OldJack

The problem here is that we don't know what those $27,000 are all about. You can't give a second opinion without knowing what the details are. This could be the shareholders stock basis being reported in the wrong place or it could be a payment made under a loan guarantee that would be reported on Sch-E. You have to find out the details.

>>The seller (your client) is effectively back in possession of the Schedule C activity<< But if your client is not open for business or operating a business, there would be no Sch-C.

I would join their board if they purchased this board to replace theirs. I have not logged into ATX for anything this year and have no passwords to update. Ha! I am using their software and other than that I could care less about what CCH does just like they care less what I do. I no longer purchase their reference materials.

I think you need to further check out the facts. On what date did mom gift (by deed without her name) the property to children, if ever, or did the children sell the home for mom with a power of attorney form. Is the proceeds really mom's just deposited in error to the greedy son's bank account or just because he is a dumb holder of a power of attorney form? Go prove the paperwork transactions and don't make a stupid mistake costing your clients taxes.

Wonderful stories.. makes me want to cry. Oh.. I just remembered, my son-in-law, when in grade school was sitting in a sex education class watching the birth of a child film. When the credits scrolled by after the film he saw his parents names listed and realized it was he that had been born in the film. True story.

Its not easy to qualify as a day trader even if that is all this taxpayer is doing. You should make sure your taxpayer qualifies. The default for an individual with large stock transaction traded for his own account is as an *investor* with the requirement that all transactions are reported in detail on 1040 Sch-D or attached schedule with similar columns and headings.

>>Take them in the year he starts business.<< True, but take them starting in the month that he starts business.

>>does the depreciation requirement go away? << Yes it goes away when the taxpayer dies and the residence is inherited.

>>My earlier post on this was deleted<< And what was that all about??? Have you been using those words again?

I am a MO tax preparer. Since MO starts out with the Fed AGI there has never been a deduction for health insurance in MO. Starting with 2007 tax returns we now have the deduction/subtraction from the Fed 1040 Sch-A. Quote from MO website under whats new: >>New Health Insurance Premium Subtraction Individuals may subtract from their federal adjusted gross income, qualified health insurance premiums, to the extent their premiums paid were not reimbursed by their employer, or excluded from their federal taxable income.<<

>>I believe there is a way to take all the losses at once << Its called realizing capital gains to offset the capital losses. There is no other way at this point for your client.

By IRS definition an active officer of a corporation is an employee.

So what? He sold it and that is the sale price as long as it is not to a related party. Where is the cite that says a taxpayer can't sell his property for whatever he wants to sell it for.

>>I cancel my paper during tax season.<< Shoot.. I canceled my paper years ago because I got tired of all the liberal bios and democratic propaganda. Our news media are out of control and never tell it like it is. It has to be sensational or they will try to make it sensational or they will just say anything believing that we will accept what they say. I had a good laugh today when our TV weather lady told us all that the tornado sirens (tested today) were not designed to be heard if you were not outside. She's not from around here and I'll bet she has never seen the bad weather we have with tornadoes in this part of the country. LOL

I would take it as a capital loss if the appraisal was a proper independent appraisal for the purpose of taxes.

So really what happens if the S-corp does not add the benefit to the W2 and just expenses it as insurance expense? The S-corp profit is reduced on the 1040 and no deduction for self-employment insurance. If added on the W2 it increases wages and self-employment insurance is deducted on 1040 page 1. But the net effect on the 1040 is zero either way. No big deal.

Great list Jainen. I might add if the error is even when divided by 2 or multiplied by 2 you may have entered the number with a minis or plus sign the wrong way.

I have had about that many transactions on Sch-D with no problem in the outcome. If you don't have correct date/year input you may not have gain/loss recognized, check your input.

I like the way you explain things Julie!! Good answer.

If the land was used as farming it would be sec. 1250 property subject to reporting on form 4797 flowing from installment sale form 6252. Form 4797 gain is not recapture as ordinary income on MACRS depreciation of sec 1250 property, but ACRS depreciation gain is recaptured as ordinary income (19 year depreciation is ACRS). If there is recapture of gain from depreciation that portion is fully taxable in the sale year regardless of actual payments received (see form 6252). Such sale could be treated as an installment sale but if the relative sells the property before the end of the term of the installment the taxpayer may have to recognize the relative's sale price as his sale price. See publication 537, page 6.

>>treated as a deemed sale of stock<< I agree with MJG if the loan amount was used to deduct losses below the taxpayers basis and the basis has not been restored with profits or contributions. You have to do a tax basis analysis from the individuals holding and not from the S-corp books. It could be the losses at the shareholder level were not actually deducted and as such were carried forward.

Just because there was no income does not mean the taxpayer did not materially participate in the business. You have to be careful about making decisions for the taxpayer (such as did not participate). If the business has ended the start-up costs would be written off as expense on the final 1040 Sch-C regardless of participation. No it is not a passive loss unless it was a passive type activity.

Yes.. Sorry...I misread the original post. I would say it should be Sch-C with profit subject to SE tax. Well.. some would say she was not in the business of renting equipment and therefore it would be 1040, line 21 not subject to SE tax. I don't agree with line 21 myself as the taxpayer enters into the rental in a business manor with their own business, otherwise the S-corp payment could be considered taxable as salary subject to payroll taxes.

Yes, 1040 Sch-E income, no deduction allowed for the office in the home expense.

It may be for personal injury which is not taxable. It may be for damages to the vehicle which is not taxable unless it is in excess of the cost of the repairs or value of the vehicle.