You mean your accountant is giving you a 30 page tax return which would consist of the Form 1041 and a Schedule K-1 for each beneficiary?
Or, do you mean the accountant is giving you a 30 page accounting for the trust which shows you all the income (itemized by date and categorized by type of income) and expenses (itemized by date and with a full description and further identified by category of expense and whether the expense is charged against principal or income)?
If the latter, then I can understand why the report is 30 pages. Why not let the accountant prepare the trust tax return?
If you want to do the tax return youself, TurboTax Business (cost about $100 at Office Depot).will generate the Form 1041 and all Schedule K-1s you need for your trust. [ Edited by NewKidInTown3 on Date 02/15/2009 ]
the latter. the accountant is doing the return. i just want the minimum amount of info needed, as well as the minimum charge. right now, i am paying for useless information. my accountant said that the report and schedules is all part of the govt requirements.
i have one line to fill in - interest income, and it is then distributed to one beneficiary. so a simple 1041 with 1 K1.
I had a somewhat similar issue a couple years back. Basically ALL beneficiaries agreed to waive the formal accounting - that cut the fees in half from theaccountant. Give that a try assuming all beneficiaries will agree.[ Edited by finniganps on Date 02/19/2009 ]
It depends on intent. If you put the property on the market right after the rehab is finished and it takes five years to sell, it is still a flip; you are selling inventory and will pay regular income tax bracket plus SS and Medicare ("self employment" taxes. If you spend a year rehabbing it, then offer it for rent one day and someone happens to come along and buy it, it could be argued that it qualfies as long term capital gains as your intent was to use it as a rental.
The safe thing to do is list it as a rental and take depreciation for at least a year, not selling it until a year and a day after you have "placed it in service". Generally this would be a year after you first tried to rent it.
If you own it a year before you sell it, the profit will be taxed as a capital gains transaction.
If you own it less than a year, any profits will be taxed as ordinary income.
On a buy-sell deal, virtually everything you spend on the property.....including vehicle mileage, etc. is added to your cost basis. The cost basis is subtracted from the net you receive when you sell. The balance is the profit you pay tax on.
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Quote:
On 2009-02-20 17:20, churcham32 wrote:
I bought a condo to rehab, and hold as a rental. I read all of the by-laws and amendments prior to purchasing, and not only did they not forbid the rental of the unit, they gave guidelines that must be followed for doing so.Just curious.
What are the guidlines for a rental? Do the bylaws actually say that the association must approve your lease?
Yeah, it states that any leases or rental contracts must be approved by the management entity. It also goes into policies regarding tenants use of the common elements, and responsibility of the unit owner to ensure tenants compliance with the association by-laws.
There are several units currently being rented, because the owners held them for a long time and were grandfathered in. But no additional units will be allowed to be rented.
does turbo tax or one of the online service do this?
You mean your accountant is giving you a 30 page tax return which would consist of the Form 1041 and a Schedule K-1 for each beneficiary?
Or, do you mean the accountant is giving you a 30 page accounting for the trust which shows you all the income (itemized by date and categorized by type of income) and expenses (itemized by date and with a full description and further identified by category of expense and whether the expense is charged against principal or income)?
If the latter, then I can understand why the report is 30 pages. Why not let the accountant prepare the trust tax return?
If you want to do the tax return youself, TurboTax Business (cost about $100 at Office Depot).will generate the Form 1041 and all Schedule K-1s you need for your trust. [ Edited by NewKidInTown3 on Date 02/15/2009 ]
the latter. the accountant is doing the return. i just want the minimum amount of info needed, as well as the minimum charge. right now, i am paying for useless information. my accountant said that the report and schedules is all part of the govt requirements.
i have one line to fill in - interest income, and it is then distributed to one beneficiary. so a simple 1041 with 1 K1.
I had a somewhat similar issue a couple years back. Basically ALL beneficiaries agreed to waive the formal accounting - that cut the fees in half from theaccountant. Give that a try assuming all beneficiaries will agree.[ Edited by finniganps on Date 02/19/2009 ]
All expenses until you sell add to the basis. Everything but the kitchen sink...and that too!
Think of it this way: The taxable event does not occur on a buy-sell deal....until you sell the property.
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Thanks so much! Makes my return for this year a whole lot easier. Next year will be a different story...
Hope you are keep mileage logs so you can document your mileage expense.
I have the dates of my trips, and the round-trip mileage. Adding up fast, at 45.2 miles per round trip, times 28 trips so far.
It depends on intent. If you put the property on the market right after the rehab is finished and it takes five years to sell, it is still a flip; you are selling inventory and will pay regular income tax bracket plus SS and Medicare ("self employment"
taxes. If you spend a year rehabbing it, then offer it for rent one day and someone happens to come along and buy it, it could be argued that it qualfies as long term capital gains as your intent was to use it as a rental.
The safe thing to do is list it as a rental and take depreciation for at least a year, not selling it until a year and a day after you have "placed it in service". Generally this would be a year after you first tried to rent it.
Chris
If you own it a year before you sell it, the profit will be taxed as a capital gains transaction.
If you own it less than a year, any profits will be taxed as ordinary income.
On a buy-sell deal, virtually everything you spend on the property.....including vehicle mileage, etc. is added to your cost basis. The cost basis is subtracted from the net you receive when you sell. The balance is the profit you pay tax on.
[addsig]
Quote:
On 2009-02-20 17:20, churcham32 wrote:
I bought a condo to rehab, and hold as a rental. I read all of the by-laws and amendments prior to purchasing, and not only did they not forbid the rental of the unit, they gave guidelines that must be followed for doing so.Just curious.
What are the guidlines for a rental? Do the bylaws actually say that the association must approve your lease?
Yeah, it states that any leases or rental contracts must be approved by the management entity. It also goes into policies regarding tenants use of the common elements, and responsibility of the unit owner to ensure tenants compliance with the association by-laws.
There are several units currently being rented, because the owners held them for a long time and were grandfathered in. But no additional units will be allowed to be rented.