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[[User:Harry Boscoe|Harry Boscoe]] 23:10, 30 October 2009 (CDT) [[User:Harry Boscoe|Harry Boscoe]] 23:10, 30 October 2009 (CDT)
 +
 +RoyDaleOne,
 +
 +I am confused as well.
 +
 +It is obvious that the drafters of 280A did not have fractional-interest properties in mind; pretty much the same can be said of time-shared arrangements.
 +
 +What they did have in mind is a single, free-standing dwelling unit with 2, 3, or 4 co-owners. Aggregating personal days by each of the co-owners, as required by 280A(d)(2) for purposes of the 14 day/10% test for treatment as a “residence” in 280(A)(d)(1), would not typically present an hardship.
 +
 +However, a larger project, with a larger group of co-owners – perhaps several hundred or several thousand, makes aggregating all of the personal days and rental days impractical/impossible. The Project Manager tracks occupancy for all of the units, but does not track personal days/rental days for any of the units; such Manager is not in a position to distinguish between “guest or family usage or rental below FMV” and “rental” usage. (Is the TP to distribute copies of 280A to each of the co-owners to document why the TP is requesting personal usage and rental usage data be provided to strangers??? Does the TP sue the co-owners to “encourage” them to provide such data??? Is the TP liable for any inaccuracies, fraud or otherwise, in such data???)
 +
 +Furthermore, counting combined usage for all co-owners is not fair. Why should the TP’s income tax liability be directly impacted by usage decisions made by each of the co-owners??? To the extent that there is co-ownership turnover, income tax planning is made more difficult (actually, more problematic for smaller projects). Why should the “rental days” number for the project not be correlated, even on a percentage basis, with the gross rental income realized by each of the co-owners that elects to rent???
 +
 +Lastly, counting combined usage for all co-owners in larger projects emasculates the “14-day” minimum (actually, this is a 15-day minimum for personal usage) in 280A(d)(2). This is due to: counting all of the personal days makes the minimum of 15 a “joke”; and the 10% of rental days rule for some properties (for “resort” fractional-interest properties, the ratio of personal days to rental days may be 5x or 6x) may be a “joke” as well. Thus, by (almost) definition, all of the co-owners treat their dwelling unit as a “residence”. Was this intended?
 +
 +Note: In the Craig & Luttman article, when discussing the “tax-free rent rule”, there is the following: “Few timeshare owners are likely to qualify for the tax-free rent situation since Section 280A(g) determines compliance with the less-than-15-days per year rental requirement based on the number of rental days for the entire “dwelling unit,” not a given timeshare owner’s portion of the unit.” The first part of 280A(g) definitely refers to 280A(d)(1) and 280A(d)(2); to me, it makes sense to calculate rental days using the same method used for qualifying the unit as a “residence”. Was it intended to make the “tax-free rent rule” not apply to larger projects?
 +
 +Conclusion: Applying 280A to larger projects is like trying to insert a round object in a square hole.
 +
 +[[User:JingleRock123|JingleRock123]] 23:28, 30 October 2009 (CDT)

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Contents

Profile

Roy,

Thanks for filling out your profile and welcome to the board. I look forward to your contributions based on your many years of experience.

Tom Taocpa 14:36, 3 February 2008 (CST)

Roy, Thanks for inviting me to contact you. My name is Dan and I am a EA out of Colorado and have several S Corporation clients. I have usually dealt with stock transactions where shareholders are buying stock directly from the corporation and/or making capital contributions and therefore gain basis in the S Corp for loss pass through and non-taxable distribution purposes. Now I have a new situation wheere and existing shareholder purchased shares directly from another shareholder. I am trying to determine what the changes are for each shareholders S Corp Basis for tax purposes and what the accounting entries in the corporate books are for this transaction. Any insight you could provide would be extremely helpful. If you would like an outline of the facts in the case I would be happy to provide those as well. Thanks, Dan


Okay Dan, first, in situation where one shareholder sells to another shareholder it just like IBM, no entries are made on the books of the corporation.

Second, on the shareholder basis worksheet included in most tax preparation program you would increase the buying shareholder's basis by the amount paid to the other shareholder for the stock. This increases his basis in the S Corporate Stock he now owns, his he had previously and the new shares he purchased.

The selling shareholder's basis is what was paid for the stock originally, plus and minus the income, gains and losses, (plus or minus other adjustments such as non taxable income and expenses) during the perios(s) he own the shares.

The buying share's basis is the computed the same way, except you add the amount he paid for the seller's shares.

If, you don't have a basis worksheet, let me know and give me an email address and I will sent you one.

If you have more questions about this let me.

Ray, Thanks so much. Exactly what I was looking for. I am sure I will have more questions but that is it for now. Dan


ATNOL worksheet

did you get the links that I provided? Kevinh5


Construction Loan Points

Thanks a lot for your response. Just wonder, in this case, do you think if I could expense the 1st year's amortization as that's the pre-construction period? Or do I need to capitlize that as well?Kerrypoon 18:56, 25 March 2008 (CDT)

Loan Points

Received your advice, thanks. Really appreciate your efforts in answering questions.Kerrypoon 00:24, 26 March 2008 (CDT)

Insurance question

Roy - I realize Kenk has posted before, but we don't have profiles on Kenk or Puru. And I don't know about you, but Puru seems to be dispensing some advice that leaves something to be desired. At least you are posting with authority and I have been trying to as well. Puru doesn't and I am very suspicious of his background based on some of his more recent posts. TomTaocpa 10:58, 2 April 2008 (CDT)

Thanks

Roy - Thank you. I've contacted Tim Doyle the moderator about him and so has Belle. I think he needs to go. TomTaocpa 18:34, 2 April 2008 (CDT)

Roy,

I want to thank you for your comment earlier today.

"RoyDaleOne (talk|edits) said: 

3 April 2008

In my way of thinking; 1. In 2008, redo loans to personal name(s), (Note the S Corp can guarantee the loans and pledge the equipment as collateral.)

2. Suspended losses are freed up and may create an NOL 2008, or reduce income taxes in 2008."

I was thinking that is what they need to do for 2008. Is it just me...isn't this stupid? They can put the loans in their name and then turn around and make the loan to the corporation. We end up in basically the same place. Of course they need to show the interest income, but then they have the expense to offset it. It seems like you are just moving things from one pocket to another.

What are your thoughts on this?

regards,

Cindylee 20:33, 3 April 2008 (CDT)cindylee


Advice with client

Roy,

My client can't understand how he would have a disposition in 2006, and have debt relief income, if the loan stayed in his name, the title stayed in his name, and in 2007, my client pays the loan off on the truck himself. He makes some valid points to consider, but the transaction still "tastes" like a disposition in 2006 to me. When I try to explain how the 179 recapture would be taxed at regular income tax rates as well as SE tax on the other income line of the Schedule C, he doesn't think I know what I'm talking about.

This guy has two separate Schedule C's and was referred to me late last year. He got me his 2006 information with less than a week to go before the extension deadline (Oct. 15th). We barely made the filing deadline. When I asked him about the decrease in income in the trucking business, he mentioned that he had basically stopped his trucking business in the middle of the year, and that he had deeded his truck to his son and that his son had assumed the loan on his truck. I informed the client that we would have to amend his return to show the disposition of the asset (to get his books closed). At the time he said fine. After lots of research to make sure that the transaction was being treated correctly, I informed him on what it was going to cost him (the taxes on the disposition). This week I get the "real facts", (after the client visits the bank)that the loan was always in his name, he paid it off himself in 2007, and the title to the asset always remained with him.

Basically I'm not comfortable with the fact that I was given one set of facts a few months ago and new facts this week. I have told the client that if indeed there is a 2006 disposition (which I'm honestly not sure of after the new information I've been given by him), then I will have to prepare a 2006 amended return. I also advised him that I would not, and could not prepare a 2007 tax return for him if he did not sign the 2006 amended return. The client owes big bucks on his 07 taxes, but doesn't have the money to pay them anyway, so I've told him that the best I can do is file an extension for him for 2007, resolve the issue on his truck transaction and determine whether or not the 06 return needs to be amended, and that I really feel that he needs to find someone else who can take care of him better, or in other words, find someone else to prepare the 07 return later this year. I don't believe that the client will sign an 06 amended return, if indeed one is needed, anyway. What do you think Roy? I appreciate your insights. They are thoughtful and reflective, and I need another CPA's outside view on the situation. How would you handle this? Thanks.

Profile Updated!

Sorry for the inconvenience.

Roy,

My name is Mary and I have updated my profile. Can you give me any guidance on my posting? I spoke with a CPA friend of mine last night, and we are both stumped. This is in reference to my posting yesterday about the liabilities section of a K-1 on a Form 1065. Any help you can give me will be greatly appreciated. Thanks Mary

Hello, Roy

Roy, shoot me an email if you want to grab lunch sometime. My office is in Longwood.

Hey Roy..

Hey there Roy, still got me curious about a schedule T.... You are right this is a state requirement in MN for CPAs to hold records of returns for 7 years. My understanding is I must go by the "stricter" guidelines in compliance. Nancy Shoemake

1250 Gain

THANKS so much.

I have had it on Part III of the 4797 for the entire time, but having received some confusing information from the temp prof, I've asked the question of others and have been unable to get any kind of agreement on the answer!

MUCH appreciated. Really.


michelle

Schedule A 1045

Roy,

First, thank you for the disussion this past week on Sch A Form 1045.

I would appreciate your opinion on the original issue I raised. That is, does one include nonbusiness capital loss carryovers from previous years in Line 2 of Schedule A (which is nonbusiness capital losses), or only include the current year nonbusiness capital loss amounts.

Thank you. Dave

NOL Calculations

Roy,

I find this very interesting that you do not use Schedule A. Don't you have to use it when filing for clients?

Regardless, I took all your numbers and populated them into my own software for Schedule A, and sure enough it results in the same NOL of $-22,000.

Let's assume that instead of $1000 of nonbusiness capital loss, there was $100,000 of nonbusiness capital loss (and all of it was from carryover from previous years, due to prior years $3000 capital loss limitations.) Whould you include that $100,000 in your calculations? And what would be the NOL in this situation?

Thanks.

NOL Calculations

Roy,

Using all other numbers in your example, what is the NOL calculation if the client had $100,000 in nonbusiness capital gain losses (instead of $1000)? My software brings the NOL down to $77,000. Is that correct? And the final question: is it correct to reduce the NOL down to this level, if these nonbusiness capital losses were from other years? It just does not seem right to me, since these previous years losses did not contribute to the AGI loss from which the NOL is calculated.

Thanks.

Dave

Audit help

Hi RoyDaleOne,

Thank you for posting to my thread Discussion:Audit_help_-_Accrual_vs_Completed_Contract. Your reply recommended that I contact you directly. So here I am. Do you need any further information regarding my matter?

--Incognito 13:03, 28 April 2008 (CDT)

Thank you for posting to my Discussion page. Your 1st suggestion was comforting because that is exactly what I did when the auditor first brought it up.

As part of the IDR they had asked for the accrual-to-cash conversion workpapers. I pointed out to the auditor that there was only an immaterial difference between the two methods of accounting because the net changes in A/R & A/P essentially offset. (I was also hoping to throw her off the path of the 481(a) adjustment--that is where my client will feel the pain).

No, I have not provided the cash-to-accrual change in actg method workpapers.

Firm doing taxes?

Doing taxes is just part of our business. I'm not sure I completely understand the question?

-OmahaGold01

Audit

Hello Roy!!

I tried to respond to your email and it bounced back. I am working with the client in need of audited financials and hope to have you some information. I emailed him in Jax. Do you travel to Jax for audits?

Thank you again and as soon as I hear back from him I will let you know :)

Sandysea

Audit

Hi Roy;

I wondered if you would please send me another email or respond if you are interested in talking with my client about his audit needs.

Thanks again and hope everything is great with you and yours!

SandySea

Firm doing tax returns

Thank you for the response.

In reading several of the questions posted on the different forums, I have seen multiple questions which I would consider "elementary" (some by EAs). Obviously those asking the questions do not consider the question elementary. Are you letting them know the same things you are telling me?

If this is a forum designed for tax pros, would it make a difference as to how much of a "pro" you consider yourself? I can readily admit there are things I do not know when it comes to tax prep. and that is why I am asking the question. Questions you ask I may have dealt with in the past and already know the answer so would I tell you that you should not be preparing tax returns even though you consider yourself a "pro"?

I am not trying to downplay your credibility whatsoever because I understand that you have done this all your life and it is how you make a living. If individuals are going to demean those who ask questions they believe are "elementary" then what good is the forum? I posted a question several weeks ago re: 529 plans and nobody was able to give me an answer. Obviously, this question wasn't "elementary" or I would have been chastised by you already I would think?

-OmahaGold01

529 Question

Thanks for the help on the 529 question, but I needed the information before 12/31/07. I was able to get in touch with some of the foremost 529 experts and received the answer I was looking for.

Thank you again though.

-OmahaGold01

audit

Roy;

You can call me or you can email the client directly. Sent an email to the cfl.rr.com account.

His name is Daryl Burrows and needs the audit asap.

You can call me at my office if you like

772-770-2148

Sandysea

Tax Court Exam

Well, I was thinking of using the tax almanac forums if it was okay with T Doyle and the community at large. That way we could get the most input. And quite frankly, I need the networking. I don't know anyone personally that has practiced or has any interest in practicing before the tax court.

TheTinCook 05:59, 1 May 2008 (CDT)

Hey, I just wanted to thank you again for helping me with my question. I just happen to learn about Tax Almanac recently this year. I Have been preparing tax return since i was 19 years old. My father was an EA, My mother was an EA. And i have been EA for 10 years. My father and mother retired in 1993. Well, i am still learning. thanks alot.

Fired the client

Roy, I wanted to make sure you saw this and see what you thought. Thanks.

I fired the client.

I filed an extension for him for 2007, but will not be preparing his 2007 tax return. I've been unable to obtain clear facts with numerous issues regarding his business, specifically, who the truck was actually sold to in 2007 (was it the son who started to make the payments in 2006, or an unrelated third party buyer). I was given a different set of "facts" this spring than what I was given last fall when the 2006 return was prepared. I'm debating whether to prepare an amended 2006 return to give to the taxpayer, and if so, how to show what transpired. If the son is the one who actually bought the truck in 2007 (which again I haven't been able to ascertain), then I think that there was definitely a disposition in 2006, and that I need to prepare an amended return showing the disposition on the 4797. If the truck was actually sold in 2007 to an unrelated third party, then the question becomes should I still prepare a 2006 amended return, but instead of showing a disposition, show the business use falling below 50% on part IV of the 4797? The taxpayer has told me that the truck sat in lot with a for sale sign on it, but he has also said that the truck was being used by the son in a separate business (and the son was making the payments on the truck). I am fairly certain that the taxpayer will NOT sign and mail a 2006 amended return, regardless of what's on it. The taxpayer appears to be set on reporting the sale in 2007. At this point, I'm simply protecting myself against any future liablilty and trying to accurately report what's happened on the return, but with the different facts given, this is proving difficult. Any thoughts or suggestions?

Fired the client

Yeah, once 80% of my aggravation is gone, I'll have to get a new hobby I guess. Would you still show an 06 disposition on an amended (if this were you)? Thanks Roy

I agree

Roy,

I absolutely agree with your line of thinking regarding the ownership issues and the vehicle. I'm worried/wondering about whether or not I would have a BU% less than 50% issue in 2006, since one would basically be taking the stance that the asset was not actually "sold" until 2007 (and again I don't know who did end up with it in all actuality)? Would one want to give the client an amended return for 06 using Part IV of the 4797? I know the son supposedly started making the payments at the end of April 06 and the taxpayer has said that a portion of the time, the truck sat in a lot with a for sale sign in it, but the son also started using the truck in a separate business operation, hence my question.

Prepaid Patent Costs

Roy, Can you please elaborate on your post? Discussion:Deducting_prepaid_expenses

--PVVCPA 18:23, 19 May 2008 (CDT)

Mbaqb

Thanks for responding Roy, I wasn't around for a few days. It's a semi-truck that we're talking about, but I agree with your thinking.

I agree

Roy, I agree not enough facts were really given by the doctor. He may have ultimately got his answer, I don't know. But, I hope that he learned overall that the tax area is not one to dabble in! He did seem to put in more effort that some non-pros that come on here. CrowJD 13:00, 27 May 2008 (CDT)

Sec 179 Discussion

Where am I going wrong on this one? My client purchases equipment solely for the purpose of leasing it out. No maintenance to speak of on the equipment based upon their P&L. How could this qualify for 179 treatment? If you disagree with me as to the treatment of these expenses on PY returns, please advise why instead of giving a general response.I would truly appreciate it.

Regards,

Chase

Thank You!

You are right I totally misunderstood.

CONDO

Roy, I am looking for an ocean front condo on Anna Maria. Do you know of any bankers or repos in that area that may have some inventory?

Thanks for any help you may give.

Phil.

form 1045 schedule A

Roy:

I read some posts from your regarding this schedule. I have a quick question. Line 6 "nonbusiness deductions", I am confused if I should include state taxes. $53K out of $87K of itemized deduction is related to state taxes paid due mostly due to K-1 received for business profits. page 6 of instructions clearly says include itemized deductions but in () except state income taxes on business profits. The $53K was an estimated payment and also includes some amount for interest and dividends.

So how do I figure amount to inclulde on line 6? If I include my full amount on schedule A than line 1 and ultimately (NOL) is severly reduced eventhough I do have some nonbusiness income (dividends, interest) and capital gains to offset.

thanks!

Rev Proc 2002-18

Per the Rev Proc, the agent gets to pick the method. Percentage of Completion and Completed Contracts are both permissible methods. Are these their only choices? I wonder which they would choose?

The books were kept on a straight accrual basis...all WIP booked to COGS and all Billings booked to Sales. They wouldn't select this method, would they?

NOL

Hello RoyDaleOne, 

    After ready all of the sections on NOL I find your answer to be the closest to answering my question. To sum it up, do I assume after filling out Sch A of the 1045 is that you can not deduct Nonbusiness capital gains in excess of your net Nonbusiness items (nonbusiness income less nonbusiness deductions).  Lert me explain.
    I have -2408 in Capital losses ( no gains, but I have 12,121 nonbusiness deductions and 18,316 nonbusiness income.)  In the end I have more nonbusiness income than I do the combined amount of nonbusiness deductions and capital losses, therefore my orignial NOL from Schedule C should not be offset. Is my assumption correct.  After filling out the form Line 1 remains unchanged.
    I'm new at this site so if possible would you please emal me at Laureen@LaureenOliver.com.  Thank you for your help.

discussion irs 183 code

Thank you for your reply. When I file an appeal with the Appeals Office, can I represent myself at the meeting with the Appeals Office Personnel, and then they would agrue my case with the IRS?

Thank you again for any adviseSebrofs 15:52, 11 July 2008 (CDT)

Negative Checking Balance on BS

Hi RoyDaleOne, My name is Nathalie Tran, a new member today. I'm a rookie (1st month) CPA in Orange County California.

Pls help: I have a Bal Sheet (accrual) with a checking account that has negative balance ($1,800). Can I present on 1120S Sch L the negative bank balance? If not, please advise.

Thank you much for your time.

Nathalie

1913

So, do you have one of those framed and hanging in your office? Natalie 18:34, 29 August 2008 (CDT)Natalie

Hi Roy,

Thanks for responding and providing me with the LTR Ruling 200646014. In this instance the ex wife did not claim the exemptions and the IRS agent is disallowing them to the husband because the form was not recieved and is now considered not timely. I still cant find anything that says the form does need to be timely filed? Any other thoughts?

Aprreciate it.

Gordon cpagp1040@aol.com

You mentioned you were sent a worksheet for to calculate an NOL for AMT purposes. Is it available for another person. Thanks much. Ted L 14:19, 29 September 2008 (CDT)

RE: Tax Tools

I already subscribe to Tax Tools, an excellent program I could not do without. Thanks for thinking of me.

Death&Taxes 08:49, 12 January 2009 (CST)

SORRY ABOUT SHOUTING BUT WOULD APPRECIATE ANY COMMENT ON TOPIC.

Thank you!

we're always looking for anti-SPAM people to help out keeping the site up to decent standards. Kevinh5

Bankruptcy/Rental

Thank you for you comments on the bankruptcy mortgage. Unfortunately, I guess I still don't get it. Is the disposition of the rental by bankruptcy taxable to at the individual level? I've read pub 908 over and over. I thought that debts discharged in bankruptcy were non-taxable. Some are saying to report the $21K gain on the 4797 and pay tax on it. Others are saying to report the gain/disposition but then not pay tax on it (not sure how one would show this). Still others are saying to disregard altogether. It appears as if the board can not even come to an agreement as to whether or not this is a taxable event (to the individual) let alone how to report it. Can you provide any further help as to what you would do and how you would report it? Thanks a million!

Rental BK follow up

I would guess you do not have a any reportable gain, however:

1. How was the property disposed? (Sale or foreclosure)2. Who disposed of the property? (trustee or tp)

don't really know - it all ran through the bankruptcy courts and the loan was discharged there

3. What was the FMV of the property at time of disposal?

In this market, who knows? No appraisal however on the BK paperwork it shows "current value of debtors interest" as $52K.

4. Did the taxpayer receive anything from the "sale"? only the discharge of the mortgage.

The answers were parsing hairs.... My only frustration on this board. Really hard to pin things down when deep down I know that we are all just trying to do a good job as professionals.

So if there is no gain to report by the individual, pick up the adjusted basis as the sales price on the 4797 (to show no gain) with a sale date of ? and do not file a 982.

Thank you again. I'm sure you are very busy (I know I am)

debt

So - do not file 4797 for the disposition. In summary, (I should note they have no credits, capital loss carryforwards or NOL carryforwards) use tax attributes to reduce the remaining basis in the property form $30K to zero on the 982 with the appropriate statements attached. They have no other attributes to reduce. What happens to the remaining $21K (from the original $51K)of debt forgiveness? Just ignore it due to the chapter 7?

Where are you from in Indiana?

By the way, not trying to be a pain in the... I would gladly pay a consulting fee to certain members of this board.

Forum Award

RoyDaleOne - I agree so I just added to your user page the Forum Award as you certainly deserve to be recognized for all of your very good posts. As you know, this is something others add to a users page. Very surprised you had not yet been designated as such. Michaelstar

Distributing of contributed property from partnership

Hi RoyDale,

When you have a chance could you possible followup on my previous question this morning regarding tax consequences regarding distribution of contributed property to partner. Any guidance would be Greatly appreciated!! Thank you, Sandra

LJ

RoyDale,

Thanks, for your input - it's a great service you are providing, and I hope it is fun for you.

I haven't been able to find this specific situation in the Code and IRS materials.

1. We agree that the client, a business entity, is entitled to deduct the full cost of the properties in one way or another. We propose to pass through to the three members the market value, say $300,000, as charitable contribution on Sch K. We will deduct the remainder as loss on disposition of property.

3. Regarding whether an appraisal is required: The attorneys are insisting that the client get an appraisal. However, Pub 561 "Determining the Value of Donated Property" says that "You do not need an appraisal if the property is ... stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business." We would like to talk the attorneys out of the appraisal because the property is clearly "property held primarily for sale to customers in the ordinary course of your trade or business". What do you think?

4. Origially we were thinking of the developed properties as "inventory", but I see from your input in another discussion "Building condos - land development costs" that they don't qualify for inventory treatment under the Code. Therefore, would you not use Schedule A to input Cost of goods sold? Would you use 4797 "ordinary gains and losses"?

Any input would be appreciated. Thank you. Lynele

LJ

Roy,

Thank you SO much for your input.

I got some more information on the situation, but I suspect it doesn't change anything. The donation was actually not houses, but land with infrastructure that never went "vertical". More like work-in-process. I suspect that does not change the discussion?

Lynele

Lynele

Lynele

I agree it does not change anything.

Please put four ~ in a row so I don't have to hunt for your discussion page.

Thanks

Hello. I'm the one who posted the question about the prior tax preparer who made adjustments on line 25 (adjustments to shareholders equity). I really appreciate your response as I'm at a loss as to what to do. If I were to amend 2005, there would be an increase to net income of about $8,000. I'm not sure about 2006 yet as I'm awaiting a copy of that return. Have you ever encountered something like this? The retained earnings doesn't tie to the schedule M-2 for those years either. The company was an S-Corp from day one and has never had anything odd like non-taxable income, etc.

Anything you have on this is GREATLY appreciated!!

Roy: Thanks for your input on the various topics where Sec 1234A would come into play. It is a Code Section, thus it is the law. There seems to be quite a bit of confusion re older regulations and the like. You seem to have it down and have done a good job of informing the board of the law on this subject.

C. Scott

Adjustment to Shareholders' equity

Hi again, You responded to a question I posted about an error made by a previous preparer on the 2004 & 2005 returns on line 25 of the Schedule L. I'm trying to fix this in 2008 but I am really struggling with how to do this. Would it be best to make the adjustment to the beginning retained earnings balance even though it won't tie to the prior year ending retained earnings? The errors consist of several things, but primarily by unreimbursed expenses incurred by the shareholders that weren't posted in prior years to their loan account and the expense/asset accounts.

Your help on this is very much appreciated!! :) ~~

linking to copyright material

hey roy,

you asked "TexCPA would you please explain about the link to copyright material?

so Trillium responded:

Generally, unless the info you want to link to specifically prohibits you from linking to it, a link to an article or other material that is under copyright is fine. It's posting the material itself here that's problematic. For a little more info, see TA policy page and TA T&C.

Thanks for thinking about it, though!

Trillium 10:51, 11 March 2009 (CDT)


(FYI, I'm referring to your post in the Casino discussion.)

hope you are having a good season!

TexCPA 00:55, 13 March 2009 (CDT)

SELF DIRECTED IRA

No, I don't act as trustee, usually a bank or brokerage firm does. If the person wants to buy real estate inside an IRA, there are a few companies that specialize in that, but I try to steer my clients away from putting all their eggs in one basket. Kevinh5

Your Latin...

"Vermis Orca Patefacio Non" Very Awesome!

Harry Boscoe 14:36, 27 April 2009 (CDT)

Cancellation of debt under terms of will

Dear Roy,

Thank you for all of your input. I know your time is valuable and I appreciate your responses. They have been a great help to me.

Howard Litz

Lunch?

Roy,

Sorry I didn't get back to you sooner as I admittedly have not been on the site for awhile. I would like to grab lunch if you're still interested as I would certainly like someone to refer clients to when the issues are over my head. I'm based in Longwood, so just let me know when would work for you if you're interested. Thanks.

Steve Davis

that was supposed to have been taken as a joke

and not directed toward you. Sorry if it seemed like I was. Kevinh5

Section263a

Roy, thanks for your post cautioning me to heed Section 263a rules with regard to the Inventory valuation for a bakery client of mine. I was 'unconsciously unaware' (ie., clueless) of this code section, but following your post I've done some research online. What I think to be the case is that this section does not apply to manufacturing entities under $10,000,000 in sales. My client had gross receipts under $3 million, so it looks like I don't have to worry about this section. Do I have this right? Thanks much Anchorman 09:15, 29 July 2009 (CDT)

Bakery and 263a

I took a master's degree level Tax Research course in college about 4 years ago and I still get freaking dizzy reading the code!!! But let me ask you this: my client is a commercial baking company. No reselling or retailing. They make bread and rolls which are sold through retail grocery stores. Knowing that, where can you point me (specific lines) in 263a that would apply to this taxpayer's situation? Thanks again! Anchorman 11:54, 29 July 2009 (CDT)

LLC to C Corp

Roy, Thanks for your question, which I answered with a recent updated post on the Tax Discussion Forum. Thanks Anchorman 17:14, 30 July 2009 (CDT)

Astjul Reponse

Hi Roy:

New to this forum & appreciate your thoughts....Do you know of anything specifically on point? All preliminary research leads me to business bad debt but all relative to "installment sale".

I have IRS id# & name but not in writing. This change is a result of an ongoing audit. I am in negotiations right now with office audit agent.

This is my argument....not saying I am 1000% correct right now because I have yet to find anything specifically on point but looking.

Why would it be a business bad debt under Sect 166?

Taxpayer reports & pays tax in full in 2006 on ordinary gain because of depreciation recapture. Doesn't get paid the full selling price...if IRS disallows my business bad debt in 2008 by either claiming it is a non-business bad debt or complete disallowance the $80k will be lost & gone forever if I am out of statute.

Alternatively could I argue that it became worthless in 2006 when they "started" to refuse to make payments????

Any thoughts

Thanks

ASTJUL reply to installment information posted 10:12 CDT

Thank you Roy. Was getting hung up "installment sale" when I should have been researching the "installment obligation". After looking in the right direction I see that I have no choice but to put this in the year of default.

Thank you again!!!

From AstJul - Can I bother you again???

Hey Roy:

If you don't mind your answer was so on point to my last question.....

1) Auditor is disallowing a NOL CF election on my amended return for "S" Corp Loss - long story 2005 out of statue for carryback. She was very sly auditing 2006 "asked for" 2005 & 2004 but never opened the years & then let the SOL run by issuing a change on 5/14. Anyway if I lose on the NOL CF election which is just about certain 

       A) Researched adding back the disallowed loss to TP's "S" Corp basis - what I found is saying no based upon 172(b) but....???  Reasoning by IRS is Basis is reduced regardless of tax benefit to shareholder. Do you know of anything out there that was argued & won to the contrary?

       B) If same TP contributed over 400k on initial investment to "S" Corp originally as $50 in stock & rest as loan do you think I can argue successfully (because IRS is saying no to loan really equity) Sect 1244 because it was his initial investment.  Think this maybe an uphill battle auditor is hanging her hat on 1-1244(d)-2 but I am arguing he put the $$ in initially & this is not a subsequent increase to stock.

Thank you in advance if you have time to get back to me. Large IRS adjustment trying to offset some of it.

Regards

Julia

Roy, you pump me up!!

What brought on your kind words? Was I too harsh once? Did you kick the dog and need to atone? I hope I'll be able to stick to the topic a little better in the future. And I hope I'll never run out of PBR. Frankly, not a day doesn't go by that I don't think about things that never were. Have a kick-ass weekend, RDO. Harry Boscoe 10:37, 10 October 2009 (CDT)

RoyDaleOne,

I am not familiar with responding to messages to my username. I am guessing that I have to post a message on your "my talk" page.

I will respond later tonite or tomorrow.

JingleRock123 20:18, 30 October 2009 (CDT)

Roy, you wrote: "I am always glad when you are on the job, I know I only have a 1% chance to disagree. Thanks for your excellence excellent comments on point. I also thank you for correcting me evry every time I need correction, which is way to too often."

You are two kind, Roy.

Harry Boscoe 23:10, 30 October 2009 (CDT)

RoyDaleOne,

I am confused as well.

It is obvious that the drafters of 280A did not have fractional-interest properties in mind; pretty much the same can be said of time-shared arrangements.

What they did have in mind is a single, free-standing dwelling unit with 2, 3, or 4 co-owners. Aggregating personal days by each of the co-owners, as required by 280A(d)(2) for purposes of the 14 day/10% test for treatment as a “residence” in 280(A)(d)(1), would not typically present an hardship.

However, a larger project, with a larger group of co-owners – perhaps several hundred or several thousand, makes aggregating all of the personal days and rental days impractical/impossible. The Project Manager tracks occupancy for all of the units, but does not track personal days/rental days for any of the units; such Manager is not in a position to distinguish between “guest or family usage or rental below FMV” and “rental” usage. (Is the TP to distribute copies of 280A to each of the co-owners to document why the TP is requesting personal usage and rental usage data be provided to strangers??? Does the TP sue the co-owners to “encourage” them to provide such data??? Is the TP liable for any inaccuracies, fraud or otherwise, in such data???)

Furthermore, counting combined usage for all co-owners is not fair. Why should the TP’s income tax liability be directly impacted by usage decisions made by each of the co-owners??? To the extent that there is co-ownership turnover, income tax planning is made more difficult (actually, more problematic for smaller projects). Why should the “rental days” number for the project not be correlated, even on a percentage basis, with the gross rental income realized by each of the co-owners that elects to rent???

Lastly, counting combined usage for all co-owners in larger projects emasculates the “14-day” minimum (actually, this is a 15-day minimum for personal usage) in 280A(d)(2). This is due to: counting all of the personal days makes the minimum of 15 a “joke”; and the 10% of rental days rule for some properties (for “resort” fractional-interest properties, the ratio of personal days to rental days may be 5x or 6x) may be a “joke” as well. Thus, by (almost) definition, all of the co-owners treat their dwelling unit as a “residence”. Was this intended?

Note: In the Craig & Luttman article, when discussing the “tax-free rent rule”, there is the following: “Few timeshare owners are likely to qualify for the tax-free rent situation since Section 280A(g) determines compliance with the less-than-15-days per year rental requirement based on the number of rental days for the entire “dwelling unit,” not a given timeshare owner’s portion of the unit.” The first part of 280A(g) definitely refers to 280A(d)(1) and 280A(d)(2); to me, it makes sense to calculate rental days using the same method used for qualifying the unit as a “residence”. Was it intended to make the “tax-free rent rule” not apply to larger projects?

Conclusion: Applying 280A to larger projects is like trying to insert a round object in a square hole.

JingleRock123 23:28, 30 October 2009 (CDT)

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