Form 5405 election

[MAMalody]

I have a client that purchased a new home and wants to file for the credit. He meets the qualifications. ATX automatically added their election page to the return, but for the life of me, I can find anything I need to fill out on it. What am I missing? I should also mention that we are referring to the $8000 credit and the election was premarked by ATX and said, "Electionn to exclude property from MACRS depreciation"

[kcjenkins]

What you need to add is the Form 5405. There is nothing you need to do on the election except include it, which the program automatically did for you.

[mlinder42]

The date of closing on the property and the purchase price.

[MAMalody]

I did use Form 5405. When I indicatd the closing date and purchase price it was on the worksheet of the Form 5405. I believe it was the entry indicating a 2009 purchase being used on the 2008 tax return that triggered the election page. I don't see a reason on the election page that covers what I am doing. The program selected "Election to exclude property from MACRS depreciation" as the reason for the election. I can generate an e-file but I would like to know what is going on here.

[mcb39]

Does your client, by any chance, own a business or rental property that would trigger the election not to depreciate?

[MAMalody]

No, however, he is a pastor and there is a Schedule SE in his package.

[Jack from Ohio]

On the actual form 5405 be sure to enter the purchase price at the top of the page, and the date of purchase below the address. You should not use the calculation worksheet.

The worksheet is only used for "Calculating and Allocating Credit Between Unmarried Taxpayers"

It has also been recommended by the IRS that if you are amending to claim the credit, that you enclose a copy of the closing statement with the amended return.

I had the same problem with a client about 6 weeks ago.

[mcb39]

No, however, he is a pastor and there is a Schedule SE in his package.

Therefore, his income is reported on a Sch C as SE income?????? This might be the reason for the Elections. I think you are worrying too much about it. If it is his personal residence and he is paying for it himself (not subsidised by the Church) you have no problem.

[MAMalody]

mcb39, generally, a pastor's income is not reported on Schedule C even though a Schedule SE is required to compute the self-employment tax.

Jack, you did it. I had overlooked the box at the top of the ATX form. When I filled that in and deleted the election page and reopened the return, the software did not automatically open the elections page. The form also computed correctly. Jeez! Thanks for the help folks, I truly appreciate it. If I can ever confuse you on something, let me know.

[mcb39]

mcb39, generally, a pastor's income is not reported on Schedule C even though a Schedule SE is required to compute the self-employment tax.

Jack, you did it. I had overlooked the box at the top of the ATX form. When I filled that in and deleted the election page and reopened the return, the software did not automatically open the elections page. The form also computed correctly. Jeez! Thanks for the help folks, I truly appreciate it. If I can ever confuse you on something, let me know.

It is good to know your solution. The pastor's that I have DO report on Sch C and are considered to be self-employed. I don't have a lot of them, though.

[Jack from Ohio]

mcb39, generally, a pastor's income is not reported on Schedule C even though a Schedule SE is required to compute the self-employment tax.

Jack, you did it. I had overlooked the box at the top of the ATX form. When I filled that in and deleted the election page and reopened the return, the software did not automatically open the elections page. The form also computed correctly. Jeez! Thanks for the help folks, I truly appreciate it. If I can ever confuse you on something, let me know.

I like being part of a team effort! You are welcome! Your insight in clergy taxes has helped me many times!