NASSAUSUFFOLK

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Abby Alhante
KURCIAS & ALHANTE, CPAs LLC
Woodbury NY
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I question the strategy.

He would have to report the income, hence for the joint return  you would have service income thru his business, then  this would increase basis as an improvement , and decrease a potential capital gain.    

hence you just converted capital gain to OI....

is that what you want, or am I not seeing it clearly here.?

deal with this hurdle first....

Original Message:
Sent: 01-22-2014 12:16
From: Martin Cohen
Subject: Sch E Cap Improvements

A client's spouse solely owned a residential rental property (she inherited it in '04), and sold it in 2013 for a large gain. She remained the sole owner until it's sale. They file a joint return. (FMV at decedent's date of death used as her beginning basis) Her husband, a part time contractor, did several of the improvements himself over the years, and they only deducted the materials for most of this work. If he billed for his labor, would it qualify as additional basis to the property? If he billed it now (assume $7500- or 10000-),and it was added to basis, would that hold up?

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for the benefit of all... we should reply to the discussion... as other may chime

so then would you amend prior  returns to support the error of not charging labor...?

is sales tax a factor?

see the question is  it bona fide  or contrived for tax avoidance. and they are related parties. I believe.   so the question is are you comfortable with explaining this , if asked. ------------------------------------------- Abby Alhante KURCIAS & ALHANTE, CPAs LLC Woodbury NY -------------------------------------------
Original Message: Sent: 01-22-2014 12:32 From: Martin Cohen Subject: Sch E Cap Improvements A client's spouse solely owned a residential rental property (she inherited it in '04), and sold it in 2013 for a large gain. She remained the sole owner until it's sale. They file a joint return. (FMV at decedent's date of death used as her beginning basis) Her husband, a part time contractor, did several of the improvements himself over the years, and they only deducted the materials for most of this work. If he billed for his labor, would it qualify as additional basis to the property? If he billed it now (assume $7500- or 10000-),and it was added to basis, would that hold up?

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