PREMIUM TAX CREDIT. His income is now more than 400% of income. So I heard about this situation in my update class, that it is a circular calculation and if you go to Rev Proc 2014-41 they tell you how to make the calculation. I can't figure out what the Rev Proc is saying. The problem is, the other moving number is the SS benefits. So every time I move down the amount of the SE HI Deduction, more of the SS is taxable, which increases the income level to over 400% of the poverty level, which makes the whole credit go away. But if the whole credit goes away, the taxpayer gets to deduct the entire amount of the premium tax credit that he gets to repay, making him below 4 times the poverty level and I start all over again. Can someone explain Rev Proc 2014-41 to me? Is there a formula that I can use? Something that will get me to the final answer? Please. I just feel stupid. Tom Newark, CA

Great question Jack, and from the answers so far, I don't think any of us know the right answer. Please let us know if you come across some official guidance. I would say call the service, but they ain't answering the phones. Perhaps a call to Heathcare.gov support personnel? They are working theopen enrollment right now and they are the ones who are where the request needs to go. It is thin, but better than what you have. Tom Newark, CA

You have 2 issues here. You have the cost basis from when they bought the house and land, and the depreciable basis from when they transferred the home to a rental. If those 2 amounts are the same, and I would suggest they should not be, the disposition is simple. If you don't have the land on the fixed asset schedule, put it on and do a bulk disposition. Everything will flow through the software. If there was a difference between the cost and the depreciable basis, because when it was put into rental status, the value was less than the cost, then you need to make an adjustment to the basis to get the proper amount of gain on the sale to flow through. Tom Newark, CA

I think the mileage to and from is deductible charitable mileage at 14 cents a mile. Might pay for 1/2 of the cost of the gas. Everything else I would pass on. Just my 2 cents. Tom Newark, Ca

They are starting to come in. I have a couple fee collects that are hitting my account today. Tom Newark, CA

I tell my clients it is a PENALTY TAX. The 9 clowns in black gowns called it a tax, and that is now the law of the land. Tom Newark, CA

OOPS. But the repayment was only $7, so I don't think it will go on the IRS radar. Tom Newark, CA

That is what I did when I got the error message. The 1099G had $0 in box 1 and a repayment amount. I could not get past the error so I put it on line 36 with an explanation. Tom Newark, CA

Hate the Seahawks. Not a fan of the Bellicheat team. I think the Pats win in one of the lowest scoring super bowls ever. The SEA defense is better than the Pats O which is very good, but the Pats D is so much better than the SEA offense, and yes I know SEA has the BEAST MODE in the backfield. Won't matter. Pats D is a strong unit that can focus on Lynch and still shut down what little passing the Hawks generate. So long as the Pats offense does not turn over the ball....... Pats 13-6. Pats score their TD on a short field turnover when Wilson fumbles trying to scramble. Tom Newark, CA

I think I have it figured out now. It is just the way the instructions are written that got my boxers in a bunch. Thanks for pointing me in the right direction. Tom Newark, CA

This shit should not be this hard. Excuse my French. Thanks Ladies. Tom Newark, CA