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Client - "What do you mean I have to pay taxes on that money? I thought if I used it to buy a home I did not have to pay taxes on it!!!! I am sure that is what you told me" Client - "But a 401K is the same as an IRA. So I took the money out the the 401K, what is the difference?" Gottal Love them clients. Tom Hollister (Soon to be Newark), CA

I've never seen anything like it!

OH well, you are just going to have to believe me that it is cool Tom

Yeah, me too. I picked it out. Tom Hollister (soon to be Newark), CA

Margaret, This is the home we are moving to, not moving out of. We are renovating the kitchen, two bathrooms and putting new flooring into the whole house. In addition, we have done some plumbing and electrical upgrades. My day job is CFO for a General Contractor, so I got a really good deal on the project. My wife was at the house when the sub contractors were working last week. The tile sub yells at the plumbing sub that he better do a good job for the owner of the company. The plumber yells back "to hell with him, I want to keep Tom happy so my checks keep coming!". I thought it was kinda cool that they recognized that my signature is on the bottom of the AP checks. I expect to get 3-4 years of happy enjoyment from this home. After the kids are done with college, we will decide where we want to move for retirement. Newark is a nice place, but the SF Bay Area is not my idea of a retirment community. I think we will move back to the Central Valley and work on building up our tax practice there. Tom Hollister (soon to be Newark), CA

OK, maybe this time it will work. Tom Hollister (Soon to be Newark), CA

I found your kitchen video

I just love an uncluttered kitchen - the bare design of this is great!

Yep, those little details we understand. But, the client sometimes hears what they want to hear. So, even if one spouse doesn't have $10,000 in their IRA, they might think they can take all $20,000 however they want. I try to say it at least three different ways to clients!

WIth each $10,000 coming out of each spouse's IRA. Not $20,000 all from one spouse's or any other combo.

The $10K exclusion from the penalty is per person, and each of them would file their own form 5329 showing the appropriate exclusion code filed with the joint return

No reason not to perform the tax preparation on the gift return. Just don't get into the valuation part of it. The Gift Tax return is fairly simple and straight forward if it is a full interest in a gift. As long as you have a competent valuation advisor, it is not a tough return. Just heed the warning about not getting into valuations. Tom Hollister (soon to be Newark), CA

The three states that this effects are: New York, Maine and Illinois per ATX. This problem is finally being presented by ATX with its latest E-mail advertisement for 2015 renewals today. "We have determined that we WONT offer "fee collect" this year to our customers as we strictly believe that if we were to agree to this "supportive" fee we would have to disclose to all customers this fee."

Perfect this was exactly what I was looking for, an FYI for the rest, I am not going to prepare a gift return, stay calmed

Jack is answering about the recipients basis where the recipient acquires the donor's basis (steps into the shoes of the donor). If you are actually asking about how to prepare the gift tax return and about determining the fair market value at the date of the gift to report on Form 709, Sch A, column F, that is a much more complicated answer about how to determine the value of an ownership interest in a closely held business on a piece of property. If that is really what you are asking about - If by property you mean real estate, I'd suggest your client use a qualified professional to appraise it because the documentation of how the FMV was determined is required to be attached to the gift tax return, and gift tax returns are reviewed by humans at the IRS. That is a risk area for tax preparers since doing valuations aren't within the normal scope of a tax preparation business. A typical scenario that I've encountered a few times goes something like this: A parent owns his own residence and a 2nd house that the child is living in (for little or no rent) and transfers that 2nd home to the child by gift. Yes, the child's basis comes from the donor's basis, but in preparing the gift tax return, the preparer must explain the method used and report the FMV on the date of the gift because that determines how much of the unified credit is used up by that gift and calculates whether there is a taxable component to the gift at all. Business valuations are much more complicated and especially so when the business is closely held. There are business appraisers that do that too. There are methods that the IRS finds acceptable and that take into consideration a variety of factors that I feel are really beyond the scope of something that could be easily or completely explained here. Again, an explanation of the valuation method used must be filed with the gift tax return. If you are considering doing this, you might want to check with your malpractice insurance agent to make sure that type of service is covered. As an example, I had a C corp client that gifted 76% of his ownership in his closely held business to his son in stages over several years. To highlight a few of the areas considered in that valuation, those factors included the type of industry, the size of the business by volume or asset base, its locale, its competition, stability of client base, discounts for lack of marketability due to being closely held, adjusting for owner compensation that might be in excess of what the business would pay an outsider or manager to perform those same duties, and much more. That list of factors isn't meant to be a full discussion, obviously, so don't shoot the messenger. I was only trying to show how business valuations are complex. A full explanation of how those valuations were done was attached to each and every gift tax return that was filed. No funds changed hands, the son received something that had appreciated close to 50 times more than the dad's basis in the company, and son's basis in the company is equal to 76% of dad's basis. The gift tax return filed by an individual tracks the total gifts given by that person over his or her lifetime so that one knows how much of the unified credit has already been used up while he/she was living, and that is used in determining if there is a taxable estate or not at the person's death. To be basic, the current law says that a person can transfer $5.34 million of assets either by gift during his lifetime or at his death via his estate without paying tax. That is what the unified estate and gift tax exclusion is all about. Does that help you at all?

The lower of FMV or actual basis of the giver.

Love the backsplash tile!

My kitchen is white, also.

Support has nothing to do with e-file. Two separate things. IRS will stop receiving all e-files on Nov. 21, 2014 from ALL transmitters. If you have not renewed, and have a technical problem or a program/tax problem, it appears that ATX has dumped us. So anyone who has to reinstall on a new computer, and does not renew for 2014 is SOL. I long for the days before CCH!!! ATX company people understood and practiced REAL customer service. I wonder if this support cutoff is new or if it was in previous years terms of agreement? Not pleased with the direction CCH is going these days.

No. Anything after 10/15 MUST be filed on paper. Don't forget to check the stupid little box on the bottom of page 1 on Form 1,and get your client to sign the EFO (please do not e-file my return) form. Also please note that Massachusetts will take ANY payment received as estimated tax after 1/15, and apply it to the then-current year. They will never apply it to a prior year. If you want money to go to a prior year, wait for a bill.

That's because the IRS is still rolling out new rules, 'clarifications', etc. I hate the "retroactive" part, that really screws things up for everyone, and it's the hardest thing ever to try to explain to clients. They always think "you should have warned me", since most of them seem to think we are physic anyway! Right? Why not, since we keep their numbers on our ceilings?

I too want clients to call before a tax situation arises so I don't have to pick them up off the floor in April when they do their return. How many clients have you had who took $100k out their 401k, had 10% withheld, and told you they had the taxes taken out? I like it when clients call to tell me they sold their home (main or vacation?), inherited something (makes a difference if it's a 401k, IRA, savings bonds), got divorced and are now paying/getting alimony. I can tell them how much to set aside for taxes, set them up with estimates if necessary, or tell them no problem. Makes me feel good that they thought to ask me. Had a client query today about some weird profit interest warrants his company granted him. Glad he called now instead of during the busy season so I could do the research. We've also had some legitimate questions about employee health care reimbursements that I am still clueless about. Then there are the high-maintenance clients. Today I did my FOURTH tax projection for one. God forbid he pay $100 too much for his 4th quarter estimate. Another has asked about 10 times about how much he could contribute to a solo 401k vs. a SEP, income changing as the year progressed. Another had a million questions over the past few months about renting out very expensive inherited property. Like Rita, we just keep raising the fees. Maybe they're at the point where they feel free to pick up the phone and call us anytime because we charge them so much. I was at a seminar last week where the speaker was an attorney who helped people with foreign tax issues and big IRS debts (not a pennies on the dollar guy). When people called he would tell them if their case was easy enough to handle on their own or they should come in to see him. To those who asked if the initial consultation was free, he told them they just had it.