User talk:R2

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Trillium 20:25, 8 September 2009 (CDT)

California law marijuana dispensary

Hi, i have a few questions regarding California law marijuana dispensary. If you would be willing to answer them you can e-mail me at tsaccounting@gmail.com or call me on 714-224-8889. Your help will be appreciated.

Thanks Tushar

thanks for your replyAzmscpa1 16:02, 14 September 2009 (CDT)

Corporate Bankruptcy Taxes

Other than Publication 908, is there any other resource available for completing a bankrupt corporate return? thanks for your assistance.Azmscpa1 16:07, 14 September 2009 (CDT)

thanks for your reply. I thought I might send a message directly to you. I am hoping that you will answer and provide some additional guidance.

Taxpayer has a an NOL carryforward to 2008 of 72,063 arising from 2006 & 2007 losses. I don't know what the 1041 looks like - I am not even sure the trustee filed it. The amount forgiven in bankruptcy - ch 7 - is approximately 329K including the following: $170K of business related debt (schedule C), includes business loan & credit cards $109K of home mortgage various other items - car loan, credit cards etc

All of the NOL is related to the taxpayer's business for the 2006 & 2007 years.

I'm not sure what to do... my inclination is that the trustee should have filed the 1041/1040/982 to indicated the reduction of tax attributes. I have put in another request to the client for whatever she can provide about this. I will say that she has told me that nothing was filed, though I am not sure if I trust that answer.

or... Should I perpare the 982 with the return & eliminate the NOL, business debt, adjust the home basis etc?

Perhaps its just late, but I keep changing my mind and second guessing here.

Thanks fo whatever guidance you can provide.

Thank you Riley. Much appreciated Iaklein 23:03, 12 October 2009 (CDT) Ira

Hi R2 Could you please help?

Hi R2, I am getting hung up on a couple points and was wondering if you would be so kind as to lend a hand:

My client has 1st loan on his California rental of 270,000 and 2nd for 50,000. Total debt 320,000. This is a recourse loan. The house will short sale by end of 2009 for 170,000. He would have cancellation of debt of 150,000. He is insolvent by 50,000 so I believe 100,000 is going to be taxable cancellation of debt income on line 21 of 1040. When calculating the sale of the rental property on form 4797 the sale price will be 170,000 and the original cost basis was 248,000. Depreciation taken will be 25,000. Also he has suspended passive activity losses (rental losses from prior tax years) of $38,000. Plus I'm sure about $15-$20,000 in (operating) rental losses in 2009.

My questions are this:

In reducing tax attributes, would I reduce the original cost basis of 248,000 by the canceled debt of 100,000 reducing his basis to 148,000 thereby causing him to have a phantom gain of 22,000? I read somewhere that when the rental is short saled, you reduce the costs basis immediately prior to sale and not the following year.

Or do I...

reduce the passive activity loss of $38,000 and then reduce the basis by the leftover amount?

I'm not sure that this would qualify as QRPI because my client just had this one rental and it was not a business as he was employed elsewhere. What do you think.

I'm sorry to trouble you, but I've checked the forums and could not resolve this.

Thanks

Thanks, R2. I suspected so, and that was my gut reaction. I honestly need to re-vamp all of my research skills!

I used to practice in the Bay area until family matters interferred. I truly miss the weather there.

2009-52 response to your answer

R2, I did not make a timely election for an ESB from the ARRA because at the time the client did not qualify so I carried back to the 2 year. So I should be okay to do a second Form 1045 with an election pursuant to Rev. Proc. 2009-52 right?

Hi R2,

Thanks so much. Judging from what I am reading, my client doesn't have an income recognition issue, and the funds will simply reduce his basis. It looks like sec. 118 sets forth the disclosure requirements and 362 addresses the recording logistics. Is there an election to be made for this?

I really appreciate your answering my question.  :)

--JP 14:15, 28 November 2009 (CST)