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This has been a big few days for IRS and taxpayers, and we wanted to get a special update out to reflect what is going on.
- The IRS has released a draft Form 3115, Change in Accounting Method form that will probably become effective by year end. https://www.irs.gov/pub/irs-dft/f3115--dft.pdf
- The IRS has released Form 1065-Schedule B-2 to make the opt-out election for partnerships. https://www.irs.gov/pub/irs-dft/f1065sb2--dft.pdf
- We are starting to see the penalty and tax assessment letters for 2015, 2016 and 2017 for clients whose investment “advisor” put their IRAs in limited partnerships. If the LP earned more than $1,000 of income it was considered unrelated business income, required the IRA custodian/trustee to file Form 990-T and required tax at 35% from the IRA. The brokers sold these 8% commissionable products in most cases without informing the client of the UBI tax potential and are trying to push the liability for the tax and penalty off on the tax preparer or the client. If you attend our classes and use our engagement letter you were aware of this and have no client liability, and frankly we believe the client having this tax withdrawn from their IRA should pursue a class action suit against the investment “advisor”.
- Social Security announced 2019 FICA wage ceilings at $132,900 and an earnings limit of $17,640 for those who drew social security before the full retirement age year.
- Our attendee Chris Powell in Ocean City Maryland today asked an excellent question regarding the QBI deduction. When we pointed out our belief that many preparers will not even disclose QBI information on the K-1 from lack of knowledge we will confront them with the IRS proposed regulation guidance that states no entry on the K-1 is an entry for “zero”. Chris wanted to know where we could tell them to look. Proposed Regulation 199A-6(b)(3)(b)(iii) on page 175 gives this guidance.
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Talking with TaxSpeaker Series
This week's video is a Partnership Question Special! To subscribe to the series, please visit www.taxspeakerquestionspro.vhx.tv. If you aren't sure how it works, we answer 10-15 questions every week or two that have been submitted by you, our members. To see how the series works, click here to watch one of the videos free of charge! It's $20/month or $200/year. (A yearly subscription saves you 17%!) A subscription will give you access to all previously released videos as well as any future videos for the duration of your subscription. If you have questions you'd like to have answered, please email them to raelync@taxspeaker.com.
See the questions for this week's video below:
- Do the new partnership audit rules affect 2018 returns or not until 2019?
- Do all of my clients qualify for this new “opt-out” election on 1065’s?
- How do I make the “opt-out” election on a 1065 this year?
- Please explain how the “pull-in” election works on 1065’s.
- What happens if I don’t make any election for 1065 audits?
- What do I need to disclose on 1065 K-1 for the new QBI deduction?
- What should the client ask the attorney to do for 1065’s?
- Should I name myself or my firm the new “partner representative”?
- Do you have an updated engagement letter for 1065’s that covers all of this new stuff????
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Elections, Checklists, & Letters USB -- Available Now!
Jam-packed with immediately useful information and organized in an easy to use manner, the desktop reference will prove to be an invaluable source for the operation of your office. For a full list of contents and to get yours today, click here.
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