Lion EA

Husband did not pass away, but is now deep into early-onset Alzheimer's so not remembering receiving a gift from his father. His father did pass away, but gifted the shares in the company while still alive. So, the two men most involved with that company are not available to answer questions or recreate anything about the past. The CPA was reporting partner wages on a 1099-MISC, so I don't know how much I trust his accuracy. By the way, my father is John Brown! I just received an amended K-1 for a partnership on the same joint return as my main question re an S-corp K-1. The partnership now has Box L information, but I had suspected it was negative. Nice to have something on paper. Still waiting for wife who is dealing with mother in law re gift tax return &/or father's last K-1 plus a couple more K-1s prior to coming to me, so I can carry husbands basis forward againts the large distribution he received when the S-corp dissolved. This return has four partnership K-1s, one S-corp K-1, three Schedules C, a W-2, and a lot of medical expenses. I prepared the returns that generated two of the K-1s, so I have basis info for those two! I think I see about what all the amounts should be and how they flow, but still need some more documentation if the wife can track it down. Thank you, everyone, for pitching in to help me. I appreciate it more than you can know.

I, too, got that message (didn't note the error code, though). But, I did get back to the forums without them being black/unread. Also, it was about the time a thread was moved to another forum. I don't think it's recurred. But, I do remember it also in the distant past, at least once. Yours is recurring now, right?

Yes, Revocable by the donor. Not only can't I do the numbers, now letters are eluding my grasp! Thank you, Bart.

I admit I have a headache due to the return I'm struggling with, so take this with a grain of salt. Business miles are business miles. If he had qualified business mileage (you mean the standard mileage rate, right?) then that's what he had for 2016 and 2017. If he took Section 179 depreciation on his truck in those years and then in 2018 his biz mileage % dropped below 50%, such as becoming a personal use truck, then you would recapture the excess already deducted over straight-line depreciation. I'd start with IRS Pub. 946 to research your client's situation.

...her husband who gifted S-corp shares TO MY CLIENT personally, not into the trust, while alive, has passed away...

Bart, that's what I'm thinking. But, the lawyer and broker gave the statement to the trustee and not to the donor. Donor of trust did NOT die, so that trust is still irrevocable, right? Her husband, who gifted S-corp shares while alive, has passed away so looking for K-1 answers from others. And, unlike Roberts' case, depreciated commercial building was sold within the S-corp and reported on final K-1. The trust was funded with cash from the donor/my client's mother.

Thank you all. I think Spouse via MIL can get me 2012 info that seems to be year of gifted stock shares. They were DIYers in between, and biz people (as well as show people, a musician and an actress) so hopefully have their 2012-2013 returns; I began 2014. I know I'm being thick about this, but I had two grandchildren in two different states in June and one very sick DIL, so I'm sleep-deprived and distracted. So, the K-1 info is on the return as usual, the 1250 and 1231 gains are really his share of the profits from the sale of the building, OK? His "sale" of stock will be a LT Sch D transaction, right? Zero sales price and what I can determine as his basis. That will offset the $300,000 in gains with only $3,000/year, right? But, he did get a distribution, so that lowers his basis. Because the firm dissolved, I'm thinking that distribution would zero out his basis, no? Sorry to muddy the waters with the trust. That's a whole different topic, I think. (CPA gave them the brokerage statement as if it's reported on their joint return.) They didn't tell me about it. Discovered the brokerage statement in their paperwork. I now have the trust document, and it uses language like Donor and Revocable. But, MIL's/donor's lawyer obtained an EIN for the trust. So, I'm not sure if it's a standalone on a 1041 by my client or if it needs to be reported by MIL/donor. But I told client that as it was a surprise to me, it's not on my schedule for right now. I will return to that after managing to complete their personal returns and preparing returns for a couple other clients. Love you guys. Trying to get this off my desk before we leave next Wednesday for a week for hubby's family reunion in MA. I hope I can get some R&R then, but won't if this complex mess is still on my mind !!

Gift. Spouse is making inquiries, mostly to MIL. Taxpayer was gifted S-corp shares in 2012, it's looking like. Spouse thinks she can get MIL's joint return for 2012 &/or 1120-S. However, the CPA has not been including a capital account nor basis information for Taxpayer, and through 2017 issued Taxpayer Form 1040-MISC as well as a K-1, so I'm not sure if we'll get the donor's basis when he gifted shares. But, what do I do with the basis? Obviously Taxpayer had basis in the S-corp when it was dissolved to receive a distribution. Would his basis be his distribution? If so, the distribution wouldn't show up as income on the joint returns. (CPA has been promising me Taxpayer's beginning basis since 2014 when I started preparing the joint returns; prior to that, they were DIYers.) Taxpayer has $300,000 or so in passthrough income (see my OP). But, if the building sold for about $1.7M and there were six shareholders, then I don't see that the proceeds were reduced by any basis before reporting on the K-1. This is only Part 1. I'll have separate questions about a trust that has an EIN with brokerage statements issued to Spouse who is trustee. But, the donor is Taxpayer's mother, and it's a revocable trust. Does that sound like a donor trust, reportable on donor's/mother's tax return under her SSN? Don't get me started. And, I really appreciate everyone's help and education. Thank you!

Spouse seems to think that the father gifted my client (and his brothers) shares while still alive (and uncle gifted cousins, but not necessarily at the same time). That's all the mother was able to tell my client/spouse. I guess that makes it worse, trying to find out dad's cost basis when no one's sure when the gifting took place. The CPA for the corporation is refusing any help. Or, maybe, he wants to charge for it. The family is taxpayer with Alzheimer's, spouse an aging actress so not working much, and two college kids, one with costly medical issues. I know I'm missing something in the flow that would lower their taxes, and they really need them lowered. This distribution has to last them the rest of their lives, especially now that two in the family have costly health needs. But, how do I work with the basis? On Form 4797 where the building sale is reported, the building sold by the S-corp? But, the S-corp sold the building, not my client. The S-corp dissolved, so my client's stock is worthless. He had a distribution from the S-corp that must've zeroed out the balance sheet, but he still had basis so the distribution isn't taxable. I've had clients sell their stock in an entity, but I haven't had a stockholder client at the time a corporation dissolved.

My client received a final K-1 from an S-corporation. The S-corp sold the firms's only asset, a commercial building it owned and dissolved the corporation. It reported rent, interest, unrecaptured section 1250 gain, and net section 1231 gain on the final K-1. Also, a distribution of $302,114 in Box 16D. Do I report all the items on the K-1 as in past years? Does his stock basis come into play? How? Client now has early onset Alzheimer's, so won't be able to answer any questions for me. Such as how much did you invest in this company. He may have inherited his shares from his father, but his father isn't alive, so I can't ask. I'm reading my S-corp book, but it is over my head, or maybe it's just the jargon. Any and all guidance will be appreciated.

And did I tell you? Found paperclipped to all the Merrill Lynch accounts, one that's a trust. I told them the trust would not be completed this week, only their personal returns, and told them what I need, such as the trust documents, tax ID (it's masked on the ML statement), anything else besides the one Merrill Lynch account, etc. Not only did she not mention a new trust, but she forgot to tell me about the sale of a building by an S-corp, so nearly $350,000 income on that K-1. I would've had them send more with their extensions, probably pay more 15 January 2019 if they'd had the final numbers by then. I had a chance to see that S-corp info sooner. CPA prepared short year returns and went on vacation to Bermuda. CT didn't like short year on 2017 forms, because they revised their forms for 2018. Client called me in March to revise CT return, but it's not in my system/I didn't prepare the S-crop returns and I was a little busy. CT actually talked her through putting the info on their new forms and faxing it to them. So, I received that K-1 and CT-K1 recently. The one with $350,000 of income. Plus other K-1s with losses and no basis statements. Three schedule Cs. They owe about $60,000. I really don't charge enough! As you say, I need to get back to work. Just dreading calling them with their balance due.

You guys made my day! (Working on a partnership, parents/entertainers joint return with a dozen K-1s and three Schedule Cs and multiple states, plus two college kids that worked in multiple states.)

This is from TASC's website, a company who administers Section 125 plans. https://www.tasconline.com/biz-resource-center/plans/section-125-cafeteria-plan/ [Note: one portion below] Exceptions Sole proprietors, partners in a partnerships, and more-than-2% shareholders in an S-Corporation have special considerations concerning participation in a Cafeteria Plan. While sole proprietors cannot directly participate in the plan, they may legitimately employ their spouse and offer the spouse the benefits of the plan. In such instances, the employer must take care to ensure that the plan must be offered on a non-discriminatory basis. The employed spouse may be considered a highly-compensated employee and as such their contributions to the plan may be limited. A partnership operates much like a sole proprietorship. While the partners cannot directly participate, they may employ a spouse who in turn may receive benefits. The highly compensated issues apply as stated above. While all non-related employees may participate in the plan, depending upon the plan's parameters, non-discriminatory rules apply. In S-Corporations, eligible employees who are not shareholders and who are not defined as highly compensated generally may participate to the fullest extent. Eligible employees, who are defined as highly compensated, excluding shareholders, will be subject to the non-discriminatory rules. Special rules apply to a more-than-2% shareholder of the organization. These individuals may not participate in the plan; nor may their employee-spouse, children, parents, and grandparents. In determining the status of an individual that becomes or ceases to be a more-than-2% shareholder during the course of the S Corporation's taxable year, the individual is treated as a more-than-2% shareholder for the entire year.

Re-read CB's posts.

Today, the mother said the wrong SSN is actually the EIN for Colgate, which might be what happened. However, the 1099-Q has a box to check if the distribution went to anyone other than the beneficiary; so if it went directly to Colgate, that box should be checked -- and is not. Anyway, it is their 529 and they did take a distribution to help with tuition and mom knows an incorrect SSN is listed for her son. We'll know what happened if we get an IRS letter. Just hope some innocent bystander doesn't get a letter for not reporting a 1099-Q distribution! I have a very small farm in IL that my grandfather bought in the 1880's. I have a sharecropper who also pays me a little bit of cash rent. Each year, he sends me a 1099-MISC with a wrong digit in my SSN. Each year I tell him my correct SSN. Each year is a different error in my SSN. I'm reporting all my income. But, random innocent bystanders are probably getting IRS letters.

Thanx, all. Yep, I already roughed out a spreadsheet for my calculations: $55,000 tuition - $40,000 grants - $1,700 CHET 529 plan (only $200 potentially taxable) = plenty for AOC. Parents are older (adopted kids from China) and dad now has dementia and can't work, so they will qualify for the AOC. I'm entering in my electronic notes to the parents' tax return, as well as the student's. Just to add to the complexity, the 1098-Q has the student's name but a SSN that does NOT belong to anyone in the family, totally different digits.

Hardly have anyone with 529 Plans, so please let me know if I have this correct. Student received Form 1099-Q, so it gets reported on student's return, right? However, does it get reported at all if used for tuition? Very expensive college. So, nearly $30,000 tuition - $12,000 scholarship - $7,000 529 distribution still leaves lots for parents to claim AOC, yes? If so, does the 1099-Q show up anyplace on student's return? Will the student (or parents) receive an IRS letter?

Your local fire department might know which brand/model is the most sensitive and the loudest. It's worth a little time searching. Install them as high as possible to make it hard for your neighbors to remove the batteries. Or, hardwire them in. Your neighbors won't want the baby crying or the toddler throwing a tantrum.

Install a very sensitive, very loud smoke detector in the alcove. Maybe your insurance company requires it...

Me, too. I want to be able to point to it if a client questions my fees!

Subaru checked our credit when we bought a car, even though using separate funds. I asked which company and unfroze that one only for the day. When clients were going to rent a storefront for their bakery, they had to unfreeze for a day; but they were committing to monthly payments for a year, so I can see why the landlord wanted to do a credit check.

New hires!

Ask your client.

It comes into play for a LOT of things. For instance, I still have not gotten back on e-Services, because I would have to unfreeze my report(s) for the time it takes for them to identify me via third-party information. (Well, that and the fact that e-Services says my cell phone is not in my name when AT&T says it is in my name; maybe tied in with the freeze, after all.) There are a lot of places that check credit reports without extending you credit, just for identification purposes. If I really want whatever it is, I ask them which company they use. The guy behind the desk never knows. If it's biz hours and he can ask corporate, I unfreeze that one until approved. Had to do that to add my kid on our cell plan. It's a real pain. One year a tax return was filed with my SSN, so I had to print and stand in line at the PO. Last year I was able to e-file again. You never know when you'll be hit with fallout.

As much as I love your professional-looking website, I do have two thoughts: I view things like this on tabs on half of a horizontal monitor, saving the other half for my own email, and saving my two vertical monitors for tax preparation. In this configuration, all I see is your beautiful picture, your contact numbers above and "Welcome" and two lines of print below. That's great if I just need to find your phone number. But, it might not be great if I'm a potential client checking you out for the first time. I also tried your site on my iPhone via Safari. Although this is now vertical, my phone screen shows only about as much as my specific monitor configuration described above. However, there are no numbers after "Phone:" and "Fax:" -- just blank. The color? The update I did last night? I don't know. If this is a marketing tool, visit some friends and family to view your site under different conditions. If this is for the portal, you are fine! (Mine is for the portal.)