Lion EA

This first CO client claims she got no 1099 for the $750. She didn't itemize, so a response will be simple of she gets an IRS letter. By the way, the CO check with stub had a cover letter that sends you to a web page that states, "No. The Colorado Cash Back refund is not taxable." As it's a Colorado.gov web site, they certainly should be qualified to answer for taxability on the CO return. I'm surprised they didn't give the standard, "Ask your tax preparer" answer for federal taxability. I do NOT believe the IRS's right hand knows what it's left hand is doing.

I see the IRS guidance re CO Cashback. Do we leave these state payments off the federal return entirely, or report them and them back them off/zero them out on another line? If the latter, where? From what I read from CO, they do NOT add it back on the CO return. (And, no subtracting, now that the IRS has spoken.) By the way, the next CO payment is happening via the 2022 tax return instead of the 2021 method via a check in the mail. I don't want to think about if we'll have to divide the next refund into income tax refund vs CO Cashback on their 2023 federal tax returns, etc.!

So, are you leaving the amounts off the returns entirely? Or, reporting them and them backing them out with a negative number? On what lines? The one I have right now is Colorado Cashback, but I have IL, CT, and NY upcoming.

Were any of the transactions contingent on any other transactions? Actual contract or implied contract? When Ann gave Bob $10,000, could he have moved to the Bahamas and never bought the lot? In other words, was it a gift with no strings attached? Then, you go through each step with your questions. One scenario has Ann filing a gift tax return for $17,000 and a $5,000 gain (less costs) on her 1040 plus Bob with a $10,000 basis. But, I can see all the other scenarios, also. Intent.

Colorado $750 to all individual taxpayers. Federal taxable? Other Income or...? Nontaxable? Are you entering it and then backing it out? Using what lines? CO taxable? My first of only two CO clients.

Or, he's her child that paid for more than half his own support. But it's late and I didn't sleep much last night, so don't listen to me!

I think keeping two siblings together can be a special need, but I'm not at all familiar with what type of paperwork is needed. It can increase the benefit, if I'm remembering correctly about keeping the sisters together, so do keep researching.

Reporting by the 3rd party processor, NOT by the recipient, is changing. I keep seeing headlines about not having to report amounts under $600, but no mention of WHO is in the headline. The headlines seem to imply (clickbait) that the taxpayer will not have to report on his tax return. The taxpayer is, and always was, required to report worldwide income from all sources in all amounts on his tax return.

You are required to have a signed Form 8879 before e-filing a return. You are required to keep the signed Form 8879 for the appropriate number of years. Sorry, I can't help with Oklahoma forms.

When to check ‘NO’ Normally, a taxpayer who merely owned digital assets during 2022 can check the "NO" box as long as they did not engage in any transactions involving digital assets during the year. They can also check the "NO" box if their activities were limited to one or more of the following: Holding digital assets in a wallet or account; Transferring digital assets from one wallet or account they own or control to another wallet or account they own or control; or Purchasing digital assets using U.S. or other real currency, including through electronic platforms such as PayPal and Venmo.

The business is still operating in State#1, right? Brick & mortar? Employees in that state? Do partners travel to State#1 to manage the business? Or employee manager in that state? Do partners perform business activities from their home or from any location in State#2?

Hey, Max, please give me your contact information if you're still interested. Via the private message in the upper right corner is fine.

From the Partnership instructions: A joint undertaking merely to share expenses isn't a partnership. Mere co-ownership of property that is maintained and leased or rented isn't a partnership. However, if the co-owners provide services to the tenants, a partnership exists.

Or, a jointly-owned rental building.

From the 2022 S Corporation Instructions for Schedules K-2 and K-3 (Form 1120-S): 2. Shareholder notification. With respect to an S corporation that satisfies criterion 1, shareholders receive a notification from the S corporation at the latest when the S corporation furnishes the Schedule K-1 to the shareholder. The notice can be provided as an attachment to the Schedule K-1. The notification must state that shareholders will not receive Schedule K-3 from the S corporation unless the shareholders request the schedule.

From the 2022 partnership instructions: 3. Partner notification. With respect to a partnership that satisfies criteria 1 and 2, partners receive a notification from the partnership at the latest when the partnership furnishes the Schedule K-1 to the partner. The notice can be provided as an attachment to the Schedule K-1. The notification must state that partners will not receive Schedule K-3 from the partnership unless the partners request the schedule.

I'll be glad to pass your contact info along to the parents, who will probably be the ones to set their grown son up with some help to get and stay compliant. Send me a private message.

I'm in CT with CO clients who have a grown son in CA who need tax help and education. "...son..., who lives in Santa Barbara, CA. We were wondering if you know someone who can advise him about his current and future financial situation? We would be willing to pay for this person to help him out. He got into trouble awhile ago not paying his quarterly taxes (we didn't know at the time) and now has quite a bit of debt owed on back taxes and credit cards. We’ve encouraged him to find someone to work with but he doesn’t seem to understand the importance of it at this juncture. He’s admittedly unorganized as his girlfriend and we worry about them! Any suggestions you could send our way would be greatly appreciated!" A small firm with a tax preparer to access prior damage and file now and going forward, and then maybe an admin or bookkeeper to remind Andrew of deadlines and educate him. Perhaps a subscription service billed monthly. Girlfriend needs help, too. Let me know if you'd like me to pass along your contact information to these nice folks.

My clients have a LOT of wash sales, so I love importing spreadsheets.

Have your client make his broker send you a spreadsheet to import.

...paying for everything he could think of out of his corp...

I have only 2 S-corps left, and both pay their shareholder/employee well. One has very cheap union insurance; the other has very expensive (pre-existing conditions) family insurance ~$35,000. I turned away a potential client who wanted to use his S-corp like his personal bank, paying for everything he could think of our of his corp, OIH, Cadillac health insurance, taking distributions whenever he needed funds to live on, telling me that HI should be the only amount on his W-2, because he wasn't going to pay payroll taxes nor use a payroll company. I declined to accept him as a client. Maybe that one part was correct, but he was too much of a player for me and my biz model.

Show him the Form 8949 instructions, especially pages 3-4 with exceptions to listing everything on Form 8949 and the sentence, "If you choose to report these transactions directly on Schedule D, you don't need to include them on Form 8949 and don't need to attach a statement. For more information, see the Schedule D instructions." If he doesn't agree, he's a lawyer, ask him to show you the code section.

So, HI in Box 1 does NOT help an employee/shareholder meet RC, because no SS/Medicare is being paid on HI.

Does the IRS compare RC to Box 1? Or, Box 5? I have clients that RC would compare well to Box 1 (HI) and wouldn't have to have any Box 3-5 income at all if it won't reflect poorly on their RC. They could take all the rest they need to live on as distributions.