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If the decedent owned 200% of the house before the date of death, then the basis of the house will be stepped up to fair market value on the date of death. If the house was sold within a couple of months of the death, then that value can generally be used as the step up value even without the alternative valuation date. In other words, the basis is the selling price of the house. If the house was used for personal purposes, then there will be a capital loss due to the expenses of the sale, but it will be disallowed under 26 U.S. Code § 165 (c).

Hi Marcus,

Choosing the appropriate legal entity depends on many factors including the type of business, types of services, future operational expectations, etc.  Most people that are starting a business will either choose to be a Sole Proprietor or and LLC; however, in some circumstances, starting as an S-Corp or C-Corp make the most sense.  If your business has some risk that you would like to separate from your personal finances, you may want to start out as an LLC.

To answer the question based on your current situation, since your business has zero income and expenses, there will be no tax impact since there will be nothing being passed on to you to be taxed. 

Paul,

I understand your concerns.  Since you were married I am sure she has all of your sensitive information from tax returns you filed in the past. 

I don't see the need to provide her with the 1095A if your divorce decree indicates you are covering the insurance for both of your children.  I don't understand why she would be requesting this information from you as she would be filing her tax returns.

I hope this helps,

Jeanne Adams, CPA

Firestone, CO

Amy, You will need to take a look at the Hobby Law Rules 1st.  If you reported losses for 3 out of the last 5 years for your businesses, the IRS will consider this a hobby and disallow any deductions.  They may send you correspondence regarding this as well.

Given the above information, you could report both of your incomes on a Schedule C and show a profit with each of your Schedule C's. 

I hope this helps,

Jeanne Adams CPA

Firestone, CO 80504

How you heard about me?

Kiara, both of you will file Single for 2023 since you did not get married until January 4, 2024.

Jeanne M Adams, CPA

Firestone, CO 80504

Casey,  Only one parent is entitled to claim their dependents.  Since you have a court agreement giving him the dependents and the child tax credit, these are his to claim.  Your tax returns should reflect single with no dependents.

Jeanne Adams CPA

Firestone, CO 80504

At the end of each year, all S corporation profits are allocated to the corporation's shareholders. Even if you and your fellow shareholders choose to leave some or all of the profits in the corporation, taking nothing as distributions or salaries, you will still be required to pay tax on those profits. In technical lingo, an S corporation is not permitted to have any retained earnings. This is different from a regular corporation, which can retain—and pay taxes on—its earnings.

However, S corporation shareholders may be able to deduct 20% of their business income with the pass-through deduction established under the Tax Cuts and Jobs Act. 

Earn tax-free income.

Maximize deductions.

Maximize tax credits.

Contributing to a retirement account – 401k or IRA.

Opening a health savings account.

Contributing to employer-sponsored plans.

Profiting from investment losses.

Check for flexible spending accounts at work.

For More Details:

https://www.syriaccpa.com/

Bryan, greetings from a Texas CPA.

I would be happy to have you come aboard as a tax client.

Technically, the shareholder of an S corporation should be on payroll, receiving a reasonable compensation, from day one. However, what you read, that the IRS MIGHT give you a pass for the first year, is correct. So, yes, you’ll probably be alright for year 1. Of course, that is partly contingent on whether they see that you’re following the rules in subsequent years.

If you filed the S election and made it retroactive back to 2020, then 2020 was year 1, even if it was not a complete year. In this case, 2021 would be year 2 for you. So, yes, you are a whole year late in doing payroll. Being this late, the best we can do now is damage control, to mitigate the problem.

If you are interested in having a phone call to discuss issue, I can probably take your call between 7:00 AM and 9:00 AM this morning (Tuesday, January 11, 2022). Otherwise, the rest of my day is booked at the moment (although I would be available this evening after 7:00 PM). I’d be available again tomorrow (on Wednesday), after 5 PM (as I already have meetings scheduled for tomorrow). My hourly rate for purely consulting is $200.00 per hour. During the call, we can discuss your questions and possible solutions. My direct number is (210) 413-4019. I don’t round up on time. I’m more interested in helping individuals like you and bringing them on as continuing clients than charging for consulting.

You can find my CPA firm (Adam Dickreiter, CPA, PLLC) by doing a Google search. I am located in San Antonio. If you’re not in San Antonio or the surrounding area, that’s not an issue, as we can still interact from a distance.