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About Edsel

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  1. I used ATX in the days they were headquartered in Maine. Since this is an ATX board, I won't go into the issues of my departure - suffice it to say I do not like to change and would not have done so unless felt strongly. Many years have passed and I'm sure circumstances have moved on. However, I believe ATX is still form-based. For those of us old enough to remember what it was like to fill out the 1040 by hand, there is no comparison. Most of the other packages are questionnaire-based and not forms based. I believe this is the chief reason ATX customers have to spend less time on the phone than others. I am very happy with Drake, and don't wish to change. However, 75% of my time with their support is because I don't know what factors are causing a particular line item to read incorrectly. I must call and find out what needs to be changed because of a cause-and-effect relationship between the answer to some questionnaire and the tax line item. This would not be necessary if the software were forms-based. I have approached them about changing, but they have reasons to remain as they are. So if you are using ATX, you do have this advantage. For the record, you will find me quite adverse to the dumbing-down of the mind to reduce trained professionals to keypunch operators. Sit down - keypunch numbers into a software package - and [poof!!] out comes a tax return. And then print out a pre-determined invoice to charge the client for this service? Sorry - not as long as I'm alive and doing tax returns.
  2. This client has a basis in the fence of $37,000 (if this was the amount he was reimbursed). It is depreciable as a land improvement, probably over 15 years. But he has to have an operation to accommodate the depreciation. In order to deduct he must operate the farm on Sch F, or rent on Form 4835, or otherwise have a for-profit operation involving the property. I have a few clients who spend a buncha $$ on their place and want to create deductions because they tell me they are "going to" have cattle or something soon. Some of these guys never begin an operation, and I believe they had no intention when the money was spent. They were just trying to get Uncle Sam to subsidize their expenditure. Unless I see the evidence, I tell them I will begin depreciating when they begin utilizing the land.
  3. Pacun, get on your state website where your client is. Might not be DC, but possibly MD or VA. There should be an IFTA reporting website online. You will need for each unit, miles driven in every state, and gallons purchased in every state. If there are many units, this could take some time. Miles per gallon will be calculated by the website for each unit (truck). Let the website do this, don't depend on the client to tell you how wonderful his mileage is. The website should divide the mileage by the MPG, to derive the gallons which should have been burned in each state. If you have purchased that many gallons or more in that state, you will be entitled to a credit. Credit is calculated by the fuel tax per gallon times the "excess" gallons. The reverse is true if the unit has not purchased enough gallons in a state where they have burned gallons. The IFTA charges you for those states. The net of all the charges and credits results in an excess charge that you have to pay, and if there is a net credit, you simply apply it to the next quarter. Some states (e.g. Indiana and Kentucky) have a surcharge that is not charged at the pump. The surcharge is built into the IFTA calculation such that if your truck travels through such a state, you are likely to have to pay extra. Drivers love to fill up in South Carolina, who has the lowest pump tax of any other state. They will drive across the line from Charlotte, NC and places in Georgia just to buy cheaper fuel. However, if they don't drive more than this in South Carolina, the calculation will result in a credit from SC and a whopping charge for GA or NC. It all works out.
  4. A client was rear-ended in her car. FMV of car was $12,000. Client is expecting insurance proceeds of $25,000. Form 4684 has the provision for a casualty to result in taxable income. I've just never seen this on an auto accident. Need to get a straight answer as to how the client was able to cover a $12K asset with $25K in coverage. Doesn't make sense. When I get to the bottom of this, I expect the excess is to cover medical damage. Only damage was a trip to clinic to check for whiplash. Minor expense. The way I look at this, there will be taxable income if the medical expense is what I expect it to be. Comments?
  5. Margaret, for what it's worth, don't give up on doing partnership returns. If you do, you'll lose both experience and expertise. As fleeting as partnerships may be, there are some that you can perceive from the outset will have responsible and somewhat knowledgeable partners. A good clue is whether they are willing to spend the effort to draft articles of partnership, or similar agreements in the case of LLCs. If they are not willing to do this, the proof already exists that your engagement will be one of misery and possibly not even be able to collect your fees.
  6. Evan, I am certain it was I. In recent days I had a discussion thread removed for political content. There ensued a lengthy discussion with one of the moderators about my posture and theirs on subject. All anyone else needs to know is that my post included too many references that made the post blatantly more political than focused on subject matter. Simple is that. The moderators are probably too professional to tell the forum who prompted the update, but I'll own up to it.
  7. I heard yesterday about this from the Nashville Liaison Officer. The scam surfaces as an e-mail to the practitioner from a plaigerized known e-mail contact. Is it true that the IRS collaborates data from all PTINs and makes their phone number and e-mails available to anyone via a $25 CD? If so, the IRS could help eliminate the scam by ceasing this practice described above.
  8. Whatever happened to "Inside Basis" and "Outside Basis?" Do I have this confused with something else? "Outside" basis is tracked by the partner and not the partnership. It retains its original cost and accumulated depreciation at the time of the asset contribution. The depreciation continues for the duration of its remaining depreciable life. "Inside" basis is tracked by the partnership and not the partner. It is recorded on the books of the partnership at its FMV at the time of the asset contribution, which is usually higher than the adjusted book value of the asset on books of the partner. The partnership applies depreciation on the FMV as if it had been purchased from a disinterested party. The varying dollar values will create a natural difference between the inside vs outside basis for as long as annual depreciation continues on either books. The difference should be tracked by a competent tax preparer for as long as the difference exists. When asset is fully depreciated, the difference will cease to exist. If subject asset is disposed within a prescribed time limit (7 years I think, but they keeping changing it), a special allocation is made to the contributing partner on the K-1, and the original owner must recognize full capital gains/recapture on his/her own return. By all means charge extra money for this extra work. In fact, inform the partners that contributions of assets instead of cash will result in higher fees. Remember, most partnerships do not last very long - often beginning with two dufus-looking guys showing up in your office and saying "Duh...we're sorta partners" and six months later they hate each other. Contributions of equipment in lieu of cash are perfectly legal, but in many cases is prompted by a cash shortage of one of the partners. Am I cornfused about the treatment described above? Won't be the first time...does the treatment differ for an LLC if reporting as a partnership?
  9. It was my understanding that when Trump took office, some kind of executive order directed the IRS not to enforce collection of ACA penalties. Everyone thought this was going to be a little-thought factor at the time, since it was assured that congress was going to do a slam-dunk to Obamacare and put a merciful end to it. Six months later, and the "slam-dunk" hasn't happened and if it ever does, no one knows how much different "Trumpcare" will be compared to "Obamacare." My software company never jumped on the wagon to eliminate the ACA penalties and I'm told none of the other tax software packages did either. So....word of the non-collection has spread to our clientele, and more and more of them are now telling us not to compute the penalty. What say ye?? Better not wait on congress!
  10. What does anyone think can be gained by hiring thug-like agencies to collect for the IRS? Does anyone believe that the IRS is too kind and gentle to engage in collection activities? If an all-powerful government agency like the Treasury Department, with all the power of the Almighty, cannot collect, then what makes anyone think a private collection company can collect?
  11. As all of you know, the IRS changed the due dates of 1120-S, 1065 etc. for this past year. Even our best efforts to inform our customers fell on deaf ears for the most part, and very few of them produced any substantive information which would allow us to file on time. So now the IRS is sending out penalty notices. These have resulted in several letters from many of us asking that the penalty be waived, as our clients were really blindsided. [We were told in seminars last year this was going to happen, and we should be able to expect waivers of the penalty on a massive scale this year]. In spite of letters written to absolve the penalty, these letters are not being answered in the affirmative or negative. I would imagine there are hundreds of thousands of such letters and if any IRS resources are assigned to deal with these letters, they are overwhelmed. But guess who is NOT overwhelmed? You guessed it!! The collection division!! They are sending out letters threatening levies even though the audit division has not made any final determinations. And their usual position is "you should have dealt with this before it came to us - we can't do anything about this assessment." That can be their position but the audit division is not doing their job. They should issue a final determination to deny penalty relief before collection division is even notified. How are the rest of you dealing with this mess??
  12. Design and usage of the 3115 should be to change accounting methods and not simply to correct errors. I believe the 3115 to be one of the most needlessly proliferated of all forms. If you are doing it "wrong" and now are doing it "right" doesn't mean you've changed methods or approach. It could simply mean that you made a mistake. From the original post, the rules and procedures were in place from the very beginning about capital leases, imputed interest, present value, etc. None of these change simply because it was done wrong. Not that it applies to this situation, but most of the needless 3115s I have seen have been for depreciation, when the only "change" was the wrong year, the wrong application of DDB, misuse of "bonus" depreciation, and mishandling of s.179. These are simply errors and not changing any of the rules or procedures of depreciation.
  13. Roberts, I'm thinking there would be a W-2 (if indeed any of this is legitimate, and it's not). My last exposure to this was with a number of USCitizens living on Kwajalein Island (Marshall Islands). They were exempt from income tax but not from Social Security or Medicare. At the time, they could earn up to $75,000 with no income tax withheld, but SS and Med were withheld at the normal rate.
  14. Thanks for the responses. Sorta reinforces what I thought and was able to research. Gonna tell my client I can't go down the road with him on this. Still don't know why his co-workers are getting refunds.
  15. Strange phone call from a good, long-time client. Backdrop: Japanese, German, and Korean auto manufacturers have plants all over the sunny South - in particular places where they are unlikely to encounter a labor union. I live in the middle of two Nissan plants - one in Smyrna, TN and another in Decherd, TN. Both plants have "posted in conspicuous place" some message that the plant property is under foreign sovereignty or some such message. I don't know whether this is true, or to what extent it is true. And some of the workers are claiming foreign income exclusion by virtue of working at these plants. My client tells me they have filed amended returns for 3 prior years and are receiving thousands of dollars in refunds. In busy years, with overtime, a skilled worker can easily make over $100,000 per year at either of the two plants I mentioned. My client tells me a couple people have refunds over $25,000 and this is easily believable. What is NOT believable is that they qualify for the foreign income exclusion. I've looked at the IRS definition and simply cannot find any support for this. Keep in mind that they have these refunds because of amended returns. The 1040-X cannot be electronically filed, so some IRS employee has to see these returns before entering them and arranging for the refunds. What say ye? Is this a local hoax, or is there a legitimate way for them to be claiming refunds??