Talking with TaxSpeaker: Video 91
1. Longtime client comes in this year and informs me has business dealings in Costa Rica. He doesn’t own property or have bank account, but has multiple promissory notes, totaling $500K. The interest is paid upon completion of the projection, so there has been no foreign income to date.. Does the taxpayer need to file an 8938 listing these notes. He has had them since 2016, if they need to be listed, do we file amended returns. My organizer asks if you have any foreign bank accounts, foreign property or foreign interests. He came in very nervous when he realize it included foreign interests, as he has no accounts or property.
2. I'm wondering if there is a dollar limit for IRA to Roth conversions per year.
3. Husband, wife and a son formed an LLC taxed as a partnership. Husband and wife own 25% each and son owns 50%. Operating agreement indicates the LLC is Member Managed when in fact, the wife doesn't actively participate. Is it necessary for the operating agreement to be amended so wife's distributive share can be excluded from SE tax?
4. I have a client who writes a check from his C Corporation to his 401 K Plan for his yearly contribution. He was a new client for 2018 tax year and I corrected his 2018 W 2 to include the 401 K Contribution and requested his retirement plan statement and retirement plan documents. I told him that for 2019 he has to do the 401 K contribution through his payroll. For 2019, he again wrote a check for $25,000 from his corporate account to his 401 K account (which he says it is). I have asked him several times for his retirement plan statement and his retirement plan documents. He has not provided these. I do not know how to proceed to do his 1120? I cannot keep correcting his W 2 without even knowing what sort of retirement plan he has. If he has a SEP, the $25,000 is more than 25% of his salary. Please advise. Thank you.
5. I am seeing a lot of hype regarding the Secure Acct. Some say it gives the IRS carte blanche to confiscate up to one-third of your IRA. Is this true? If so, how is this suppose to happen?
6. Can a minister who timely filed a Form 4361 to exempt himself from Social Security obtain any coverage under Medicare, assuming he’s meets the age requirement? I’m thinking he cannot have coverage under Medicare, but would appreciate Bob’s input. Relatedly, can this minister obtain Medicare coverage under his wife’s Medicare plan?
7. Situation: Mom took out a qualified student loan to pay for her dependent daughter's college. Mom is legally obligated to pay interest on the loan and she does pay the interest. Daughter is no longer Mom's dependent. Question 1: Is the interest paid on that loan still deductible to Mom even when the daughter ceases to be her dependent? Question 2: Same situation except daughter pays the interest even though mom is still legally obligated to pay it. Who gets the interest deduction?
8. Do you have to include a distribution from PERA Public Employee Retirement Assn in the withdrawals from a qualified plan. When we had contributions years ago PERA never contributions never qualified for this credit. I called IRS last year and the lady said, oh yes, you have to include PERA withdrawals.
9. I have a two member LLC that elected to be taxed as an S-corp. One member owns 97% and the other owns 3%. The 97% member sold his interest to another individual. Am I correct that the transaction is treated as outside the LLC between the prior member of the LLC and the new member of the LLC and there is no way to get a stepped up basis for the assets inside the LLC? Going forward the new member will have both inside basis and outside basis?
10. I have a client with a S Corp dental practice and a Partnership that owns the self-rented building. The dental practice paid for a new commercial roof in 2019. Is it possible for the dental practice to take Section 179 on the new roof, or does the partnership that owns the building need to claim the cost? If the Partnership has to take the cost, it seems that it would lose out on the benefit of being able to claim the cost in one year (would generate a loss on a self-rental property)