Buying rental home to rent to parents
    Brad-99449 - 05/8/2019, 4:06 pm
    I've come across this client that wants to help his parents buy a home near him and to help out he is interested in co-sign the loan, and when his parents move on or pass on he inherits the house and turns it into a rental property. The son will treat it like a rental to his parents, meaning, the son will be responsible for the mortgage and upkeep, and the parents will pay him a little rent. There's many issues at play here. Son wants to get owner occupied loan rates so that means the dad needs to be on the loan and title. Son wants to treat it, for tax purposes, like a rental so he will report income from parents and wants to deduct all the mortgage interest, even though the father is on the loan. I was told by another CPA that if the son wants to deduct all the mortgage interest, the dad cannot be on title, because the son would otherwise only be able to deduct half of expenses such as mortgage interest if dad is still on title. Can someone confirm this? We are hoping if son pays 100% of mortgage/housing, and reports all the rental income from dad, that son can deduct all rental expenses the same as if he was sole owner. Furthermore, I'm told that if son is the only one on title, I'm told he would lose any possibility of a step up upon his father's death, but if his dad was JTWROS on the property here in Colorado (a common law property state), that there would be a 50% step up (the father's half) when he died. I'm not sure if this is correct. I thought that it depends on who contributed money to purchase the home. So if dad contributed all the money to buy the home such as the down payment, that the house would receive a full step up at his death? Or am I confusing that rule with marriage in community property states? Anyways, the goal is for the house to end up in the son's name without probate and to be well managed from a tax standpoint, both for passive income tax purposes and inheritance purposes. (This is a small estate so no estate or gift tax concerns). If you have any suggestions, please share! We'll all learn together.
    Residual value correct ?
    Fernando-91859 - 05/5/2019, 8:17 pm
    The questions says that new residual value should be only $10,000, it does not say dropped $10,000....could you explain more?
    TRaded value
    Fernando-91859 - 05/5/2019, 5:02 am
    Why the traded value is not considered since it it the value received? Is that because is a different type of asset?
    Fernando-91859 - 04/21/2019, 11:18 pm
    I would add that $50,000 tax expense will never be deducted so no deferred tax needs to be calculated.
    Going concern
    Janet-89765 - 04/20/2019, 2:33 pm
    In my text it states in rare cases the going concern is considered to be so extreme or if there are multiple uncertainties where it is not possible to for an opinion on statements taken as a whole , so as to warrant a disclaimer of opinion. The answer chose for this question doesn’t appear to be correct.
    Clarified Standard
    Kyle-31249 - 04/19/2019, 4:35 am
    Under new structure of the Audit report, reference to GAAS is in Auditor's responsibilities Section.
    Student Loan Interest
    Caroline-91970 - 04/18/2019, 6:21 pm
    Is the $2500 max annual or lifetime total?
    Gabriele-19406 - 04/9/2019, 7:21 pm
    Wouldn't Theodore and Franklin be considered Qualifying Relatives? The TP provides more than 1/2 of their support. A Dependent is either a Qualifying Child or Qualifying Relative. Even if they don't qualify as dependent child, they still could be claimed for medical expenses and the new Credit for Other Dependents if they lived more than 1/2 of the year with the TP. The question does not indicate that they live on their own.
    Prepaid Insurance Expense
    Chris-15937 - 04/8/2019, 12:36 am
    How is the increase in Prepaid Insurance equivalent to subtracting that amount when working BACKWARDS from net income to calculate cash from operating activities? If my operating cash for the year was $207, as the answer says, and I PAY OUT an extra $9 to increase my Prepaid Insurance by $9, as the problem states, that puts me at $198 cash for the year. Adding back the $6 for Salaries Payable puts me at $204 net income, not the $210 starting point stated. Am I missing something here?
    Valuation Allowance
    Ryan-12701 - 04/7/2019, 6:50 pm
    Is an increase in valuation allowance always a tax liability?
    Posts per Page 10 20 30 50