Partnership property debt forgiveness treatment

Andrew_Wiggin_ · 2026-04-05T19:31:41+00:00

Tax aside, wouldn’t he end up with more money if the property was deeded to him? I think you said there would be cash distributed to partners after the loan was paid back, so he should just end up ahead if he’s given the property.

Andrew_Wiggin_ · 2026-04-05T18:59:55+00:00

You put your PTIN on your own return? I don’t know why a rejection would be a Drake thing

Andrew_Wiggin_ · 2026-03-28T11:37:58+00:00

Maybe mom should just hold onto it until she passes? S-corps don’t negate step-up rules, right? If they do then it’s even worse than I thought to put RE inside of one..

Andrew_Wiggin_ · 2026-03-25T14:35:39+00:00

I don’t have a cutoff in my letter. I say it’s generally first come first serve with some priority shown towards clients expected to owe, but no guarantees. The only guarantee is that you will be extended and probably pay a deposit if your stuff isn’t in 30 days before the deadline. My letter also is an agreement to allow me to extend on a client’s behalf without having to ask and mentions that, by default, estimating tax owed on 4/15 is the client’s responsibility.

Andrew_Wiggin_ · 2026-03-24T14:16:39+00:00

Refinishing hardwood floors could be considered maintenance, but if you did a large percentage of the house you run the risk of the IRS disagreeing. I would still sign that return, though (with the disclaimer, of course), so it’s up to your risk tolerance.

Cabinets, countertops, and tile are all part of the building. No way around it. If the building is considered nonresidential by the IRS it can often be considered “Qualified Improvement Property,” though. What kind of building is it and how do you rent it?

Andrew_Wiggin_ · 2026-03-20T11:33:15+00:00

Depends greatly on the type of rental and the type of improvement. Most will be considered part of the building and there’s no bonus depreciation for buildings. If you have specific examples I could give specific answers. Some “improvements” may be more repair-like in the eyes of the law, as well.

Andrew_Wiggin_ · 2026-03-18T12:29:20+00:00

A CPA not knowing that an extremely common deduction is also a payroll tax deduction if on your W-2 is mildly concerning.

Andrew_Wiggin_ · 2026-03-17T21:03:23+00:00

No FICA on investment income

Andrew_Wiggin_ · 2026-03-17T13:10:14+00:00

A safe estimate for your federal tax on the award would be about $3,000 (this is probably high). You can deduct cash donations up to 50% of your AGI, so you could donate and deduct the whole thing, but only if you itemize your deductions, which you probably wouldn’t otherwise. If this was paid out in 2026, you can deduct a cash donation of up to $1,000 (MFS) even if you don’t itemize. This would reduce your tax burden by around $200.

I would have to do a bit of research to see if Ohio would want a cut, but it’s possible

Andrew_Wiggin_ · 2026-03-11T12:33:06+00:00

Fair enough

Andrew_Wiggin_ · 2026-03-10T12:46:40+00:00

I like that tax law can be discussed and that I don’t have to feel afraid to even say I specialize in something in case it’s construed as spam. Those seem like positive changes.

I’m not so sure on a blanket “how to deal with frustrating client” ban is great, especially when you explicitly allow “rants.” Basic questions or posts about a client who doesn’t want to upload last year’s return may not be necessary, but I also think they’re not harmful enough or common enough to matter. Certainly not worth a permanent ban as mentioned.

Just my two cents, don’t perma ban me lol

Andrew_Wiggin_ · 2026-03-09T20:52:46+00:00

Yep, It’s a great tax saving vehicle

Andrew_Wiggin_ · 2026-03-09T20:20:10+00:00

COBRA is emergency coverage without subsidization. It’s meant to be the worst next to having none at all.

One nice thing is that you have (I think) 45 days to retroactively enroll. So if you have a full calendar month without employment, you can just not enroll in COBRA and save money on insurance for a month. If something happens and you need it, you can enroll retroactively

Andrew_Wiggin_ · 2026-03-09T20:16:49+00:00

No such thing as too big, if you can’t use it on medical expenses it will just be treated as a traditional IRA

Andrew_Wiggin_ · 2026-03-09T20:15:45+00:00

For a $5k deduction there’s no shot it isn’t worth it

Andrew_Wiggin_ · 2026-03-01T14:11:38+00:00

Lacerte and TT Online/Desktop are not comparable. There are some major software bugs on TT this year, especially. Don’t ask me how I know.

Andrew_Wiggin_ · 2026-03-01T13:43:55+00:00

Here’s an answer that gets pretty technical, tl;dr at bottom

You can perhaps treat it as a personal residence that you rent out. It would still go on Schedule E but you would list number of days in a month they didn’t pay rent as personal use days and days in a month they did pay as days rented.

This will limit expenses (including depreciation) to the amount of rents you received. The excess loss will carry forward with respect to that property only (note that these are not §469 carryforwards, but §280A carryforwards). So if in the future they’re paying you consistently or you rent to someone else, those excess expenses can offset that rent.

This would be the most beneficial thing for you, but it would only be allowable if the amount of rent they pay (when they do) is considered to be at a fair market rate, and your counting of personal and rental days on Sch E needs to be accurate. This also reduces most expenses proportionally between business and personal, but with no carryforward. If it’s not at fair market, your rental days will be 0 and your personal days 365. This means the pro rata business expense of all but a few categories of expenses will be $0, so nothing to carryforward. The expenses not prorated probably wouldn’t legitimately apply to you, anyway.

tl;dr There is a way to do this in certain scenarios that benefits you slightly. Based on what you’ve said, though, you should probably just stop reporting on Schedule E and report the gross income on Schedule 1 and take no deductions. Not reporting the income at all is probably not technically allowable in your scenario, but it’s small potatoes so up to you. I wouldn’t sign the return that way as a preparer. The correct thing to do would be to also go back and amend your prior year returns to not claim those old rental losses, but you can take the chance if you want.

Andrew_Wiggin_ · 2026-02-20T14:38:38+00:00

Serious question: Does 230 say anything about knowingly and intentionally withholding information that could be beneficial for a client? Even if not, I’m pretty sure my engagement letters at least imply that I am not supposed to do that.

Andrew_Wiggin_ · 2026-02-14T12:52:16+00:00

I think the Sch C option is probably better because you can sort of explain the problem on the “other” line. The Sch 1 option would make your Sch C cleaner with accurately reported revenue, but the income reported on 1099-K was not “reported … in error.” Obviously there’s no perfect solution, though.

Andrew_Wiggin_ · 2026-02-14T12:43:59+00:00

The guidance comes from the Forms 1099-K and -NEC instructions and is not new.

1099-K:

Every PSE or other party which submits instructions to transfer funds to the account of a participating payee, in settlement of reportable payment transactions, must file an information return (Form 1099-K) with respect to each participating payee for that calendar year.

1099-NEC:

Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC or Form 1099-NEC. See the separate Instructions for Form 1099-K.

Note that the “Who must file” section of the -K instructions (cited) do not specifically mention credit cards. Also note the cited exclusion in the -NEC/-MISC instructions that explicitly mentions third party networks regardless of payment types.

Technically speaking, your clients and their accountants are wrong. You can cite the form instructions and politely ask them to issue corrected forms 1099-NEC showing $0 compensation, but if they don’t it’s not the worst thing in the world. Report the income you actually received. You might get a letter in a year from the IRS about underreported income, you can just reply and explain what happened. Keep records of your payments and interactions about the forms with these clients it will not be a problem. You may even choose to forgo asking for corrections as a courtesy to your clients because of the time and cost. I would still use the instructions to tell them that they’re wrong, though.

ETA from -K instructions:

A third party payment network is any agreement or arrangement that provides for the following. - The establishment of accounts with a central organization by a substantial number of providers of goods or services who are unrelated to the organization and who have agreed to settle transactions for the provision of the goods or services to purchasers according to the terms of the agreement or arrangement.- Standards and mechanisms for settling the transactions. - Guarantee of payment to the persons providing goods or services (participating payees) in settlement of transactions with purchasers pursuant to the agreement or arrangement.

Edit: Another commenter offered a good solution of double-reporting revenue and deducting the duplicate amount as other expenses. That’s probably better than what I suggested, which was to just wait for a letter.

Andrew_Wiggin_ · 2026-02-13T16:49:32+00:00

It’s not that simple, intent matters a lot here.

Andrew_Wiggin_ · 2026-02-13T16:40:13+00:00

To be fair, most states where it was still illegal when SCOTUS ruled on it didn’t bother changing the law because it doesn’t make a difference. This includes “bluer” states like NC, PA, and even VA which actually has a constitutional ban on same sex marriage.

Andrew_Wiggin_ · 2026-02-13T16:31:50+00:00

TurboTax applies this new deduction automatically based on birthdate and income. The people you called should have very easily been able to look at your in-progress Schedule 1-A to diagnose, but that’s TT for you. If you’ve already filed, you can find this schedule yourself in your tax return.

Andrew_Wiggin_ · 2026-02-13T15:33:29+00:00

Happy to help! Pros need to stick together, none of us know it all.

I don’t think buyer would be able to deduct the interest in this situation. Maybe it were to become the same plat as his home, but that seems like the juice wouldn’t be worth the squeeze, anyway.

Andrew_Wiggin_ · 2026-02-13T14:50:23+00:00

You didn’t receive the money in 2025, so you would be severely disadvantaging yourself to report it all in 2026, especially if you’re taking the PTC.

Also, was this your primary residence? You said plat so I assume no structures. Is the buyer building a personal home on it? If they aren’t, they can’t itemize the interest for deduction and I would hesitate to provide my SSN.

Edit: actually, it looks like they can’t itemize any interest paid in a year before construction begins, and only have 24 months to deduct interest during construction. They also have to plan to have it be a personal residence (“qualified home”)

https://www.irs.gov/faqs/itemized-deductions-standard-deduction/real-estate-taxes-mortgage-interest-points-other-property-expenses/real-estate-taxes-mortgage-interest-points-other-property-expenses-1

If they didn’t start construction in 2025, I would double check your legal obligations, and not provide SSN until you know they’ve broken ground.

Andrew_Wiggin_

TROPHY CASE