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Chapters

California Chapter

Chapter President

Richard Moring III, EA
RM3 Tax Services
PO Box 22412
Bakersfield, CA 93390-0412

661.327.4814 phone
661.327.2626 fax

  
  
September in San Diego!Yes
  
Picture Placeholder: Grace Fortaleza, EA
  • Grace Fortaleza, EA
15/2/2014 1:19 AM

​TP was a resident of Calfiornia from 2006 up to Oct. 1, 2013 when she moved to Texas. TP has a rental property in Texas since 2006 and was including rental income while a resident of Calfiornia. TP accumulated $37000. of passive losses from this rental property.

TP now sold the rental in Decembr 2013. Can she use the accumulated losses? Is the gain from the rental property taxable in california now that she is a nonresident?

Jen Horton, EA6/24/2014 1:15 PMNo
  
Picture Placeholder: Marion Loiola, CPA
  • Marion Loiola, CPA
13/17/2014 7:02 PM
I have a Corporation that was suspended in CA. Taxpayer moved Corp to NY in 2009 from CA. Tax preparer did not file in CA and corp was suspended. I am in the process of trying to get him re-instated as he wants to move back to CA and do business there again.
I have spoken to the FTB, filed 3557 and I am trying to settle.
My question is, does anyone know of anyway to get the fees and penalties reduced as it will cost txp a lot of money?
Everytime I call, I am told to call back by recording as they are busy.

Jen Horton, EA4/23/2014 8:18 PMNo
  
Picture Placeholder: Genaro Salvatore Cardaropoli, CPA
  • Genaro Salvatore Cardaropoli, CPA
03/13/2014 10:28 AM

When a short-sale occurs, and a 1099-C is received, is it taxable?

This is a question we sometimes receive. Whether the 1099-C is taxable (or even correct), is a matter of fact and law. California tends to treat mortgages secured by "dwellings", as defined in CA law as nonrecourse debt.

Late 2013, the IRS sent a letter to CA indicating how they will treat cancelled debt resulting from short-sales in CA. Because of anti-deficiency statutes, the debt is nonrecourse meaning the sales price is equal to the debt outstanding, which §121 can apply rendering the occurrence non-taxable. You can see the letter below.

http://www.natptax.com/TaxKnowledgeCenter/IRS%20Tax%20Resources/IRS%20letter%20to%20CA.pdf

This leaves a few questions, is "bad money" taxable? Is second mortgage debt or refinanced debt taxable?

This depends on CA law on whether it meets the civil procedures to be nonrecourse which is based on real estate law.

This letter is not a formal ruling, however, it does give you indication on how the IRS will treat the sale of the home and the resulting canceled debt. When receiving Form 1099-C for a principal residence, further inquiries may be needed. Sometimes the lender changes and information is missed on the bank's side, which can impact the accuracy of the information on Form 1099-C.

UPDATE 6/9/14:

There has been an updated letter from the IRS clarifying and narrowing the scope of how the civil procedures in CA works. The IRS, while not reversing their position, has distinguished between loans that meet the anti-deficiency statutes and those that do not.

They separate it into two categories, those that are nonrecourse from inception of the loan and those that are nonrecourse due to non-judicial proceedings. They stand by their interpretation that if the loan is nonrecourse from inception to purchase a residence, there is no cancelled debt.

However, they clarify that not all loans meet this criteria. Professional judgment is required in determining if your taxpayer has cancelled debt income.

IRS letter to Senator Boxer

Senator Boxer's letter to the IRS

 

3/13/2014 10:28 AMNo
  
Picture Placeholder: Roger F Lickteig, EA CFP(R)
  • Roger F Lickteig, EA CFP(R)
11/6/2014 3:51 PM

I an NATP member in Arizona with a client the move to Arizona from California.

Part of his income on a K1 is from a rental building in New York city for which he filed a NY income tax form and paid the NY tax.

California is now asking that he pay tax in California.

Should I exclude it from CA income?

Roger Lickteig EA​

Richard Moring III, EA1/7/2014 3:07 PMNo
  
Picture: Megan Sonicksen
  • Megan Sonicksen
012/6/2013 10:18 AM

​With tax season fast approaching, remember your Chapter discussion board can be a great resource for state and local tax issues as well as utilizing the state tax volunteers.


http://www.natptax.com/TaxKnowledgeCenter/Pages/StateTaxVolunteers.aspx

Megan Sonicksen, NATP Tax Communications

12/6/2013 10:18 AMNo
  
Picture Placeholder: Megan Sonicksen
  • Megan Sonicksen
09/27/2013 11:24 AM

​Please use this discussion board for discussions specifically relating to the California Chapter, state or local tax discussions.

For general discussion items relating to business management, federal tax or education, please use the discussion board located under Member Center>Community.

9/27/2013 11:24 AMNo

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