Unanswered Tax Questions

Yes, for the portion of the mineral rights the stepsister inherited from her mother, the fair market value (FMV) on the mother's date of death in 2022 is the relevant valuation for tax basis purposes. When assets are inherited, their basis is generally stepped up (or down) to the FMV on the decedent's date of death. Since the stepsister inherited her interest from her mother who passed in 2022, her basis in that portion would be its FMV as of that date. When she then transferred this interest to you via a quitclaim deed, you generally receive her basis in that specific portion. Therefore, a valuation of that portion as of the mother's date of death in 2022 is necessary to establish the correct tax basis for that part of the mineral rights.

Investing in rental properties through platforms like Arrived.com will introduce new elements to your tax return. You'll report your share of rental income and deductible expenses, typically detailed on a Schedule K-1 you receive from the investment entity. Key deductions often include property taxes, insurance, management fees, and importantly, depreciation. Depreciation is a non-cash expense that can significantly reduce your taxable rental income, potentially even creating a tax loss on paper. However, rental real estate is generally considered a passive activity. Losses from passive activities can usually only offset passive income. There's an exception allowing taxpayers who "actively participate" and meet certain income thresholds to deduct up to $25,000 of passive losses against non-passive income (like wages). Whether you qualify for this "active participation" exception depends on your specific involvement and Adjusted Gross Income. If your deductions, especially depreciation, exceed your rental income and you can utilize the passive loss exception, it could reduce your overall taxable income, potentially leading to a larger refund or lower tax liability. However, if losses are limited by passive activity rules, they are generally carried forward to future years.

Investing in rental properties through platforms like arrived.com means you'll report your share of rental income and can claim corresponding deductions. Common deductions include depreciation, property taxes, mortgage interest, insurance, and operating expenses such as management fees. Depreciation, a non-cash deduction, can be substantial. These deductions can reduce your taxable rental income. However, rental real estate is generally considered a passive activity. This means any losses generated from these investments can typically only offset income from other passive activities. They generally cannot offset "active" income like wages or portfolio income (e.g., stock dividends). While the deductions can significantly lower your taxable rental income, the ability to use losses to reduce *other* types of income is often restricted, especially for hands-off, fractional investments where you are unlikely to materially participate. So, while the properties generate deductions, their immediate impact on reducing your overall taxable income from non-passive sources may be limited.

Yes, you must amend your Form 1120 tax returns for 2020 and 2021. The Employee Retention Credit (ERC) is treated as a reduction of your deductible wage expense. For income tax purposes, this reduction must be applied in the tax year the wages were paid or incurred, not in the year the credit is received. Since you claimed the ERC for wages paid in 2020 and 2021, your deductible wage expense for those years is reduced by the amount of the credit. This means your taxable income for 2020 and 2021 was understated on your original Form 1120 filings. You will need to file Form 1120-X, Amended U.S. Corporation Income Tax Return, for both 2020 and 2021 to reflect the decrease in your wage deduction. The receipt of the refund checks in 2

It's unusual to have no federal income tax withheld. Several factors could cause this: * **Incorrect W-4:** Your new employer may have incorrectly processed your W-4 form. Double-check that the allowances and other information are accurate. An incorrect W-4 may result in too little or too much being withheld. * **Low Income:** If your income is very low, your tax liability might be zero. * **New Tax Laws:** While unlikely to cause a complete absence of withholding, recent tax law changes could affect your withholding. Review your W-4 with your employer's payroll department. If the issue persists after correction, consult a tax professional or the IRS for further guidance. I cannot provide specific tax advice without reviewing your complete tax situation.

Using business profits for a down payment on a condominium or vehicle for your single-member LLC (Deenil Groups LLC) is generally permissible, but careful record-keeping is crucial to avoid tax issues. The IRS requires a clear distinction between personal and business expenses. To minimize tax problems: 1. **Maintain meticulous records:** Document all business income and expenses separately from personal finances. This includes detailed records of the condominium or vehicle's use for business purposes (e.g., mileage logs, rental agreements if renting out space). 2. **Properly categorize assets:** The condo and vehicle should be considered business assets on your LLC's books. Depreciation on the condo and vehicle will reduce your taxable income. 3. **Consider business structure:** Depending on your state's laws and your personal liability preferences, you may wish to consult with a legal professional about the optimal structure for Deenil Groups LLC. This will impact how business profits are taxed and passed on to you. 4. **Consult a tax professional:** This advice is for general informational purposes only and does not constitute tax advice. A consultation with a CPA can provide tailored guidance based on your specific circumstances.

As a CPA, I must advise you to consult with a tax professional for personalized advice. However, I can offer some general guidance. Using LLC profits for a down payment on a personal residence is generally not a tax problem. The LLC's profits are distributed to you, the owner, and taxed as your personal income. You then use your after-tax income for the down payment. Purchasing a vehicle for the business is deductible as a business expense, but only to the extent it's used for business. Keep meticulous records of business mileage versus personal use. You may depreciate the vehicle over its useful life, impacting your business taxes. The best way to handle this is to maintain separate business and personal bank accounts, meticulously track all income and expenses, and consult with a tax advisor to determine the optimal tax strategies for your situation. Failure to do so could lead to penalties and interest.

Since you're filing a late Form 2553 seeking retroactive S corporation election, you must file all required payroll tax returns, even if they show zero liability. File amended Forms 941 and RT-6 for the affected quarters, clearly indicating "Zero Return" or similar language on each return. This demonstrates compliance and avoids penalties for failure to file. Attach a copy of your approved Form 2553 to each amended return. Failure to file, even with zero liability, can result in penalties. Consult the IRS instructions for specific filing requirements.

As a CPA, I cannot provide legal advice. However, regarding your tax situation: You likely do *not* need to foreign qualify your Wyoming LLC in Illinois if it has no physical presence or employees there. Illinois generally only requires foreign qualification for LLCs conducting business within the state. Your online sales alone, without a physical presence, may not trigger this requirement. However, you will still be required to file Illinois personal income taxes on your profits from the Wyoming LLC, as your residency is in Illinois. You'll need to report your share of the LLC's income on your individual Illinois return, regardless of where the LLC is formed or operates. Consult a tax professional or refer to the Illinois Department of Revenue website for specifics. Wyoming may also have its own filing requirements for the LLC itself, depending on its income and structure.

If the US citizen VP is listed as the responsible party and later removed using Form 8822-B, her liability for tax matters generally ceases upon the IRS's acceptance of the form. However, her liability for actions *before* removal remains. If she remains the responsible party and leaves the business, her liability for pre-departure tax obligations continues. She is not liable for the corporation's post-departure tax obligations unless she remains an officer with ongoing responsibilities or engages in willful tax evasion. Filing with a foreign director may delay EIN issuance but doesn't inherently create additional tax implications for the VP. The corporation remains responsible for its tax obligations regardless of the responsible party designation. Consult a tax attorney for comprehensive legal advice.