Lion EA

If the partnership was on extension until 15 September, then the K-1 is very timely. Hope the partner/your client was on extension, also.

And, the family has some hoops to jump through to provide you with documentation that the FMV has appreciated from the cost basis.

Sounds like it was the client's fault. If they want to call/wait on hold to see if they can fax it to someone that would speed up the process...

OK, so a family bought the basket in 2010 for $1,500. One family member passed away? Then the family donated the basket in 2021 to a museum. I don't see any other documentation other than the $1,500 -- IF there's a paper trail for the $1,500. Are you asking what charitable deductions all the remaining family members receive on their 2021 returns? Without any other documentation, and assuming they kept their purchase documentation, $1,500 divided by the number of remaining family members. If the family is hoping for more, they have some more legwork and research to do.

I see only mailing in the instructions.

It sounds more like a hobby than a business. Why would you want to draw attention to it by filing an S-election now, hoping to make it retroactive? Why does the company want to be an S-corporation? It's going to cost them a bundle to have you do their past bookkeeping, payroll, financial statements, personal returns, etc. I hope you have a huge retainer. Can they afford you? Can they afford all the P&I? If they came to me and insisted on a much-too-late S-election, I'd send them elsewhere! If they came to me to make a fresh start, I'd work with them to treat their casual hobby/business like a real business. I would not rewrite their history. Depending on their income and long-term plans (do they want to take in a new shareholder, for instance?) I might suggest an S-election for 2023, after I've seen them make the changes I'd require. If you have time to redo 2022, you might make a late election for 2022.

Not to mention the P&I on all those years' worth of late payroll forms, 841, 940, etc., and amending his personal returns to account for the new W-2s and K-1s. Your fee should be huge! They issued a W-9 stating what name, TID, and checked what biz structure?

Our tax dollars at work -- NOT.

Has it been operating as an S-corporation since 2016? Payroll? Forms W-9? Did everything except file the election? Thought lawyer filed it? What?

Was it part of the inventory of the belongings of the deceased for probate or on his estate return? If the estate paid tax on a $3,300 value, then that would be documentation. If they haven't included a value, or a value no higher than $1,500, before or at death, then they need good documentation now to claim a higher value! Can't have it both ways!

What is the basket currently insured for? That could be documentation, maybe. Or, a quote from an auction house or consignment shop, what would they price it at?

And, a lot of high school kids listened to their friends and filed in the IRS portal for EIP3, which counts as a tax return. The kids get their free $1,400, but their parents' returns get rejected due to their dependent already filing a "return."

Thank you, Katherine. I think I understand that.

Again, I'm not doing their bookkeeping. Are you saying to overwrite to include it on the balance sheet as a normal depreciable asset for 2021? (Depreciation will begin in 2022.) I'm not giving them journal entries. They have a list from the checks written and from deposits made during the year. They have no fixed asset account, because they have no "books" except for the list generated after the fact from the business checking account.

I was looking at the Other assets (attach statement). It's going into service now, so I know I can make the adjustments to move it on the 2022 return. (This is my son and DIL. It's always the freebies that take me the most time and anguish!!) Thanks so much, Margaret and Judy.

The client does no accounting, just gives me a list. (She used to at least use Quicken and then an Excel spreadsheet, but so few transactions during Covid that she's been emailing me lists the last couple tax seasons.) I'm trying to do the tax reporting from her notes. I use ProSystem fx which pulls assets and accumulated depreciation from the depreciation schedule. So, If I'm not depreciating something that's not been placed in service, it doesn't flow to Schedule L unless I do some overwriting. She did give me her closing bank balance; they paid cash for the food truck. She gave me a list of expenses, and the new food truck is on that list -- but it's not in service yet. Her income list includes money she/partners put in and RRF as well as actual income. Her expense list includes the truck and petty cash on hand as well as actual expenses. Just trying to move all her items to the right 1065 schedules. And, I don't know where to put something that was purchased but not used. My quandary is not that it's on a depreciation schedule only, but that it should NOT be on a depreciation schedule at all. Is it an asset if it wasn't used in business during 2021? It's not a depreciable asset.

Well, Margaret, that makes lots of sense! Now I need to figure out how to get it there if not from the depreciation schedule...

Yes, it's the same partnership. And, it's my son and DIL's partnership, so a freebie. I can't believe I haven't had this situation before, but as I said in my other post, I prepare only about four business returns. Partnership bought a food truck in 2021, but placed it in service this summer 2022. I know not to depreciate an asset not yet placed in service. But, again, the BS is my weak point. The money is out of the bank account, but I don't put the truck on the return yet, right? How do I balance the BS? (I was doing well with this partnership for years, because I started when they started, with all zeros to open, and had good detail from the partners. Now, I get a problematic list, bank closing balance, and two new items for my limited experience!) Thank you to all who can help me get unstuck on this 1065.

Not really, it's actually the Restaurant Revitalization Fund. Someone pointed me to Rev Proc 21-49 which states that the RRF is treated like the PPP and other Covid relief programs. This partnership received the money in 2021 and has until 2022 to spend it on qualifying expenses; they spent part in 2021 and expect to spend the rest in 2022 and all on qualifying expenses, per a partner. I don't prepare very many business returns and only two partnerships, and the other one had no PPP or RRF. How do I report it?? At 12/31/2021, some was spent but much remains in the bank account. How do I balance the BS? (I have lots of notes from a couple of S-Corporations that had PPP; M-2 addition to AAA, subtraction from OAA. But Form 1065 Schedules L and M are the same as Form 1120-S.)

The state may've deactivated the corporation. You're going to need lots more information from that potential client &/or collect a very large deposit toward your hours.

The firm was founded in 2021? So, you're filing their first return on extension? Or, 2021 was filed by someone else and you need to...what?

You have to keep checking online. The IRS doesn't notify you of anything. Anything to do with the IRS is DIY. Don't trust, but verify!

That's what tax preparation feels like...

I've heard from one of my professional groups that the IRS is considering a mid-year mileage adjustment. That will be so much fun breaking out mileage (that clients pull out of the air anyway) into the before rate and the after rate. I use MileIQ, so I have the my dates, and urge my clients to use it or a similar app or notes on their calendar (paper or electronic) or a paper log, but we all know which ones will not follow our directions.

The remaindermen need to contact their lawyer. But here are some articles about your topic: https://wernerlawca.com/who-owns-property-life-estate/#:~:text=While a life tenant cannot,over the role of remainderman. https://burnerlaw.com/who-owns-the-property-when-there-is-a-life-estate/ https://www.fendrickmorganlaw.com/a-life-estate-deed/ https://www.bowmanlawfirm.net/blog/selling-property-life-estate