[ITSTIMETOPASS]

So I’m working on a partnership 1065 tax return for a client. They provided me the year end balance sheet and income statement. The retained earnings doesn’t roll correctly from the prior year. What is the process to go about rolling retained earnings without asking for the general ledger.

I know how to roll retained earnings by seeing if beginning account balances tie to the prior year’s ending balances and if income statement accounts are closed out.

Anyone know how to get started with this?

AUD: PASSED!
REG: Q4 2015
FAR:
BEC:

[Recked]

Lets assume the DOD and sale are relatively close in proximity. An appraisal would be great in theory, but no one wants to pay $400-1000+ for an appraisal.
I, and the estate/trust attorney I use, will rely on the sales price of the home as being MORE accurate than an appraisal, as it is the actual fair market value willing to be exchanged by a buyer and seller (which is what an appraisal tries to determine, usually with poor results).

So lets assume DOD 6 months ago. You list the house and sell it for 150k. I would say the basis in the home at DOD was approximately 150k, and then you lose the RE commission, usually 6% on residential. There would be no gain, and the deduct-ability of the loss depends on certain “factors”. Safer to call it a non-deductible loss, but if you dig deep enough you can find justification to claim the capital loss, up to 3k a year. It's not a large enough income offset to raise any eyebrows on a year by year basis. Using the above numbers, 150k basis, expenses of sale = 9k, not counting attorneys fees etc, 9k loss split 3 ways = 3k capital loss on each K-1.

Sounds like the 1099S was kicked out to multiple SSN's. I would be less inclined to claim a capital loss directly on a personal return, but I don't see anyway this would be a capital gain/taxable.

[Bourne]

I didn't take into account the DOD. Correct, if the DOD is somewhat close to the date of sale there's no way the FMV would have changed enough to report a gain

[Tncincy]

So how would I report this. So is the sch d the proper place to report this? with the sales price of the home minus the portion she received? fill in sch d work sheet like selling stock?

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[Recked]

What software are you using?
There should be a personal asset sales tab.
You could do Schedule D.

For the sake of simplicity I would probably just report 1099S total on sale price, and then use the same amount as the cost basis.
If you have personal asset tab I would report date of acquisition as DOD/inheritance, sales date is on 1099S, proceeds = 1099S, and cost basis = inherited value. Expenses of sales would be one third of RE fees/commission plus 1/3 of legal fees.

Sale price minus the portion she received does not sound right.
Is the 1099S for the full amount, or just her third?

[Tncincy]

Just her third.

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[aaronmo]

Real world…adjusting entry to contributions/distributions and call it a day (small practice answer anyway).

[Tncincy]

Thank you for your responses.

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[Tncincy]

Hey I'm still waiting on you recked, because this is ow I got stuck because Sales price – her portion received don't look right on the return. 🙁 help…..anybody.
So I have: property description col a : descript of property, B : date acquired, c: date sold D: proceeds (sales price) E: Cost or other basis (Adjustment, if any to gain or loss) H: Gain or loss,
so I have the decript, date aquired: inherited, date sold: 07/17/2017, Proceeds : 15,000 Cost: 45,000 = 30,000( the amount of the brothers )

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[Recked]

sorry, did not realize you were waiting for a further response.
the shot answer is no.
sales price = cost basis.

If the house sold for 45k, and the 1099S shows 15k to the woman, then the sales price and cost basis will both be 15k = 0 profit or loss.

(You can't take the full 45k as the cost, as she only gets 1/3, and her 2 brothers get their third each)

Desc. – Date Acquired = DOD (don't put inherited), date sold 7/17/17, proceeds=15,000, cost basis = 15,000

Without knowing all the details about DOD etc, that's the best guess I can take at it.

[Recked]

Taking the loss is above your pay grade/skill level I think. Plus its not flow through on K-1.

I would report as follows.
8949 C Not reported on 1099-B.

Description = home address, or the 1099-S description.
Date Acquired = Date of Death
Date Sold = 7/17/17
Proceeds = 15,000
Cost Basis = 15,900 (15,000 stepped up basis plus her 2% of RE comissions assuming 6% total but not at all relevant)
(f) Gain Loss code = L
(g) Adjustment = 900
(h) Gain or loss = 0

8949 flows to Sch D. Its most likely short term as DOD to date of sale is most likely less than a year. Technically speaking this would be a long term gain, as is the case with the sale of all inherited property, but it does not matter for your purposes.
Super simple approach is to just match 15000/15000 as proceeds/cost.

[Tncincy]

Thank you so much . I feel so much better. with your answer.

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[Tncincy]

Thank You…it is done 🙂

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[Author]

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