South Jersey Working Together Conference

South Jersey Working Together Conference

South Jersey Working Together Conference 2018

WORKING TOGETHER

“A Joint Effort of Public & Private Tax Professionals”

The Working Together program continues to promote the positive ongoing relationship between the tax practitioner community and the Internal Revenue Service. The annual meeting, open to both IRS employees and the practitioner community, has become a “mark your calendar” event for many New Jersey tax professionals. The intent is to engage in ongoing, meaningful dialogue aimed at improving our dealings with one another, thereby improving service to our common customer – the taxpayer public.

Key Information

Date: Thursday, June 7, 2018

Registration: Register Online Here, or pay by check (see below)

Check-In Opens: 7:15 AM (Verified PTIN's are required at time of registration)

Location:
     Rowan University Chamberlain Student Center 3rd Floor
     201 Mullica Hill Road, Glassboro, NJ, 08028
     Parking at Townhouse Garage, access through the Rowan University Welcome Gate

Directions:
     For parking location and a campus map of Rowan University, click here.
     For directions to Rowan University, click here.

Overnight accommodations: Available at the Courtyard Glassboro Rowan University. Call (856) 881-0048 for reservations, and request a reservation with the "Rowan University Guest Rate" for a special discounted rate.

Additional information: For more information on the South Jersey Working Together Conference, please contact Glenn Gizzi, IRS Sr. Stakeholder Liaison, at (732) 777-7269, or e-mail him at: Glenn.J.Gizzi@irs.gov

Agenda (7:15 am to 4:30 pm)

(Full day session with continental breakfast & lunch included with registration)

Sponsoring Organizations

  • American Academy of Attorney-CPA’s
  • New Jersey Association of Public Accountants
  • New Jersey Institute for Continuing Legal Education
  • New Jersey National Association of Tax Professionals
  • New Jersey Society of Certified Public Accountants
  • New Jersey Society of Enrolled Agents
  • New Jersey State Bar Association
  • Rowan University-Rohrer College of Business
  • Internal Revenue Service

Additonal Conference Information

Conference Fee: The Conference Fee is $135 and is Non- Refundable for 8.0 NJ & PA CPE Credits in Taxation and/or 8.0 CE Credits awarded to Enrolled Agents (EAs).

Pay by Check: Please make checks payable to Rowan University Rohrer College of Business and mail along with registration form by 5/17/18 to:

Rowan University
Rohrer College of Business
Attn: Andrew Van Hook, CPA, EA
201 Mullica Hill Road
Glassboro, NJ 08028

 *Note regarding 8 CPE and CE credits in taxation: In order to ensure the integrity of the program, credits will be adjusted for late arrivals or early departures. Attendees are responsible for reporting their credits in accordance with their respective reporting requirements. NJ and PA State Boards of Accountancy have final authority on the acceptance of individual courses for credit.

Note for NJ Attorney CLEs:
No additional fee for NJ CLE credits. The program has been approved by the Board on Continuing Legal Education of the Supreme Court of New Jersey for 8.4 hours of total CLE credit.

Special note for PA Attorney CLEs:
You will be awarded 7.0 substantive credits pending ($28.00 fee – separate check payable to NJICLE to process the application). Contact Glenn Gizzi at  glenn.j.gizzi@irs.gov  to receive the additional payment processing instructions in order to receive PA CLE credits.


Exam Panel – Passive Activity Loss Questions:

Q. What happens to Passive Activity Loss on property when you do a 1031 Exchange? Do they remain on the 8582 under the new property in the 1031 until the property is sold?

A. Yes, they remain as suspended Passive Activity Losses in the new replacement property until such time as there is passive income or until the replacement property is sold. The original property is not considered to be sold, just exchanged for replacement property.


Q. If a client converts a rental property into a primary residence, can the taxpayer take the passive loss? From 2014 – 2007 the property was rental property and in 2018 it was converted to a primary residence.

A. No, the suspended losses are not deductible, as they remain suspended. The property was not sold, all you accomplished was that the use of the property changed. The losses may be deductible in future years if there is other passive income. The losses may also be used if the home was sold at a taxable gain and there is recapture of depreciation, from the time the property was held as rental property. The suspended losses can be used against the recapture income.


Q. Could you please go over again what happens to a carryover passive loss from rental real estate on a decedent’s final 1040. The property is not sold, it is inherited by the decedent’s child and not held as rental property by the child.

A. The slide in question indicated “There is an exception to the individual rule for a decedent’s estate which is treated as an active participant for its tax years ending less than two years after the decedent’s death if the decedent would have satisfied the active participation rule in the year the decedent died.
In the question that you posed, the suspended passive losses would have been lost forever, if the decedent was unable to use then on the final 1040. The child that inherited the property would have received a step-up in basis, as of the date of death, and would be starting fresh with both a new basis and no prior PAL’s.


Q. New Tax Laws and Vacation Homes – Will the limit on mortgage interest and real estate taxes impact the expenses on vacation home.

A. Yes. The combined State & Local taxes will be capped at $10,000, no matter if the taxes are derived form real estate taxes on the primary and second home or state income taxes. If the property was purchased after December 15 , 2017, the combination of the mortgage on the primary home and the vacation home can not exceed $750,000. The only exception would be if the primary residence already had a mortgage in place prior to December 15, 2017 and the amount was between $750,000 and $1,000,000. In that case, none of the mortgage interest for the replacement home would be deductible.


Q. For Real Estate professionals, is the rental income, and are gains from the sale of rental property subject to the Net Investment Income Tax.

A. No – all income for Real Estate Professionals is reported on Schedule C, for individuals. The net income is subject to Self-Employment Tax but not the 3.8% Net Investment Income Tax. The gain realized from the sale of rental property is exempt from the Net Investment Income Tax, for real estate professionals.


Q. Is there ever a time, with the grouping of properties, that the income can be reported on Schedule C? Also, can you pay S/E tax on rental income, if it is grouped on a Schedule C?

A. Based on your question, I am going to assume that you are referring to someone that Qualifies for Real Estate Professional status. If so, the correct reporting would be on Schedule C and the income is subject to S/E Tax. If the taxpayer does not qualify as a Real Estate Professional and the properties do not meet the requirement for material participation, then the properties should be grouped on Schedule E. In this case, the income is not subject to S/E tax.


Q. Taxpayer’s office building has to tear up a paved parking lot down to the ground, replace underlayment stone and then repave. Is this a repair?

A. The expenditure would only apply if 30% or less of the square footage of the parking lot was replaced. If greater than 30% was replaced than the cost of the expenditures would have to be capitalized and depreciated over 15 years. If you will be capitalizing the replacement costs, you have to remove the original cost, plus accumulated depreciation, from the books. If you know the cost of the original paving, then remove that cost. Any undepreciated cost would be deducted in the current year as a partial asset disposition. If the parking lost basis is not separately stated or readily available from your fixed asset schedule, the method would be to present value the cost of the replacement costs back to the date that the building was purchased. When you have calculated that value, calculate the accumulated depreciation that would have been expensed and claim a partial asset disposition for any remaining balance.


Q. You have Passive Loss Carryovers for a rental property. Are you sure if the property is sold for a loss, the carryovers are deductible?

A. Yes, if you read the regs., when a property is sold (either at a gain or loss), all of the suspended losses related to that property are deducted on Schedule E, Page 2.
Miscellaneous questions for Exam


Q. Can You talk a little bit on Auditing Techniques Guide on Landscapers?

A. While there is no specific Audit Technique Guide for landscapers you can refer to the Cash Intensive Business ATG however, if you truly have a landscape architect then you can refer to that specific ATG.


Q. Also, talk about Validating Mexican Labor

A. I’m sorry but that is not a examination question that IRS can speak on at this time.