Talking with TaxSpeaker: Video 80
1. I have a Partnership that was formed primarily for Estate Planning purposes and gifting of interests at discounted values. There are 3 one-third partners—the Grantor and 2 Grantor Trusts. When income is generated by the Partnership, are the capital accounts of all 3 partners increased equally? Also, does the basis of each partner’s interest get increased equally by the income or does just the basis of the Grantor’s interest get increased by the entire amount of the income because the Grantor is responsible for all the taxes (i.e. the Grantor’s share of income allocated and the income allocated to the 2 Grantor Trusts)?
2. Do you have an example of form 706 filed for portability? I have been attending his seminars for about the last 8 years and heard him speak about portability. When looking in to it, it seems to be a little more than checking box and I am left more confused now than when I began researching it. I would greatly appreciate it since this is a great feature I can pass along to my clients
3. Can you do a like kind exchange of a current rental property for another rental property and then subsequently convert it to a primary residence, live in it for the requisite number of years and qualify for some exclusion on gain of sale (Section 121) ?
4. Client has a commercial building which is 70% rental space to various businesses. The other 30% of the space can be rented by the public for events, prom, Christmas parties, etc. The owners of the property may become involved with the event planning and start selling tickets to events coordinated by owners. Or they may start receiving commissions from caterers. Is this event planning subject to social security taxes? Does it play a part in the hours spent for safe harbor QBID? Should the true rental element of this property be split from the event planning and have a separate legal entity set up?
5. I have a question regarding the QBI deduction. I know you are supposed to net profit and losses of all businesses for the same taxpayer. I have a taxpayer who had losses from 2 businesses in 2018. One of the businesses finalized in 2018 and the other is a continuing business. Do we still need to net the loss from the business that was final in 2018 with 2019 profit of the continuing business?
6. Since there is no longer a shared responsibility payment for 2019, do you still suggest including the ACA addendum to the engagement letters?
7. Another question came to light yesterday regarding the Meal Deductions-2019 table on page 321 of the 1040 manual. At the seminar there was a correction to move convenience of employer meals to 50% column. I am wondering if there should be another correction regarding meals for business meetings of employees or stockholders. It is under the 100% column and it states Sec. 274 (e)(5). With my research I have not been able to confirm that this is a 100% meal deduction. Was there a correction that I missed at the seminar? Or can you point me to the right direction to find documentation confirming that it is a 100% deduction?
8. Client is a U.S. citizen working abroad and qualifies for foreign earned income exclusion. Employer shows Virginia as the state on his W-2 even though he has no residence there (there is an accommodation address of a relative on the front of Form 1040 and that ownership information was passed on to that state). However, the taxpayer’s refund claim has been denied and I’m wondering how to advise clients in similar situations as to how to have income allocable to states reported on their W-2.
9. On old C corps, what tax consequences, if any, are there in making S elections on old farm corporations?
10. My firm has a client that carried back a farm NOL generated in 2018 to 2016 and 2017. Due to the farm loss, the QBI generated in 2018 was negative. What is the amount of the negative QBI carry forward? Is it the total calculated in 2018 or does it get reduced by the amount of the NOL carried back to 2016 and 2017?
11. Husband took early retirement and has been receiving severance pay since the end of February. He deferred about 4,000 in his 401k the first two months prior and then they stopped allowing him contributions. I only have $800 in income myself. It looks like we cannot make deductible IRA contributions with his income over $200,000. Is this correct? Any other recommendations for tax deferral this year?
12. Our firm has received a large amount of IRMAA questions over the past year….clients receiving adjustments based on a one-time increase of income due to the sale of an asset. I’m advising them as to how to utilize the appeal processes available, so I’m clear on “what to do”. I think there’s some merit in having clients in this situation HOLD the actual filing of these “one-off” returns until the October 15th deadline, of course paying the tax due in April to remain timely. I’ve had some success with IRS processing the 10-15 filed return, then SSA not getting the increased AGI information until after the IRMAA adjustment reports are run. Therefore, SSA is using the AGI from the previous year—terminology in the regs indicates “most recently filed return”. We file the following year’s return in Feb/March, showing the “normal” AGI, and the IRMAA adjustment is never made since the returns hitting the radar are “normal”. Any successes have been essentially anecdotal due to the long feedback cycle, but I’m planning to train our team of 1040 practitioners to suggest this approach when appropriate (truly a one year increased income or ROTH conversion, etc). I wanted to ask your opinion on the topic