Talking with TaxSpeaker: Video 49
1. I have received a 2018 Schedule K-1 (Form 1065) related to Oil & Gas Partnership, where Line 1 has Ordinary Business Loss in the amount of $8,024 while Line 20, code Z (Section 199A Qualified Business Losses amount is $29,871. Is this possible? Do I need to question further? Thanks.
2. I have a 24-year-old who graduated from college 05/2018. She is claiming herself as a dependent. She received a 1099-Q from 529 State program funds. I would like to recognize the basis in the distribution and claim the American Opportunity Credit. Your manual said to reduce the Distribution by the amount recognized as tuition and fees paid on the 1098T. What do you think?
3. I have a client whose child died in a car accident 1 month before he turned 17. Since he did not attain the age of 17 before the end of 2018 does he qualify for the full CTC of $2,000. He was 16 on the date of death 9-24-18. Date of Birth was 10-30-01. Any help would be appreciated.
4. I have an investment holding company as a client. Their operating expenses usually run between 300,000 and 400,000 each year. I have always recorded these as investment expenses which flow through to the shareholder's K-1 and end up on the shareholder's schedule A on the 2% other expense line. They have no trade or business and in my opinion the shareholders are going to lose this substantial deduction on their personal returns. Am I missing something?
5. If I have an individual with tuition expenses of $6,875 and scholarships and grants of 6,800, are they allowed to treat $3,925 of the scholarships as income and get the full benefit out of the AOC?
6. I have a w-2 employee who is a finance manager at a car dealership receiving commissions on products he sells throughout the year. These are not "Spifs" that the other salesman get from GM. He receives a 1099 on these as NEC. Would this qualify as trade or business income for QBI purposes? We have always reported these as other income subject to SE tax. He incurs zero expense relating to this income as it is all generated from his w-2 job. If I slide this over to Schedule C QBID comes through. Is this a trade or business?
7. Parents gifted equity to their daughter as a down payment on a rental the parents are selling to the daughter. We have a Form 1099-S for $170,000. The gifted equity is $63,172.58. The basis plus expense of sale is $160,065, depreciation allowed is $63,690. The question is: What is the real sales price? How do you handle the
$63,172.58 in the sale? (I know they will need to file a Gift Tax Return). What is the basis for the daughter?
8. We have a new client whose tax return that has always been filed on the cash basis of accounting. We noticed that the box was marked that the return was being filed on the accrual method. Do we need to file a Form 3115 with no adjustment to change the box from Accrual to cash?
9. LLC Partnership with 3 remaining members borrowed $ with the LLC land as collateral used note proceeds to buy out the 4th LLC member. How do I allocate the interest on the note and how is it deducted? There was no termination of the partnership. Thank you!
10. I have a client that sold a rental real estate property contract for deed. But still has a mortgage on the property. The interest and principal go on the 6252. But what about the interest that he is still paying the bank? Before it would be written on the schedule E. It's investment interest. So, the only place he can take it is on the Schedule A? Thanks Bob!
11. What is the relationship between “trade or business” for QBI and “trade or business” for Net Investment Income Tax?
12. My client has $17 from an investment in several REITs, and now my software is asking me to attach a form 8990 and make an election "if necessary.” Is this something new?? Where can I find out more information, without spending a ton of time (it would only be a $17 error if I do it wrong… right?)
13. There is a $1200 monthly reduction in excess salary, the new salary is still more than reasonable and the $1200 reduction amount is then received by the S Corp Shareholder in his paycheck as a Distribution. Is this acceptable to the IRS regs or could the IRS view as Tax Evasion and not Tax Strategy by increased QBI deduction.