Third House

[JohnH]

Do you get the uneasy sense that your client is playing you?

[Lion]

FMV Rent

If you're going to recommend a creative approach, remember you still need FMV rent or else it's still a not-for-profit rental with Line 21 and Schedule A expenses up to rental income. And the grandson needs to report $6,000 on his Schedule C unless Grandpa is going to do payroll. Late filing fees for Forms 1099 or W-2. Do you really want to aid and abet this person? He had use of his money all year long. Do not feel sorry now that he has to pay taxes.

[Burke]

The Saga continues.....
Wayne

You know our (tax season) lives would make an interesting TV series. Cliffhangers and all..... think of an interesting name?

[KathMorgan]

I got it!

You know our (tax season) lives would make an interesting TV series. Cliffhangers and all..... think of an interesting name?

Tales from the Tax Desk!!!!

[whkrueg]

Third House

Well I've now the 2010 return. Last year, the rental house was reported on Schedule E with
zero rental income and a $23,000 loss. If I followed the same way I'm afraid the bells and whistles will go off at the IRS for two years with no rental income at all.

I hadn't considered with the FMV of services in lieu of rent that the grandson would have to file a schedule c. That would serve him right.

I don't feel sorry for the guy because he has to pay taxes, that is a part of life. What I do feel for is a 78 year old man who is being taken advantage of my his 22 year old grandson. Who is a UCLA graduate who can only find a minimum wage job, unable to pay rent but can afford a vacation to Switzerland to visit his brother.

Fortunately he just dropped off the return and I'll have a few more days to decide how best to handle this return.

Thanks
Wayne

[FEDUKE404]

Solution

I would suggest you let the person who gave him the sage investment advice and/or the person who prepared his 2010 tax return also file his 2011 tax return.

Did his barber get involved??

Unless you want to get entangled in some shaky tax scenarios, I likely would not want my PTIN within a mile of this mess. The "best" you could hope for is to prepare a proper tax return and then have a very disgruntled client (and grandson) who might decide your inept work is not even worth your fees.

Just my 2¢ worth.

FE

[JohnH]

Excellent advice!