Talking with TaxSpeaker: Video 62
1. I have a partnership with three partners who all actively participate in the business. Two of the partners receive guaranteed payments for their services, but the third partner receives a W-2 from the partnership for his services because his interest in the partnership is held through a wholly owned S corporation. Is it appropriate for the third partner to receive a W-2 from the partnership? Or should guaranteed payments be paid to his S corporation and his wholly owned S corporation is then responsible for issuing him a W-2? The layered owndership of the third partner is really throwing us for a loop, and we are struggling to determine how benefits related to this partner should be accounted for.
2. I have a question about the R&D Tax Credit. I have a client who has started a new business that does research for another company. I've found some info on the R&D Tax Credit, but not enough to know exactly what to do with it. Could you please explain it for me? Thank you for your videos! I've learned so much from them!
3. I have a client who has owned a business for many years. Based on the 2018 tax law change, this business is now located in an Opportunity Zone. If the client keeps this business through 01/01/2028, 10 years in total from the enactment of the opportunity zone, does it qualify for any gain reduction/elimination if sold?
4. Can you clarify the "safe harbor" rule under the Final regs for SALT/charitable contributions. Do you believe that the 'safe harbor' exists only for 2018 returns?
5. Could you recommend a good software program to block malware? My computer was recently infected, even though I do have Bitdefender, which was your recommended security software. There are so many out there, I hesitate to click on any in fear it might be a scam for more malware.
6. Does the HSA information listed take into account recent changes that President Trump made to HSAs and the ability for more employers to be able to setup and contribute to HSAs for their employees?
7. Question on HAS’s… If both are over 55, does not the $1,000 catch-up contribution for the spouse have to be contributed into the spouses own account?
8. Would like to clarify the new entertainment rules. I understand the cost of non-food entertainment (hunting trips, athletic events, sporting clubs etc.) are NOT deductible if these items are provided to clients. But if these type of items are offered to all of your employees would they be deductible? Examples, recreation expenses (bowling, sporting event, company picnic and holiday parties.)
Would these still be 100% deductible because the employees are involved?
Is there a good definition as to what is deductible (and the percentage (50% or 100%)?
9. Have you heard any update on the S.617 - Tax Extender and Disaster Relief Act of 2019?
10. Now that we have new rules governing Section 1031 exchanges, what are the mechanics involving an exchange of a residential rental or commercial property that contains some personal property like furniture and or appliances?
11. I recently listened to one of your Q&A videos and the question about making scholarships taxable to increase AOC caught my attention. We have been optimizing AOC for years by choosing to include portions of some students’ scholarships as taxable. I panicked a bit to hear you say that is not allowed, which prompted me to do some additional research. According to Publication 970, it is acceptable and even gives examples referring to this exact situation. I have attached page 16 & 17 of Pub 970 for your reference. Let me know if I’m missing something!
12. Is there anyone out there you recommend that host and maintain websites for CPA’s and tax preparers?
13. The IRS made an exception on QBI for insurance agents however many insurance agents also act as investment advisors and receive commissions commingled into one 1099/W-2. In addition, they rarely track expenses separately maintaining only one bank account. Do they need to have a completely separate records to be able to qualify for the QBI Deduction if they’re over the threshold or can you prorate expenses if the insurance commission income is separately stated?
14. Do you use cloud based tax preparation software? If so, why do you use the one you use? And does the cloud based software allow the use of the new OCR auto input software?
15. Page 576 of 1040 Manual states "Other newly qualified assets include HVAC to nonresidential real property placed in service after the building was originally placed in service". Does this mean that a newly constructed Hotel building placed in service in 2018 includes HVAC cost of $670,000 does not qualify for Section 179? Does it have to be as "improvement" to real property already in service?
16. Can anything be done with a C Corp NOL in year of liqidation as we can no longer carryback a NOL?
17. An S corporation client has just one employee (also the owner) with health insurance from the Marketplace. The corporation paid his 2017 insurance premiums which was reported on his W-2 box 1 and deducted on his 1040. However, it wasn’t until he filed his 2017 personal tax return that he learned he had to repay $13k for the advanced payment of premium tax credit. His corporation wrote a check in 2018 to reimburse these 2017 insurance premiums. Would this $13k be reported on his 2017 or 2018 W-2? The corporation could not have reimbursed this payment in 2017 since the amount of the repayment isn’t known until 2018. I know this has been addressed for sole proprietors and the credit is deducted in 2017. However, this seems like an unfair hardship for S corp owners. Any advice?
18. Client has a daughter who is getting ready to sell a NYC coop apartment. 12 years ago she and her father (my client) both signed whatever legal documents were needed to buy and finance the coop. In the years since, the daughter and now her husband have been living there and have made all the mortgage and tax payments. Now comes the sale and how to handle the exclusion of gain on sale of residence? The father says his initial involvement was merely an accommodation; no one has lived there but his daughter and son-in-law and all the bills have been paid by them. There is no quit claim deed as a coop, I believe, is stock in the entity that owns the building. The gain is $350,000. What is your recommendation on how this should be reported?
19. I just watched video 58. You said that a high income taxpayer could possibly do a grouping election for a trade or business and self-rental to get the full QBID, if they qualify. Can you think of any situation where the trade or business and self-rental of the building for the same trade or business wouldn’t qualify if both are 100% owned by the same person?
20. If my client is under audit for a prior year can I change accounting method for current year (not filed yet and not under audit)?