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Edit: I moved this so that we may all wish Jack our sincere congratulations, and so that it won't hijack another topic. It's a little misleading that the forum list shows Jack started his own thread of congrats. lol That was not the case. I should have used the "merge" function instead of "move". ~ Judy HEY!! I resemble that!! Passed all 3 EA exams last week. Just waiting on the official paperwork from the IRS. All of this talk about regulating preparers, and the ability to properly represent clients before the IRS are the reasons I stuck with it and won.

Time to look for another job or go out on your own where you can be honest. Don't hang around and be tainted by perception even if you aren't one of the "creative" preparers at your firm.

No, I don't like any of it or the fact that I wasted my time with you. Lion and I just had several posts back and forth about answering questions for others, trying to help, and not doing research for others. I had the time today, and when I have the extra time I don't mind helping others on here and elsewhere that actually need some help. I certainly don't need to do it, and don't get anything out of it. It is one of my ways of giving to this community, to try to bring this forum to a higher plane from the tone we had going last year, and to put to rest some of the comments made by a few that this forum is unprofessional. If you don't really need help and are posting hypotheticals, maybe you should mark them as such or find some other way to indicate that directly rather than making vague references to holiday dates within the post.

I found the answer in Reg Sec 1.72(p)-1 in the Q & A section. Below are some excerpts that should help. The deemed distribution of $40K occurred on 2/14/14 and will be taxable in the 2014 year, not when the loan was made. Note that the references to the loan satisfying the requirements detailed in Q&A A-3 relate to the loan's terms meeting the IRS requirements, and this section does not apply to the OP's hypothetical scenario. (Note for anyone else reading this: there ARE times when the distribution would be taxable at the time the loan is made if it DOES violate the tax law as described in A-3, but this is NOT the case with OP's fact pattern). OP's answer and an example is found in A-10. PART 1—INCOME TAXES (CONTINUED) §1.72(p)-1 Loans treated as distributions.The questions and answers in this section provide guidance under section 72(p) pertaining to loans from qualified employer plans (including government plans and tax-sheltered annuities and employer plans that were formerly qualified). The examples included in the questions and answers in this section are based on the assumption that a bona fide loan is made to a participant from a qualified defined contribution plan pursuant to an enforceable agreement (in accordance with paragraph (b )of Q&A-3 of this section), with adequate security and with an interest rate and repayment terms that are commercially reasonable. (The particular interest rate used, which is solely for illustration, is 8.75 percent compounded annually.) In addition, unless the contrary is specified, it is assumed in the examples that the amount of the loan does not exceed 50 percent of the participant's nonforfeitable account balance, the participant has no other outstanding loan (and had no prior loan) from the plan or any other plan maintained by the participant's employer or any other person required to be aggregated with the employer under section 414(b ), (c ) or (m), and the loan is not excluded from section 72(p) as a loan made in the ordinary course of an investment program as described in Q&A-18 of this section. The regulations and examples in this section do not provide guidance on whether a loan from a plan would result in a prohibited transaction under section 4975 of the Internal Revenue Code or on whether a loan from a plan covered by title I of the Employee Retirement Income Security Act of 1974 (88 Stat. 829) (ERISA) would be consistent with the fiduciary standards of ERISA or would result in a prohibited transaction under section 406 of ERISA. Q-10: If a participant fails to make the installment payments required under the terms of a loan that satisfied the requirements of Q&A-3 of this section when made, when does a deemed distribution occur and what is the amount of the deemed distribution? A-10: (a) Timing of deemed distribution. Failure to make any installment payment when due in accordance with the terms of the loan violates section 72(p)(2)(C ) and, accordingly, results in a deemed distribution at the time of such failure. However, the plan administrator may allow a cure period and section 72(p)(2)(C ) will not be considered to have been violated if the installment payment is made not later than the end of the cure period, which period cannot continue beyond the last day of the calendar quarter following the calendar quarter in which the required installment payment was due. ( b ) Amount of deemed distribution. If a loan satisfies Q&A-3 of this section when made, but there is a failure to pay the installment payments required under the terms of the loan (taking into account any cure period allowed under paragraph (a) of this Q&A-10), then the amount of the deemed distribution equals the entire outstanding balance of the loan (including accrued interest) at the time of such failure. © Example. The following example illustrates the rules in paragraphs (a) and ( b ) of this Q&A-10 and is based upon the assumptions described in the introductory text of this section: Example. (i) On August 1, 2002, a participant has a nonforfeitable account balance of $45,000 and borrows $20,000 from a plan to be repaid over 5 years in level monthly installments due at the end of each month. After making all monthly payments due through July 31, 2003, the participant fails to make the payment due on August 31, 2003 or any other monthly payments due thereafter. The plan administrator allows a three-month cure period. (ii) As a result of the failure to satisfy the requirement that the loan be repaid in level installments pursuant to section 72(p)(2)(C ), the participant has a deemed distribution on November 30, 2003, which is the last day of the three-month cure period for the August 31, 2003 installment. The amount of the deemed distribution is $17,157, which is the outstanding balance on the loan at November 30, 2003. Alternatively, if the plan administrator had allowed a cure period through the end of the next calendar quarter, there would be a deemed distribution on December 31, 2003 equal to $17,282, which is the outstanding balance of the loan at December 31, 2003.

Someone will soon run out of "likes".

This is where I store my resources as well! And I don't trip over them all that often anymore. What's a couple of face plants per season anyhow?

Was doing four years in arrears for a client last year. I had the transcripts from the IRS. 2011 showed a 1099-R distribution of 30,000. He SWORE that he never withdrew that much money. Had me do the other three years and go back to 2011 after he did some investigating. Said it had to be a mistake that his broker had made. Guess what! In the end, there it was plainly deposited into his checking account in 2011. I hope he stays current this year because he didn't come out of that as badly as he expected.

Some POSSIBLE answers to share with those clients (or maybe just to ease the pain):

33. Why do I have to pay tax on the gain of a muni fund???? They are tax free!

n) I'll just drop off my taxes on April 15th and they'll get done that day, right? n+1) {in the middle of tax season} I need you to file my last 6 years of taxes. Can you do that in a couple of hours? I've gotta get to Florida tomorrow. n+2) I need my {current year minus 8-12 years} taxes. Just pull me a copy, including all my W-2s and 1099s. n+3) I know it's a capital gain, but there must be some way you can get me out of paying taxes on it. I swear, I feel like socking these people right in the nose when they pull this crap on us.

This year, I made a complete change from Quickfinder (which I really liked) to the Tax Book (which, we shall see). Then, when I found out there was not going to be a paper Pub 17, I ordered the J K Lasser's book (which I used for years exclusively when I started out). I also rely heavily on the US Masters Tax Guide (as the final word) which is included in the Max package. I really liked the 1040 Express Answers; but that was no longer included in the package last year. I am a person who wants paper in her hands. I don't like looking answers up online; particularly when the client is sitting on the other side of the desk. They like it when I grab a book from the floor; find the answer and show it to them. They also like it that I have more than one source of reference.

Tell them to do their own due diligence!

...or simply baiting an audience...and for what purpose?

I just finished taking all the testing I need. It was from the IRS. I don't need testing by anyone else, even if they think they are qualified to be testing others.

Hooray, Jack! Congratulations!!

Congrats.

Congrats!!!!!!!!!!!!

What I meant is that sometimes we discuss a post for a while and until the end we get the best answer. In this case, I got the best answer from the very first post. Why will you get insulted? If you check most of the posts don't get the one best answer from the first post and in this case I did. Yes it is not a real life question. Detailed oriented people like you noticed that Saint Patrick's day, Father's day and Halloween dates were enter which would make this situation a bit more than a scenario rather than a real life situation. Did you like the warm up or not?

None of the forms are Excel any more. That ended with the release of 2012. Fill-in pdf is available at the IRS site. Why does the form need to be in Excel?

Tell him that your crystal ball is out for repair...

Is this another one of your hypothetical questions that are only meant to test us here to see if someone would arrive at the correct answer, or something you really didn't need help with? It seems like you already had the answer, and your statement really comes off as rather smug and insulting to say that you are surprised at the correct answers given here.

Congratulations, Jack!

Congrats to you!

Yeah buddy!!

Well done, Jack. Congratulations!

Thanks to all of you. I think I will go with the name on the return and the correspondence. I am only taking the POA to attach to the letter I will send to the IRS. Appreciate you. Tom Newark, CA

You are correct Jack. [No surprise there.] But we also know that now and then you run into an idiot at the IRS, or maybe they are just having a bad day, so they try to get rid of you fast by demanding something they do not really need. I know I have. So while she's there signing one, it's so easy to have her sign two, just in case. I once had an agent ask me for a POA for the client's LLC, even tho it was a disregarded entity. I will always believe he was just running late and wanted an excuse to put off the appointment but put the blame on me.

You could even cover all bases, by getting one of each signed, start by filing the one with the return name, but if an issue comes up over it, you are ready to whip out the one with the new name, with no delay.

CONGRATULATIONS, JACK !!!

^ that. My preferred method is to enter the name that matches the return and notice. Then I'd mention the name change early in the correspondence or in the re: section of the letter, especially if documents are attached that were issued with the new name on them.

I don't do "creative" outside the regulations. I am totally offended by any business owner that tolerates such actions.

I need bigger smileys! I've been cranky too and I bought good chocolate today to take care of that.

I hope you aren't implying that anyone on this forum is "being creative" or outright lying for their clients. I certainly hope that isn't what you meant, and I hope you aren't saying that's what you have been doing either! As for your other statement, I don't think taxpayer care one bit about fines and penalties that are imposed on us.

They would get FAR better results if they used the funds it would take to implement these "registration" programs and used it for two purposes (both already in their purview): 1. To fund public education ads (etc) telling folks how to choose a GOOD, qualified preparer, and 2. Strong acts against fraudulent preparers (they have EFIN's and PTIN's already; start by revoking those), and especially paying attention to larger firms that specialize in fraud-rich areas of tax. Heck, just refusing to send ANY refunds until they have matching W-2 info would cut out huge amounts of fraud. Any non-matches then go straight to the "investigate these preparers" list. Frankly, the onsie-twosie preparer who uses TurboTax (or similar) to do "self-prepared" returns just can't do enough business to make a big splash in the area of tax fraud. And an education campaign will put most of those folks out of business faster than trying to track them down individually.

32. I don't remember getting all that money (in reply to 1099, K-1, etc)

More lunacy. If the tax code is that difficult, then fix it, much like others have said. And as importantly, if every citizen can prepare their own taxes anyway, without being certified to do so, then it logically stands that you can do that same work for pay under the same lack of certification. After all, the taxpayer's dependency creates a natural due diligence. In fact, the due diligence is factual... the IRS still holds the taxpayer liable for the outcome of the filing, regardless of the position of the preparer. So controls on the preparer naturally exist. The concept of limited government is being lost in all of this. Shame on us if we let this happen.

Some good comments on the article, both pro and con. And the one I tend to agree with most:

When are they going to regulate the IRS?

I read that this morning. I was surprised that it didn't appear on the board until now. I am reserving comment as I have already jumped through all the hoops and landed on my head at least once.

I like The Tax Book Deluxe Edition spiral bound (is also three-hole punched, so you can unspiral and put in a binder) for quick answers, something in plain English to read to clients, cites to go to IRC and elsewhere for further research, etc. However, their online version is actually easier to search, email, print out only the selection you want, whatever. Also for paper, J.K. Lasser's Your Income Tax Professional Edition. I'm using CCH's IntelliConnect more and more as easy to search, can get explanations &/or Code &/or Tax Court &/or.... Also, easy to search, keep a folder on my computer for topics I refer to (Partnerships or CT or...), mark my favorite sources to search, print just the selection I want, email directly to a client, access from within tax prep or while searching from Chrome, IE, Google, doing more and more with IntelliConnect as I learn more about it. Have the mobile app on my iPhone.

In my ACA update class last night, the instructor showed the chart from page 2 of the Form 8965 instructions with 8 Exemptions Claimed on tax return only, 6 Granted by Marketplace only, and 4 that can be either. In addition, the Income below filing threshold Exemption needs No Code See Part II. All the Exemptions that can be Claimed on tax return (6+8=12) have the letter Codes to use listed in the chart. The 6 Granted by Marketplace note Need ECN See Part I. The instructor in another class said, "If you can't find an Exemption, you're not trying hard enough."