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About JohnH

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    ATX Supreme Guru
  • Birthday 02/20/1948

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  1. Cell Towers

    You might want to back off for another reason or two. Being asked to recommend the choice of entity alone is reason enough.
  2. Rant for the Day

    My solution several years ago was to stop preparing returns claiming EIC. I know that isn't practical for everyone in this business or even everyone on this forum (and there's always that issue of the adult child of a regular/profitable client), but I simply started telling people who have large EIC that they needed to have a preparer with deeper pockets than I have. I usually just gave them the address of a local HRB office and tell them they will probably pay a lot more than I would have charged, but "that's life". In recent years I haven't received that many inquiries, but when someone would approach me, that's one of the first questions I'd ask. Along with whether they own any rental property, whether they use the Obamacare exchange, and whether they regularly have lots of stock/mutual fund transactions - all of which are usually deal killers.
  3. So that would be a password password?
  4. Can't help but wonder if IRS is throwing down the gauntlet with this announcement. They got caught in political crosshairs this year and they had to punt with an awkward policy that left everyone guessing what to do. With this announcement, they are clearly stating what they are planning to do next filing season. If the administration/Congress want IRS to do something differently, then clear direction will need to be provided. All in all, probably a smart move by IRS, and early enough for action to be taken before the filing season begins.
  5. Minimal Depreciation

    My grievous error has been corrected, with sincere apologies.
  6. Minimal Depreciation

    I agree with Judy. 2 likes and 2 laughs is more akin to an electoral vote rather than a popular vote. Don't anybody dare respond to this post. It is only in jest and it will be deleted if Judy deems it necessary.
  7. Minimal Depreciation

    I don't have any big-time farmers as clients, so I don't run into this type of situation. However, I agree that the lenders' practices are at the least highly suspicious. I can't recall how many times I've had to explain to clients why a bank turned them down because the bank lends money based on "ability to repay" rather than the size of the collateral. The client wants to borrow against the value of their assets, but the bank wants to see an income level sufficient to service the debt. Collateral is necessary, but it's usually the bank's fall-back position. Most banks hate to go after collateral when loan defaults. If what you describe is the norm, then it seems that banks dealing with farmers take a much different approach. The only way this guy can be continually buying new equipment is to roll over ballooning debt. One could jump to the conclusion that an underlying goal is to get possession of the land in the long run.
  8. New eservices phishing scam

    I'm with Jack. No info to third parties. Anytime or for any reason.
  9. ROBS used in C Corp

    I had to come back and post a personal experience on this issue from several years ago. I had a long-time client who told me he was looking into a ROBS to convert his existing business to a franchise operation. I told him I wasn't keen on the idea. A few weeks later he called back to tell me he had decided to move forward with the plan and that I'd better bone up on the ROBS arrangements. I spent about a half hour on the franchise web site, plus an equal amount of time reading some hair-raising stories about how these things went south, usually over minor details. So I called him back and told him if he went through with it, he should immediately start looking for a good accountant/tax preparer knowledgeable in this area because I wouldn't be working with him on that plan or business in any manner. I also thanked him for pushing the idea, because it forced me to do some serious research. I had learned enough that if anyone else ever mentioned this to me again, I could immediately tell them what I had just told him.
  10. OIC when 941 taxes are also in arrears

    Tom, I wish you luck. Personally I applaud you for advocating for your client & doing whatever you can to help him, rather than attacking him or rubbing salt in his wounds. Your approach is the mark of a true professional, IMO.
  11. ROBS used in C Corp

    I think these ROBS arrangements are aptly named. Based on the few I've seen, all were land mines I wouldn't go anywhere near. Just one little misstep blows the whole setup, triggering a lump sum withdrawal with full taxation (and penalties if applicable). Plus, the underlying business is often a loser, as if the case here in the OP. I would just change one sentence - instead of "the owner was able to use the funds tax-free", I'd suggest "the owner was able to LOSE the funds tax-free."
  12. Minimal Depreciation

    Sounds like your client is the poster boy for the joke about the farmer who asked his neighbor what he would do if he won the lottery. His answer - "Guess I'd just keep farming 'till I lost it all."
  13. NC and pension taxation

    Sorry, Catherine, I just now saw your post. But I see you found the answer. The Bailey decision more--or-less settled the issue. Eventually, even retired NC state employees will also pay state income tax on their pensions after all the "grandfathered" employees retire and then die off. Right now we are in the midst of a long changeover process. But you are correct. Your client will probably have a lower cost of living. Her state income tax may be less than the savings on her property taxes alone. Plus, there's tangible value derived simply by living in the "Variety Vacationland."
  14. Non-Profit Accounting Question

    Thanks for the quick responses. Just to clarify Ron's question, the payers were not taking a charitable contribution deduction on their returns. My reasoning for it being a liability is along the lines of Evan's response. The organization assumed a responsibility to forward the funds to the tour operator when it accepted the funds. (or to return the money to the participants if the trip failed to materialize). Therefore, the cash in the bank account needed to be offset by the recognition of a corresponding liability. I'm still getting up to speed on non-profits, but in my way of reasoning, the "Temporarily Restricted Net Assets" is in reality a proxy for a liability account. Fund accounting is weird.
  15. I'm having a discussion regarding the handling of a transaction for a non-profit organization. In 2016 it sponsored an overseas tour which several people signed up for. The participants paid deposits during 2016 to reserve a spot on the tour, which took place in early 2017. At the end of 2016, the organization was holding these deposits, which were paid to the tour operator just prior to the trip in 2017. These were NOT contributions or gifts, but simply payments which the non-profit organization consolidated and passed through as a convenience to the participants & the tour operator. My approach was to book the deposits as a liability on the records of the non-profit. Then the liability was netted out to zero when the tour operator was paid in 2017. A question arose recently concerning whether the deposits should have been recorded as "Temporarily Restricted Net Assets" in the equity section of the B/S. My understanding is that "Temporarily Restricted Net Assets" is used to recognize donor contributions, gifts, or grants which are earmarked to be used in specific ways in furtherance of the purposes of the non-profit organization. Therefore, it would not have been the appropriate account for the pass-through of the tour deposits and the liability account was more appropriate. Can any of you non-profit experts give me some guidance (or correction/criticism) in either direction? Thanks.