Essays

Need Help With Essays? Ask an Essay Tutor Online.

Ask an Expert,
Get an Answer ASAP!

Essays

For Megan C. Following is a situation where I have to write

Customer Question
For Megan C. Following is a...
For Megan C.

Following is a situation where I have to write a client file memo. I am not asking you to write the memo. However, I am the worst researcher and I need help with the facts and the main issues. Some direction would also be appreciated as to the actual tax law(s) that are being compromised. I think the main issue is that the income the Grumpys receive from their C corporations is not considered passive income and therefore they cannot offset their rental losses against the income. However, I could be mistaken.

• Gary and Greta Grumpy are a married couple who reside in Hinderland, USA. Both of them own a separate C Corporations. The corporations operate out of the Grumpy’s home and pay rent for office space in the home. In addition to their C corporations, the Grumpys own five rental properties, which have operated at a loss for the previous five years. Gary and Greta have been using the losses from these rental properties to offset the rental income they have been charging their corporations for operating in their home. On their last three individual tax returns, the Grumpys have shown income from the leasing office space to their C Corporations of $40,000, $24,000 and $22,000. The losses from the rental properties have been in excess of the income from the leased office, thus the couple has a passive loss carryforward of some amount; however, they did offset the lease income with the losses from the rental properties. Please give the tax issues and your advise in a tax memo format for the file.
Submitted: 4 years ago.Category: Essays
Show More
Show Less
Ask Your Own Essays Question
Answered in 6 minutes by:
11/5/2013
Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago
MyVirtualCPA
MyVirtualCPA, Master's Degree
Category: Essays
Satisfied Customers: 16,592
Experience: I have a Master's Degree in accounting, and always enjoyed writing articles and papers.
Verified
Hey Diana,

Great to hear from you. I will take a look at this, but it will be at earliest tomorrow late night before I'm able to do this. I teach several courses and grading weeks just closed so I'm a little backed up and on tight deadlines. Add to that it's close for many of my clients and it's just crazy busy. Hope you understand :-)

Thanks

Megan
Ask Your Own Essays Question
Customer reply replied 4 years ago
ok
Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago
Thanks!
Ask Your Own Essays Question
Customer reply replied 4 years ago

You are welcome.

Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago
I'm working on it. It will prob be tomorrow before I get anything. Thanks.
Ask Your Own Essays Question
Customer reply replied 4 years ago
Thanks.
Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago
You're welcome.
Ask Your Own Essays Question
Customer reply replied 4 years ago

Hi,

 

What is the status?

Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago
Hello,

The issue here is whether or not the Grumpys can use their passive rental losses to offset the income that they get from renting out their home to their business. I do not think that they can apply the passive losses against that income. I don't have a code or section or case to cite for this, but this is the issue that you would need to write your memo about.

I hope this helps. Please let me know if you need anything additional.
Ask Your Own Essays Question
Customer reply replied 4 years ago

Herein lies the problem. I found a section of the law that says it is okay, however, a tax attorney acquaintance of mine claims the law does not apply to this situation. That is why I needed help.

Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago
Diana,

I am not sure on this one. I would think that it would be okay, because it's a rental. But, it could be that there's a situation when you rent to yourself that it's not passive. Had they rented the space out to anyone else there would be no question. I would ask the tax attorney why he says that the law doesn't apply in this scenario. I've never had a similar situation.

Thanks

Megan
Ask Your Own Essays Question
Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago

.

Ask Your Own Essays Question
Business Tutor: MyVirtualCPA, Master's Degree replied 4 years ago
Diana,

The income from the rental of the home is not passive, because it fails to meet the material participation test. Since the owners are 100% owners it doesn't qualify as passive income. Therefore they could not net against their other passive income.

Also, the rents seem high for a home office. This could be a way for them to save on payroll taxes, to take this instead of taking a distribution from the company. This could create a dividend in some situations, if the IRS does not think that the rent is appropriate.

These are the main issues that I see. The PAL rules do not apply to the rental, as such they cannot deduct their passive losses from that.

Thanks

Megan
MyVirtualCPA
MyVirtualCPA, Master's Degree
Category: Essays
Satisfied Customers: 16,592
Experience: I have a Master's Degree in accounting, and always enjoyed writing articles and papers.
Verified
MyVirtualCPA and 87 other Essays Specialists are ready to help you
Ask your own question now
Ask MyVirtualCPA Your Own Question
MyVirtualCPA
MyVirtualCPA
MyVirtualCPA, Master's Degree
Category: Essays
Satisfied Customers: 16,592
16,592 Satisfied Customers
Experience: I have a Master's Degree in accounting, and always enjoyed writing articles and papers.

MyVirtualCPA is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

I couldn't be more satisfied! This is the site I will always come to when I need a second opinion.

JustinKernersville, NC

Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around.

EstherWoodstock, NY

Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know.

RobinElkton, Maryland

He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here.

DianeDallas, TX

< Previous | Next >

Meet the Experts:

Mr. Gregory White

Mr. Gregory White

Master's Degree

500 satisfied customers

M.A., M.S. Education / Educational Administration

MyVirtualCPA

MyVirtualCPA

Master's Degree

16,592 satisfied customers

I have a Master's Degree in accounting, and always enjoyed writing articles and papers.

Brittany

Brittany

Professional

228 satisfied customers

AA/Accounting BS/Business

Eric M.

Eric M.

Master's Degree

177 satisfied customers

BS and MS in computing, pursuing MBA, founder of a half-dozen start up businesses.

DXJWriter

DXJWriter

Master's Degree

160 satisfied customers

20+ years of writing, research, problem-solving & training

linda_us

linda_us

Master's Degree

88 satisfied customers

A tutor for Business, Finance, Accounts and other related topics.

SuperiorTutor

SuperiorTutor

Bachelor's Degree

80 satisfied customers

Bachelors in Finance and Accounting. Have a running blog. Passion for writing.

< Previous | Next >

Related Essays Questions
FOR GRACE Can you please help me write an APA assignment
FOR GRACECan you please help me write an APA assignment regarding Human Resources Management. Please let me know if you can help. Thank you… read more
Grace
Grace
Bachelor's Degree
144 satisfied customers
Due on Sunday, 1/14 at 8PM EST; I'm not looking for a full
Due on Sunday, 1/14 at 8PM EST; I'm not looking for a full paper done on this -- an answer and a small explanation for each area would help out a lot and I would be very appreciative. If you accept, I… read more
Cher
Cher
JustAnswer Expert & Mentor;Teacher/Tutor
Masters Degree
1,381 satisfied customers
Our reading this session extensively covered the changing
Our reading this session extensively covered the changing economy and very nature of how the United States changed from a country that imported most of its manufactured goods and exported raw goods to… read more
Grace
Grace
Bachelor's Degree
144 satisfied customers
Explain how at least 2 of the following topics influenced
Please explain how at least 2 of the following topics influenced the outbreak of the American Civil War.1. The Dredd Scott decision and the Kansas-Nebraska Act2. The rise in price of slaves and the fa… read more
GLENN
GLENN
Master of Mathematics
343 satisfied customers
For writer F. Naz. This assignment is due no later then
For writer F. Naz. This assignment is due no later then wednesday 1/10. I have attached the assignment page and grading rubric below. Please follow the instructions carefully. I will have part 2 of th… read more
F. Naz
F. Naz
CA Finalist & Completed B.com
277 satisfied customers
I am looking for an expert with a background in Monetary
Hello! I am looking for an expert with a background in Monetary Economics. I have a number of famous journals which I would like summarized as concisely as possible (e.g. a 20-page journal can be summ… read more
F. Naz
F. Naz
CA Finalist & Completed B.com
277 satisfied customers
I need help with my Business And Technical Writing
I need help with my Business And Technical Writing assignment (FOR GRACE). The assignment is on page 64 to 66, Please see attached.… read more
Grace
Grace
Bachelor's Degree
144 satisfied customers
Attention Grace: Your textbook discusses state-corporate
Attention Grace:Your textbook discusses state-corporate crime and examples of criminal enterprises involving cooperation between a state and a corporation. An example of state-corporate crime is the H… read more
Grace
Grace
Bachelor's Degree
144 satisfied customers
Imagine that you were hired recently as a financial analyst
Imagine that you were hired recently as a financial analyst for a relatively​ new, highly leveraged ski manufacturer located in the foothills of​ Colorado's Rocky Mountains. Your firm manufactures onl… read more
F. Naz
F. Naz
CA Finalist & Completed B.com
277 satisfied customers
I Need help writing my Macroeconomics graded project. It
I Need help writing my Macroeconomics graded project. It needs to be 750 words.INTRODUCTION Over the past decade, many media articles have discussed the topics of “outsourcing” and “emerging markets,”… read more
Grace
Grace
Bachelor's Degree
144 satisfied customers
Are registered nurses. They want to start a home health
Elaine and Roy are registered nurses. They want to start a home health agency, taking referrals from physicians and providing health care to homebound patients. They plan to be in business for 10 year… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I am taking an Organization Behavior Class and I am
I am taking an Organization Behavior Class and I am struggling with the following question: Describe the global implications that status has for an international manager in Western culture. I just nee… read more
F. Naz
F. Naz
CA Finalist & Completed B.com
277 satisfied customers
Cassius Clay operates a bituminous coal home heating and
Cassius Clay operates a bituminous coal home heating and delivery service in Dauphin and Centre counties. He must have a supply of bituminous coal on hand so customers may get the coal they need to he… read more
BusinessTutor
BusinessTutor
Foundation classes for MBA
531 satisfied customers
For writer F. Naz. This assignment is due no later then
For writer F. Naz. This assignment is due no later then wednesday 12/20 at 6pm. This assignment is for a healthcare finance class. I have attached the questions and assignment page below. Please read … read more
F. Naz
F. Naz
CA Finalist & Completed B.com
277 satisfied customers
Review the Comprehensive Annual Financial Report (CAFR) for
Review the Comprehensive Annual Financial Report (CAFR) http://www.cedarfalls.com/DocumentCenter/View/3037, for 2013 from the city of Cedar Falls, Iowa, and answer the following questions.Explain how … read more
F. Naz
F. Naz
CA Finalist & Completed B.com
277 satisfied customers
Government Impact on Budgeting Rely the advantages and
Government Impact on Budgeting Rely the advantages and disadvantages of the project on the agency operating budget in Hawaii Department of Education on the air conditioning system in schools This is o… read more
lani_s
lani_s
Bachelor\u0027s Degree
47 satisfied customers
I need exampleof a portfolio example. HAving a hard time
I need exampleof a portfolio example. HAving a hard time find one … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Need some assistance ASAP. Its due today before midnight
Need some assistance ASAP. Its due today before midnight central time. Please advise.Eight Unique Features of E-Commerce TechnologiesChoose an e-commerce company (i.e, Amazon, Etsy.com, Overstock.com,… read more
David L.
David L.
Bachelor\u0027s Degree
6 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x