User talk:JAD

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Contents 1 Welcome! 2 After tax season drink! 3 Pro for 1 year, Passive Loss 4 S-Corp income = "earned income" for SEHI deduction? 5 S-Corp Health Insurance-Lacerte entry and handling 6 Gross Receipts in Sales Factor 7 Floating Ads 8 sale of partnership interest

Welcome!

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- Tim Doyle, TaxAlmanac Moderator - Talk to me 18:25, 23 February 2007 (CST)

PERSONAL USE OF INVESTMENT PROPERTY

Hi Jessica,

Thought I would send you a quick meesage to check out my update on the personal use of investment property issue that we discussed. It looks like that works in at least some situations.

Regards

Mark

After tax season drink!

2 cups fresh strawberries with tops cut off and rinsed. Enough good white tequilia to cover. Put in good jar(s) that seal well. I use washed out spaghetti sauce jars & caps because they seal well... wash them really well, rinse and let them set for a day.

Just put the strawberries in the jar, cover with tequilia to tops of berries, and refrigerate for 3 weeks. Use a funnel to put the liquor in the jars. When I make a drink I put like 2oz of tequilia, ice, plain water to fill smaller glass (one cup or so), and half packet or less of Sweet n Low. It's good ! Ciao! CrowJD 19:26, 14 April 2007 (CDT)

Pro for 1 year, Passive Loss

RE Pro for 1 year, Passive Loss Hey Mark,

Now it applies to me....what did you wind up doing? Thanks, Jessica

Hi Jessica,

My extreme apologies for just now answering your message. I have not been on Tax Almanac in quite a while. I'm finishing my last GGU class, so all of my dicretionary time has been spent on class. Two more weeks and I'll graduate!!!

On the above issue, despite considerable research time, I never found anything on point. I told my client that I could not comfortably recommend that she make the election and take the passive loss because of the uncertainty of how that would effect her in the future. She was understanding and agreed that a conservative approach was best. Nice client.

Again, sorry for the late reply. In two more weeks I will probaly be back to cruising the Almanac on a more regular basis. I miss the cast of characters, as much as I miss the good info!

Regards,

Mark

S-Corp income = "earned income" for SEHI deduction?

Jessica, I looked this up in my research yesterday, and I concluded that I was wrong. The flow-thru K-1 income does not qualify as earned income for purposes of this deduction. The only thing that qualifies are wages subject to Social Security.

--PVVCPA 14:33, 21 December 2007 (CST)

I know, that is scary. And that happens to me more than I would like to admit.

BTW, 3 weeks left. HUH? Have you checked your calendar lately? I wish we had 3 weeks. It's only 10 days! And 4 of those days are weekends and 3 of those days are holidays. That means 3 more working days. Ay caramba! In some evil way, I was hoping the AMT patch wouldn't happen so that I did not have to worry about doing the "should I pay my CA Q4 payment in December" people.

S-Corp Health Insurance-Lacerte entry and handling

In 2006 Lacerte: Screen 20.2, Schedule K-1 Information. Part II: Name or number of W-2 received by greater than 2% shareholder. And....The wages entered in Screen 10, Wages must also include the entry in "other information section": "More Than a 2% Shareholder in an S corporation" (Screen 10, code 26).

Gross Receipts in Sales Factor

Hi Jessica,

I'm assuming this was the sale of a business, or a significant part of a business. In some states the gain would be treated as nonbusiness income and allocated to the locations of the various assets; the goodwill would be allocated to the commercial domicile of the taxpayer (or residence of the individual owner). And the proceeds would not be in the apportionment formula at all.

However, in California you would have to go to court to argue that the gain is not business (apportionable) income. And then you would probably lose.

The California Supreme Court has recently held that when UDITPA says gross receipts in the sales factor, it means gross receipts. (Microsoft, General Motors) So the entire $13 million of proceeds from the sale of goodwill would go in the denominator of the sales factor. How to allocate it in the numerator is not all that clear, but if you make an effort (perhaps in the ratio of the fair market values of the other assets sold in California to those everywhere) it should be OK. Of course, this is not going to be a pretty picture if the business sold was all, or primarily, in California. There is an "out" clause; gross receipts can be omitted from the numerator and denominator of the sales factor if their inclusion is distortive. If you can come under this regulation, you can (or must) exclude the receipts from the sale of goodwill (and the other assets too) from the sales factor denominator (and the numerator, of course):

Reg. 25137(c)(1)(A)

(A)  Where substantial amounts of gross receipts arise from an occasional sale of a fixed asset or
other property held or used in the regular course of the taxpayer's trade or business, such gross 

receipts shall be excluded from the sales factor. For example, gross receipts from the sale of a factory, patent, or affiliate's stock will be excluded if substantial. For purposes of this subsection, sales of assets to the same purchaser in a single year will be aggregated to determine if the combined gross receipts are substantial.

1. For purposes of this subsection, a sale is substantial if its exclusion results in a five percent or
greater decrease in the sales factor denominator of the taxpayer or, if the taxpayer is part of a 

combined reporting group, a five percent or greater decrease in the sales factor denominator of the group as a whole.

2. For purposes of this subsection, a sale is occasional if the transaction is outside of the 

taxpayer's normal course of business and occurs infrequently.

I'm sorry about the formatting; I copied and pasted from the reg and I can't seem to get it to work right. Anyway, I hope this helps!

Merry Christmas! KatieJ 17:57, 24 December 2007 (CST)

Floating Ads

If you see any of the floating advertisements, please let me know. I'll need to know what the advertisement is for as well, so I can check to see if that was coming from TA or not.

Thanks!

- Tim Doyle, TaxAlmanac Moderator - Talk to me 11:37, 11 March 2008 (CDT)

sale of partnership interest

JAD, your comment re "you have to start the selling partner's share of depreciation over...take adjusted basis of his 1/2 share of assets and start depreciation over" - do you have a Code section for that? We agree that should be done in order to avoid recapture of 1245 or 1250 depreciation a second time on the assets "sold" in the sale of the partnership interest, but we cannot find a code section that addresses that.

Thanks for your help, D. Spradley, CPA, Austin, TX

D Spradley, I am replying here because I don't know how to reach you...perhaps you will check back here? If you sign with 4 of these in a row: ~ then there will be a link at the end of your post, like this JAD 11:47, 26 March 2008 (CDT).

If I didn't post a reference in the thread, then I probably don't have one without doing the research. I'm not sure which thread you are looking at. I'm sorry I'm not more help at this time.