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I think it may be even worse next year. If they signed up in November 2014 for 2015 insurance and subsidy, they are probably basing the income numbers on 2013 figures. Now, they should be able to go in and adjust it once we get their tax return done for 2014 but will they? I hope no one is holding me responsible for reminding them - I am NOT in insurance business.

JB, On a simple 1065, don't overthink it. You still have the same revenues, cost of sales, and expenses to get to net profit. The 1065 just asks a lot more questions about the partners and their business. Then it gets different when you have to put in the balance sheet (do it even if not required) and the partnership percentages to get the K-1's to spit out. ATX is not real friendly in that area, but once you go through it, it is not bad. Take your time and ask questions here about where to find things in the software. From what you posted, this is a nice introduction to the 1065 and well within your ability. Tom Newark, CA

Another point, most likely not required on your 1065, but I ALWAYS do the balance sheet even if not required. Keeps things cleaner from year to year.

You don't give yourself enough credit. From your description, it seems as though you are correct. This is going to happen frequently for clients that buy insurance from the marketplaces. They "estimate" income to establish the subsidy. Then we, (the bad guys) get to tell them that the IRS is going to snag some of the refund due to the differences between estimates and reality. FUN FUN!

Are we having fun yet? The advanced credit was based upon her projected income, family size and insurance plan she was buying and how the income flirted with the poverty level or 4 times that number or something like that. She would have had the choice of taking the credit in advance or taking it with her return. Since she took it in advance, as you are seeing, she may have too much advance credit and have to pay some back. Don't cry too deep of a river for her. It was still a good deal for her. But your point is very well taken - this is so weird! By the way, you are seeing first hand how the preparation fees are going to be higher for those that can least afford it. And trust me when I say that I have, six times now while I have been typing this, got up and then back down off of my soap box. I am fighting hard to stay off that.

A rose is a rose, by any other name, it is still a rose. They can call this whatever they want, but on audit, my bet would be it is, for whatever reason, a disguised installment sale. Are there depreciable assets that Daddy does not want to recapture depreciation on? I would not treat this as any kind of 1099, but as what it is, an installment sale. That is my opinion, for what it is worth.

Not guaranteed payment unless the partnership (LLC operating) agreement says so. Not salary unless the LLC is set up to do payroll. It would be a draw just like you would have a draw on your Schedule C clients. The bottom line of the 1065 goes to the K-1 which goes to the members individual 1040s. My guess is it, the K-1 amount is also self employment income. Are you certain that the multi-member LLC has not elected to be taxed as a different entity, say 1120S? Just asking to cover all bases.

Over the decades, the CPA organizations have promoted themselves so well that the American Public thinks that a CPA is the only accounting/tax credential that has any value. If the IRS would copy some of those processes for EAs and then new FSHP designations we would have much more recognition. Ask any CPA about how much of the test was concerning taxes. Answers are 10-15% of the test. Ask an EA how much of the test was concerning taxes, answer 100%. Therefore, the EA test has more validity at expressing the tax knowledge of the person taking the test.

I feel that I have a responsibility to myself as well as my clients to acquire as much knowledge as I can. Even after the fact, I am not sorry that I took the RTRP test. I have voluntarily attended tax classes and seminars for many years now; not because I enjoy them or can afford them, but because I feel that if I walk away with one new piece of knowledge; that is something I didn't know before. This year I walked away with several pieces of knowledge and the fact that I had taken the RTRP qualified me for the AFSP; and I know that many of you will say FWIW. Well, it is worth a lot to me because I know that I am doing what I can to make my business more productive and worthy. I am not responsible for unethical preparers, but I am responsible for ME and have an obligation to the clients who put their trust in me.

This is the last season for me and I am not sure I am going to make it through the whole season. I cannot find a cite that states we have to use the W-2 for preparation and not the last pay stub but I know we have to. I have a client that has made an appt. called 7 times and even had her MIL call then the last call was...I don't have husband's W-2 but we can use his last pay stub. Sorry....make another appt after you have the W-2. She makes an appt for Monday but doesn't have the W-2 yet...really? Please tell me where to get the cite so I can include it in her packet to take home. Another client called, made a appt. didn't show up, called the next day and said her boyfriend didn't know about the appt so he let her sleep. She wanted another appt as soon as possible but was told that 3 people wanted her original appt time and I was booked for 2 weeks. Another local bookkeeper e-mailed me so I could create 1099-MISC for one of her clients. She did forget to put amounts in the e-mail. Last year I did this for her and she called a couple days later to say that the amount was incorrect and I needed to re-do the 1099-MISC. This year I told her that I didn't buy the software. Mostly rant and thanks, Karen

I have been doing that Tom. I keep getting "What am I going to do?" and they get really upset when I say "I don't care". I am moving to so I won't even run into them at the store. HEE HEE Still would like to see something in writing about the W-2 in my hands prior to preparation. Karen

I played with an 8962 before I plugged some of my income into the return. At 38k for a single 54 year old with no dependents I was getting about half of my premiums paid back with a credit; over 3k in credit. I was very surprised at how high the credit was. and 400% of the poverty rate was much higher than what was in the calculator I used to determine if I should even buy through the marketplace. So the credits can be quite high. Then I put in more income.....

Also, there is a new rule this year regarding In Home Health Services provided by a family member. I just ran across it at my update seminar and I don't have all the details in front of me. The way I understand it, those payments will not be made on a 1099 or W2 anymore from the counties. I will post more when I get back to my tax office if any of you are interested. Tom Newark, CA

No reason to feel dumb. Geez, for real, if that is how we are going to gauge people, they do not come dumber than me. And I say that with complete sincerity. I would set up an intangible on the clients books and call it "Client list". I would take some reasonable number of years of payments for each client that Dad will receive payment for and call that the sale price and start amortizing that as of the day of the transaction. The offsetting entry would be to Note Payable. All payments then would be debited to the note. Now the right way to do this would be to take the present value of the revenue stream and use that number. The difference between that and the actual received would be the interest component of the payments. It would be interest expense to son and interest income to Dad. The rest of the payment would be capital gain to dad. If you are not comfortable with present valuing, put some real numbers on here and I am sure someone that does that can help you. And keep in mind that this sale price will be subject to adjustment at the end because you are using estimates (completely legit) now.

Deb, It really was a sale. Again, they can call it whatever they want. If Dad no longer has any interest other than a % of revenue, then he is receiving payments for the sale of his client base, goodwill, what have you. And issuing a 1099 Miscellaneous is the wrong thing to do. This is often the way professional practices are sold. The seller will get a payout % of continued billings that were in place at the time of the transaction. That is no different than what you are describing. If I sold my practice like I just described to fund my retirement, it would be a sale. Continuing the argument, in proposing the transaction the way you are, you are penalizing the Dad by converting capital gain income to ordinary income.

I agree with Ron that those payments are part of the purchase price and you have an installment sale. Since you won't know the final price until the end, you'll have an adjustment of the final price in the last year. Is there a limit on the number of years these payments will continue, or was 2014 the only year? One reason a sale may be structured like this is because the purchaser will not want to pay full price if customer retention could be an issue, but may not be the case here since it is a son that presumably worked in the business.

Agree with both of you. If the realtor received a 1099 for commission he didn't received, he should either take that issue up with whatever entity paid him to have the form corrected, or he should report the gross amount and take the discount as a business expense. The discount he allowed your client in no way falls within the definition of any payment that would require the issuance of a 1099 to your client. That doesn't even make sense.

Well, partners don't receive salaries. See the operating agreement as to guaranteed payments, likely they don't have them. More likely these are just distributions from the capital accounts.

I am a lifetime member of the NRA. Does that get me any points?

You could do a nice screen shot of your Avatar and frame it. After all, "ATX Supreme Guru" just about says it all insofar as most clients are concerned.

Maybe we should get a certificate on this forum after answering some questions and posting important information about tax matters. KC and Judy should decide who gets the certificates and they should be huge posters because you learn more here than anywhere else.

Well, the cleaning lady just cleans. If I don't clear off the kitchen table, she can't wash it. If I don't get stacks of newspapers off the living room floor, she can't vacuum it. Today she really couldn't clean the family room, because I have two corners of it filled with boxes I'd moved from my office when clients came and from my usual "holding tank" guest room when I actually had guests and some more stacks that are hubby's plus some stray Christmas boxes and things. Once upon a time I cleaned my office well at the end of tax season and before the new season began, but now the season never ends. One time I'd even picked up enough that the cleaning lady cleaned my office. But, I can't get things cleared out enough to really dust and vacuum. It's one section at a time when I expect clients. I have a friend who sees clients in his conference room so his office can stay the way he works. I have met clients in my dining room or living room when I don't want to move my stacks while in the middle of a complex return. Thank goodness most use the mail slot in my front door, upload to FileShare on my website, FedEx to me, etc.

I am SO jealous. Cleaning Lady? You can't even see the top of my kitchen table which still has the Christmas tablecloth on it. We had the carpenter who is working on our enclosed porch and my assistant for lunch today. Had to move around papers so we could all sit at the table. My assistant actually furnished the lunch of homemade bean soup and homemade bread. What a blessing. My office is the cleanest room in the house because it is the newest. One of the few things I insisted upon when we were building my office addition, was a deadbolt lock in addition to the other lock. Also, the full door glass has the blind between the panes of glass so it can be opened during the day and closed at night and on weekends. NO dust on THAT blind.

Had an attorney in my office yesterday with a mutual client. I do not work with this attorney much but he was sharing with the client and me about his recordkeeping system. He keeps everything in a desk draw until it gets too full (and in his car console) then he transfers that to a big box in a closet and repeats that exercise until the end of the year when he goes through it paper by paper to get it organized for his tax return. And he went on to share what his wife does for a career. Are you ready for it? She is a CPA. Some people just can not be helped.

So for the heck of it I offered to help a cousin of mine and his wife file their return though turbo tax because I was curious as to what the experience was like and what I am up against. It's pretty simple return, MFJ, one income, education expenses, one dependent. Getting EIC and Child Tax Credit. The experience was pretty shocking. First of all, it was not fast. It took me almost just over an hour to get it done. I probably could have done it 50% faster because I know all of the forms and rules like the back of my hand, but I read through pretty much all of the material presented because that's more than likely what the average taxpayer would do. I will admit that I skimmed some areas that I am already very familiar with so it would probably take the average person even longer. Here were my findings: It was absurd how little evidence is required to claim dependents or the EIC or child tax credits. Underneath the dependents name is basically several bullets that ask you of this dependent lived with you for more than 6 months, etc. I almost overlooked it. So while we have to detail with the 8867 and all the ramifications of that, Turbo Tax s allowed to simply put up a few bullet points. Claiming education credits didn't require a 1098-T or even the educational institution EIN. Turbo Tax just said the TP should receive it by Feb 15. He had one but it didn't require one because initially it let me go on without entering any info on the school other than the name, and it gave him the American Opportunity Credit. I am an experience preparer and I found it complex, as it should be because taxes are complex by their nature. But I cannot understand how an average person cold understand half of the material and make an informed decision. There are so many links and popup windows to sift through. There is dumbed-down language but even still, I can't see the average person just skimming through. The questions on the ACA were absurdly simple. It asked did you pay for health coverage? No. Did you apply for health insurance through a state or federal marketplace or receive Medicaid? Yes. That's it. No more questions on that. It wasn't cheap. The total cost of the return, including the state, was $119, and that was with a 30% "discount". To have the fees deducted from the refund, the total cost was $154.00. Total time for preparation, about 70 minutes. I'm pretty sure it would have taken a non-tax person about 90-100 minutes minimum. And this was for a simple return. The TP has to print the return themselves. I cannot understand why people bother. What I did like was how Turbo Tax offered options to track the refund by email or text message alerts. There is an estimated refund date. There is also a status bar showing the status of the return (i.e. transmitted, received by IRS, Refunded, etc). I like these options. I'd like to know why ATX hasn't incorporated some of this in the program. I'd probably be willing to pay for such a service because I think clients would like them.

http://www.irs.gov/uac/Tips-for-Choosing-a-Tax-Return-Preparer See bullet point six. It's probably in here someplace: http://www.irs.gov/pub/irs-pdf/p1345.pdf especially pages 11, 12, 27 (what to keep)...

Since this is your last year, you could tell your clients what you really think of them? What would it hurt, they just won't come back next year? Think about it, have some chocolate, and enjoy the possibilities. Tom Newark, CA

I know it is early in the game for this kind of comment, but the facts are the facts, what's a lunch, Jack and Eric?

Cashew chicken, fried rice and egg roll for lunch.

Don't forget the 5 year look-back period.

You guys and gals are the greatest! I feel very privileged to have your experienced input!

Client is condo assn. that files 1120-H. I inherited them, there isn't a balance sheet and the income is all exempt from condo owners and the expenditures are all for exempt purposes per the 90% test. So a capitalization policy when they don't have any depreciation? A supplies and repairs policy? Should I just whimper (thanks, Rita, for the perfect reaction)and send them on their merry way? It's always been so simple before.

Because my husband won't agree to move to NH.

Tom: All I would say, is that your Wife has to slow down on the sorting of the info on those returns, you could bill more! I keep all my receipts in a box, but I use Qbooks to run the biz, and all my info is in there. I also run it for my personal account, and that makes it easy. To the original poster, $154 isn't cheap. And I would not do a return, simple or not, for that, but... It gets more expensive, if you add other schedules to the return, (I believe). And yes, it is designed for a lack of documentation, and to encourage you to check the box and increase the refund. If $1,000 in charity gets me a refund that is larger, than $2,000 or $3k is only going to look better. However, I believe that TT and TaxCut and most of the sold to taxpayers software actually results in a net gain to the IRS. Sure, folks overstate some of the deductions, credits, etc, but the real problem is that they do not get all the credits, deductions and other things that us pro's know about. Rich

Yeah, I had the same thought. A lot of pricing discrepancies are the result of location and culture. You are somewhat higher than my minimum but I live in Podunk USA where the cost of living is less. My minimum get out of bed fee this year is $200, higher for business returns. I had an email from a multi year client (a PITA client I might add) stating that he did not have much activity in his S-Corp last year so he is wondering how much I am going to charge him and "oh, I need it done by the end of January". I email him back a quote of $500 because in PA, S-Corps are never that easy, even with minimal activity and the end of January is problematic because the forms may not be available and I may not be doing returns yet by then. He emails me back saying he is going to have to shop around - for his own peace of mind. Well, if and when he gets back to me, the price just went up a $100. And if he balks one iota I will tell him to not let the door hit him in the back side. He is one that does not really fit my client profile so if this is a parting of the ways, no big deal. The vast majority of my clients would never treat my firms services as a commodity and do appreciate our work and will pay what I bill them without hesitation.

I thought it meant "Awesome Tax Xpert". I think you could sell that concept to most clients.

I agree JohnH but if you print your Avatar, people will think that ATX stands for Animal Transportation Xpress.

For next year, employers will be giving their employees a 1095. This is when enforcement will start. Right now, only the purchases off the exchange can be verified for PTC. Tom Newark, CA

And we know how the old honor system works. Nobody fails to report cash. Nobody finagles around trying to maximize EIC. Nobody overstates the value of their rejected yard sale crap that they donated to Goodwill. Everybody keeps a mileage log. C'mon, it'll be great.

Never mind. I got it fixed. .

I expect that Turbo-Tax will be better than normal for my client list this season.

You guys are show offs, this is my humble office.

We're old enough that we treated ourselves to a cleaning lady every couple of weeks for the main rooms of the house. But, not the guest room or my office (I'd have to put stacks away) or our kid's old room that houses hubby's computer. It does include the hall bathroom that clients would use, though, as well as our master bath. Much easier on my aching back and allergies. (Now she refuses to use my vacuum with the hepa filters and uses her old Oreck that leaves a toxic cloud. Today, I'm trying to get out of the house to see a biz client before she vacuums.) That's why I'm in the organizational pickle with stacks stacked on stacks in crates due to getting them out when a client would be coming! I did add a deadbolt to my office door. And, have certain drawers and cabinets that lock. But, out of sight, out of mind. Am trying to alleviate stacks before first new client's appointment, so I don't just throw them together again and lock them in the guestroom. We'll see how far I get.

  I would consider myself an average taxpayer, but I am WAY too paranoid to take that route.  The closest I get is "it's unfortunate that I have to check that box, my return just took a nosedive" You're right though, they shouldn't show the average person their dollar figure in real time--it's probably irrelevant and just acts as a temptation to be dishonest.   I've never used their online service, which at the price mentioned seems awfully expensive considering their home and business software for doing a Sch C costs less than that, even if you include federal and state efile.  I find that it's pretty thorough, but it takes me FOREVER to get through my return.  I read and re-read every stupid box that pops up to make sure I'm getting everything correct, and then i leave my desk because reading that much gibberish makes my head hurt after a while.

Chowdahead - thanks for a detail and very informative dialog of your TT experience. I guess the only thing I would question is that your attempt to be an average taxpayer is tainted. You are too much of a professional to think like the average taxpayer. I imagine the average taxpayer is looking at the refund amount and clicking a bullet and saying "that increased my refund so I will leave that one clicked". Or, "that decreased my refund, I think I will unclick that bullet". You are, in my opinion, giving the average taxpayer too much credit. Just sayin'.....

Take your pick...............

Sometimes I have a prior year return open, usually the .pdf. But, most of the time the prior year numbers/info on the current year data entry screen is sufficient. Today my office is a huge mess. My first firm appointment isn't until Monday 2 February, so I'll probably clean that weekend !!

I am so incredulous of that neat desk that I am in awe!!!

I do not have the physical room for even 2 with the current layout of my office. This WILL be changed for tax year 2015. I am totally jealous of your three monitors. At the firm, I have two. When I work at home, it feels like I am working with a huge handicap.