she has been told by the mortgage holder that she is not liable for the mortgage Sounds like an unscrupulous lender to me, that doesn't want to educate you on the facts, because they basically want to legally "steal" that property from you...rest assured that if the mortgage payments are not made they can and most definitely will do that too. Unless you can get a better rate by refinancing, assume the existing mortgage. The property itself is collateral on the mortgage and if mortgage payments are stopped the lender has every right (and will exercise that right) to foreclose on the property. Any losses you experience on such a foreclosure will *NOT* be deductible on your tax return, ever. Generally, all rental income and rental expenses incurred after the passing of the owner and before the actual transfer of deed are reported on the final tax return of that deceased owner or the estate return of that deceased owner up to the date of transfer from the estate to the beneficiary recipient. But there is no law at any level of government that requires this. That's just the way it's "usually" done. It doesn't have to be. Regardless of when the actual transfer of deed occurred, you are required to report all rental income that you actually received in the tax year. If the beneficiary recipient is the named payee on the 1099-MISC (amount of rent paid to the beneficiary reported in box 1) then the beneficiary recipient is required to report it on their tax return. Period. Now if the named person on that 1099 MISC did not actually received the amount stated, there are several things to take into consideration in order to figure out who is responsible for the difference. If the difference was paid to the estate and that rental income was then passed to the beneficiary recipient through the estate (probably included on the 1041-K1 they received) then it's taxable income to the beneficiary recipient *UNLESS* you can prove the estate paid taxes on it "before" it was transferred/paid to that recipient. (Easy to prove by reviewing the 1041 of that estate, which as a named recipient of proceeds of the estate, you have a right to see.) If the estate did pay the taxes on it prior to paying that specific rental income to the recipient, then the issuer of the 1099-MISC needs to issue a 1099-MISC to the estate for the amount actually paid to the estate by that issuer, and a corrected 1099-MISC to the recipient for the amount they actually paid to the recipient. More than likely, I suspect the amount reported on box 1 of the 1099-MISC you received, is the amount that was actually paid to the recipient. Overall please keep in mind that my responses are from a "federal" point of view. Laws dealing with the property of a deceased person differ state to state, and differ quite significantly with some states. So I would highly advise you seek the legal advice of a professional in your local area. Now I would not expect a tax pro or tax expert to really know the laws on your mortgage situation. Their knowledge is on taxes, not legal situations that really have nothing to do with taxes. However, I would expect an attorney that specializes in Wills, Estates and Probate to be knowledgeable in this area, or be able to steer you to a more specialized attorney who is. So while a tax pro or tax expert is best for answering your tax questions, in most cases they are the worst and least knowledgeable for answering your non-tax legal questions... such as your query about mortgage liability. You will find the cost of professional help in this area to be well worth it, and quite a pittance when compared to what you can "and will" lose if that mortgage is not paid.     ... View more

You have just classified things wrong in the wrong asset class, is all. Easy to fix. new flooring, If it's carpet, then it's classified correctly and gets depreciated over 5 years. But for anything else (hardwood, tile, etc.) it should be classified as "Residential Rental Real Estate" and it will be depreciated over 27.5 years. new windows, and new plumbing There is absolutely no question that these become "A physical part of" the rental structure. So they should be classified as "Residential Rental Real Estate" and they will be depreciated over 27.5 years. If you want, (and I recommend it) if the windows and plumbing were placed "in service" on the date date, then you can combine windows and plumbing into a single asset item. If you put carpet in, that's something that generally doesn't last long and it's easy to rip up and replace. The "real" life expectancy of a descent carpet is 10 years. But the IRS classifies that with appliances for 5 years. I could see that for a rental property, because in general a renter doesn't take care of the property like they would if they owned it. Now if the flooring is not carpet, and if all three improvements were place in service on the same date, you can actually combine all three into a single asset entry and depreciate the total $23.5K over 27.5 years. ... View more

Are  you sure he qualifies as your dependent? I ask, because you say he was a student in 2019. I assume a full time student for any one semester that started in the 2019 tax year.  - Did he live in your household for the entire year?  - Are you absolutely certain you provided more than half of his support for the entire year? I question the support, because as a student I would expect he has scholarships, grants and possibly 529 funds. All of that counts as 3rd party support and does not count for you supporting him, or for him providing his own support. So if he receives any 3rd party support and you don't have sufficient income to show you supported yourself and him *and* that you provided more than what he received in 3rd party support, he can't be your dependent. Note also that since he's not blood related to you, he must be younger than you too.   ... View more

Generally, since insurance you pay for rental property is a deductible rental expense on SCH E, any payouts are considered taxable income. You can expect to receive a 1099-MISC or some other type of tax reporting document from the insurance company by the end of the first week of February. If that happens, then you must include the insurance payout, with your rental income received. Then you will claim a repair expense of $6000 thus offsetting the taxability of the insurance payout. If you do not receive some type of tax reporting document from your insurance company, then you can only deduct your $1000 deductible as a rental expense.     ... View more

Rental property is a form of business property. THere is no limit on mortgage interest deductions for rental property. The limits only apply to your SCH A deductions. Mortgage interest on a rental property loan is a SCH E deduction, not SCH A.   ... View more

Your renovations/property improvements are "IN FACT" new. Brand spanking new. You didn't pay for "old" or "used" materials. Even if you did, it's "NEW" for that specific property as "YOU" have never ever in your life used any part of those improvements for your personal use. Not ever. They are entered in the assets/depreciation section, and since those improvements are now "a physical part of" the property, they are classified as residential rental real estate and depreciated over 27.5 years starting from the date of completion or the date they were  placed "in service' for the use of a renter. (whichever occurred last) All of the improvements you mentioned are without question, classified as "residential rental property" and depreciated over 27.5 years. Most people don't realize it, but while a water heater may be thought of as an appliance that gets depreciated over 5 years, when you install a water heater in a rental property, it becomes "a physical part of" the plumbing system, which is already "a physical part of" the rental structure. Therefore it's classified as residential rental real estate and depreciated over 27.5 years.     ... View more

you do not have to keep an inventory to file a Schedule C True. But the fact is based on your statement, you were given 7 bags to sell and you paid $100 for those 7 bags. That comes out to $14.28 that you paid for each bag. So if you sold one and (your words) "made $10", that means you sold it for $24,28 or more and made a profit on that particular sale. You still have 6 more bags in inventory that you need to account for. I would suggest you "cover your basis" and report the inventory. You'll indicate you sold one, and that the rest were removed from the business "for personal use" That will leave your end-of-year business inventory at zero. Then so long as you have no other assets or business vehicle use, you won't need to bother with SCH C on your 2020 tax return next year. If you actually do receive a 1099-MISC, the income paid to you will be reported in box 7. As far as the IRS is concerned, income reported in that box is self-employment income. Overall though, you may not receive a 1099-MISC. The issuer of that form is only required to issue one to you, if they paid you more than $600 in a tax year. So in your case, you may not even get one. With the petty amount of money you're talking about here, were I in your shoes and didn't receive a 1099-MISC I wouldn't bother reporting anything on a SCH C at all. A mere $100 expense on your part "might" make a $1 difference in your tax liability (if that much) and reporting it on a SCH C isn't worth my time.   ... View more

You can apply for an EIN "right now" if you want, at https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online and it doesn't cost you a penny. You'll have your EIN within an hour too. Just make sure you tie that EIN to the same exact SSN you have been using on your SCH C in the past, and you won't have any issues at all.   ... View more