Free Income Tax Advice? I Know A Place

Greetings everyone! I know that filing income tax returns can be difficult, frustrating, and expensive. If you are like me, your thought is that income tax preparation is much too difficult and much too time consuming. For those of you preparing your own income tax returns, no one admires your effort more than I. Using a tax program is a tremendous help but still requires that the taxpayer answer some questions allowing for proper treatment of a given item.

Le't examine the entering of a K-1 from a partnerhsip. How many of you know what level of participation you have in this entity beyond contributing cash? Well, if you go to enter the information from this K-1 into your tax return, you will have to determine if you are passive, active, or materially participating in this venture. If you are passive, losses from this entity will only be deductible against other sources of passive income (normally from rental activities). Any unused losses will become suspended and can be carried forward until passive income is generated or the investment in the entity giving rise to thsi K-1 is terminated. If one actively participates,there is the opportunity to take losses up to $25,000 providing that the partner's adjusted gross income does onto exceed a certain level. Material participation means that you are engaged in an active trade or busness and will be able to take losses without limitation. Each of these situations requires that you have an amount for which you are at risk. In english, thsi means that you have a positive capital balance or you are obligated to pay part of a note within the entity itself. Those lines on your K-1 will help you make this determination with qualified nonrecourse debt being counted as recourse debt for purposes of determing basis for loss taking.

This can be quite confusing for the novice income tax preparer and could be the difference in whether or not you are able to complete your own income tax return. Ther's always a question or two for most taxpayers that if answered, would allow them to finish.

Welcome to the most complete business program on radio. "Better Business" is a radio program designed to help Americans with these types of income tax issues. No matter what your question, "Better Business" is ready to help with your income tax and financial issues ranging from the very basic to the most complex. All answers are porvided for free. You can call in to the program or you can send an email to have your questions answered.

Remember, "Better Business" is America's business radio program and you are invited to listen and take part. Don't forget to thank Alan for airing the most complete business program on radio at alan@wbis1190.com.

Ron Piner, CPA
Host of "Better Business"
Saturday Mornings at 10ET
On WBIS AM 1190
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