Talking with TaxSpeaker: Video 51
1. We understand that the TCJA limits taxes deducted on 1040 Schedule A to $10,000. But if we can’t deduct all of the property taxes paid on the house do those taxes add to basis in the house? If so, which applies first, Property taxes on primary residence, property taxes on vacation house, sales tax/state income taxes, personal property taxes, etc? We’d really like to be able to add some non-deductible property taxes on the vacation home to it’s basis.
2. I have clients who served in Africa as missionaries for the last several years. In 2018 they had continuous work in Africa until the husband had severe heart pain. Due to no medical experts in Africa, they flew back to US and found he needed several stints in arteries in his heart. By the time he got a doctors permission to return to Africa, he was in US for 60 days, thus exceeding the 330 rule for foreign income exclusion. He went back to Africa as a missionary till February 2019. Thus not meeting the 330 day rule. The couple had residence in Africa, a home with all their belongings, the whole time he was back to US, and his wife came with him to US. Can the foreign income exclusion be claimed with these circumstances?
3. I have a PTP that shows “Do not use part III info – see supplemental K-1 info.” The supplemental info shows business income, interest income, etc for 4 separate entities. Do I only enter the info for the partnership my client is in, or do I enter all the info on the front of the K-1? If I only enter the appropriate partnership info, my capital account, basis info, etc will not be accurate.
4. A surgeon practiced through his own S Corp. has been retired for 15 years and the S corp long ago dissolved, had to pay annually into a state medical malpractice underwriters fund which he deducted each year. The state tried to use the money for general purposes. The surgeons sued and won. He just collected $138,000. Is it subject to a QBI deduction since he would not be collecting it had he not been in business? But if it is QBI, are there other ramifications such as SE tax? Or would you just claim it as income from a class action settlement? Thank you!
5. Claim of Right Sec 1341 question. In 2017 taxpayer took W-2 form job in TX and was paid incentives to move including relocation expenses that were grossed up on 2017 W-2. He signed an agreement that if he quit within 24 months he would have to pay it back. He quit 12 months later. In 2018 he had to repay $59,000 to the company. What options does he have to deduct the repayment? It appears that the miscellaneous itemized deduction is still an option for 2018 and not subject to the 2% floor.
6. What is the correct treatment for costs incurred (utilities and repair costs) during the period after a renter moves out and the date the rental property is sold. During this time, the property is not available for rentbut rather is on the market to be sold. Are those costs considered selling expenses or Schedule E expenses or nondeductible?
7. A rental property is sold at a gain of $50K. $40K of that gain (the accumulated depreciation portion) is subject to ordinary income tax rates and the remaining $10K gets capital gain rate treatment. I read in the 2018 1040 tax in depth manual that “1231 gains are QBI if ordinary income, but if capital are not QBI”. Does that mean $40K in my example is QBI?
8. We use UltraTax. I just received a K-1 from an outside CPA firm - a large regional firm - and there is an amount on the K-1 in box 13K. The number is $9,290 so it is a significant amount. There is no place in UltraTax K-1 input screen. There is a form 8990 under the noncalculating tab in UltraTax but I am uncertain if I should be manually completing this form to attach to the return
9. Heavy vehicles/trucks cannot take standard mileage rate. Is there an IRC code that lists what those vehicles are or how to determine which vehicle cannot take standard mileage rate.
10. I have fit up costs in an existing commercial rental for a new tenant. I’m getting a Lacerte diagnostic that my depreciation method doesn’t allow a 179 deduction. I’m using the 31/39 yr MACRS life… What’s wrong?
11. The new 199A regulations (From Jan 2019) explain 'deductions' for calculating QBI require you to reduce net business income by 1/2 self employment tax, self employment health insurance, SEP contribution to the QBI amount. Is it a reasonable argument stating those 3 items are used to calculate the AGI and should not affect the QBI calculation? I have your QBI calculator and it does not specify any reductions. I have located additional calculators that do require these entries. Or will the 2019 filing season be the trial run for these new tax changes! Any help is appreciated.