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use Form 3115 to treat as a change in accounting method ( improper depreciation method). Then and only then you can take all of the depreciation in the year of sale. FYI, the depreciation life for a tractor (trailer) is 3 years, not 5.

They should not be the regulator, any more than the AICPA should be. Or the IRS control the Tax Court. A basic rule in accounting is division of responsibility.

It was posted Tuesday night which allows it to be voted on in the House Thursday (today). And then it goes to the Senate for vote. Assuming no changes in the Senate, it would then go to the President for signing. In as much as this is part of a mega spending bill, I believe the jury is very much still out as to whether this can get done by the end of the day tomorrow after which Washington will look like a ghost town until after the new year.

What is probably happening is that the employer is taking a distribution from the company of money on which he (the employer) has already paid the tax. Then he is giving it to his employee. Hence, he is telling the employee that the tax on the money has already been paid (it was taxed as corporate or partnership profit to the shareholders or partners). In the employer's mind, the tax has been paid and he is treating the check to his employee almost as a gift, which it could be if it were not given in return for any services rendered. As to why employers would do this, consider that the employer is not paying his share of FICA and Medicare, nor is he paying Fed and State unemployment tax. Depending on the employer's tax bracket (which could be zero if there is a large amount of deductions or a NOL on his return) he, the employer, could actually be saving money. I do not agree with the employer nor would I take the client unless he reported all of the checks as income.

Yes, it has to go to the senate next. Just giving a heads-up on what it's looking like at this point, since clients always want to ask. Never answer without a qualifying caution, if you have to answer.

#1. Absolutely. #2. Double absolutely! #3. Yeah, but: I would rather see them spend the money on an aggressive public-education campaign coupled with very aggressive prosecution of crooked preparers. Anyone with the intent to commit tax fraud will have no quibbles about lying on exams, giving the "right" answers on ethics CPE tests without any intention of acting ethically, and generally being cheaters and criminals. Those people need to be forcibly removed from the profession (and possibly society, by incarceration), and anyone needing a little bit of a goose to tread the straight and narrow will fear prosecution more than some one-time licensing exam.

Washington, D.C. (December 16, 2015) By Michael Cohn Congressional leaders unveiled a wide-ranging deal on tax extenders, making some items permanent. The Protecting Americans from Tax Hikes Act of 2015 is a culmination of recent work done in both chambers of Congress and renews and makes permanent important tax incentives that support both individuals and job creators. Among the provisions that would be made permanent are the enhanced Child Tax Credit, the enhanced American Opportunity Tax Credit, the enhanced Earned Income Tax Credit, the above-the-line deduction for teachers who buy school supplies, the charitable deduction of contributions of real property for conservation purposes, along with the Research & Development Tax Credit and Section 179 expensing. The permanent R&D Tax Credit provision permanently extends the research & development tax credit and, for the first time, allows for eligible small businesses to claim the credit against the alternative minimum tax liability or against the employer’s payroll tax liability. The Section 179 provision permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014; and sets a new threshold at $500,000 and $2 million, respectively, from the current amounts of $25,000 and $200,000, respectively. Also made permanent by the legislation are the tax break for mass transit and parking benefits, and the option to claim an itemized deduction for state and local general sales taxes in lieu of a deduction for state and local income taxes. In addition, the legislation suspends the 2.3 percent excise tax on medical devices through 2017. It also phases out bonus depreciation. Another provision permanently extends the exception from subpart F income for active financing income. The legislation also permanently extends the rule reducing to five years (rather than 10 years) the period for which an S corporation must hold its assets following conversion from a C corporation to avoid the tax on built-in gains. Another provision permanently extends the ability of individuals at least 70½ years of age to exclude from gross income qualified charitable distributions from Individual Retirement Accounts (IRAs) of up to $100,000 per taxpayer in any tax year. Congress is expected to vote by the end of the week on the tax legislation along with an omnibus spending bill that was also unveiled late Tuesday night (seeCongress Reaches Deal on Tax Extenders). “Santa came early this year with gifts for almost everyone in the form of numerous tax relief provisions, although the IRS may view its gift as a lump of coal,” said Peter Mills, managing editor of federal taxes for Bloomberg BNA. “Tax planners would gain more certainty because the bill would make permanent many important tax provisions, most notably the research and development credit, the expanded §179 expensing limitations, the enhanced child tax credit, and the earned income tax credit, as well as extending some popular temporary provisions, such as bonus depreciation. Foreign investors would gain advantages in increasing investment in U.S. real estate by increasing their ownership percentage of publicly traded REITs without being taxed on sales of the interests, and by exempting foreign retirement and pension funds from being taxed on sales of REITS holding U.S. real estate. It also would delay some of the taxes associated with the Affordable Care Act. The IRS fares less well under the bill with new restrictions, including a rule providing for the termination of any IRS employee who takes official actions for political purposes. Moreover, the IRS has the burden of processing these changes in time for the upcoming tax season.” The Internal Revenue Service would receive $11.23 billion in fiscal year 2016, an increase of $290 million over the current level, specifically for customer service, identity theft and cybersecurity, according to the National Treasury Employees Union. While that figure is $1.7 billion less than the administration’s request of $12.9 billion, the NTWU noted, the final amount is an improvement over the House proposal to cut the IRS budget by almost $838 million compared to the current level. The bill would make permanent a provision that allows retailers to depreciate remodeling and other improvements to their stores over 15 years rather than the previous standard of 39 years, the National Retail Federation pointed out. The provision, which also applies to restaurants, is important because retailers typically remodel every five to seven years. In addition to helping keep stores attractive to customers and profitable, the remodeling work creates tens of thousands of construction jobs each year. A separate provision that allows 50 percent of the cost of improvements to be written off under “bonus deprecation” would be extended for five years, and would be expanded to cover stores and restaurants that are owned rather than just those that are leased. Section 179 expensing, which determines the amount of an investment a small business is allowed to write off entirely in the first year rather than being depreciated over multiple years, would be made permanent and its level would be increased. The Work Opportunity Tax Credit, which gives retailers a tax incentive to hire the disabled, welfare recipients and other economically challenged individuals, would be renewed for five years. Paul Gevertzman, a tax partner at Anchin, Block & Anchin, sees benefits in having more certainty about the tax provisions. “The most positive aspect of this extender package is that many of the perennially expiring provisions are either made permanent, or at least pushed off beyond another New Year’s morning expiration,” he said. “What it means for businesses is that they can now plan properly. They can operate with the knowledge that if they follow the prescribed steps they can achieve the anticipated tax result. I had one client tell me just this morning how he’s been sweating it out because they spent $20+ million dollars on equipment purchases in 2015 not knowing for certain how much of that spend could be written off this year. This bill takes the guesswork out of the equation. This certainty allows tax incentives to actually incentivize businesses to spend, rather than to simply provide a benefit to businesses post facto for what they’ve already done.” Speaker of the House Paul Ryan, R-Wis., spoke of the advantages of the tax deal during a press briefing Wednesday. "I cannot tell you how many times I have visited with small businesses and farmers who tell me, ‘Give me some certainty in the tax code, and I can go create jobs.’ We are finally delivering on one of those tax policies we’ve been trying to—for years—to get certainty in the tax code so we can create more jobs," he said. "I think this is one of the biggest steps toward a re-write of our tax code that we’ve made in many years. And it will help us start a pro-growth, bold tax reform agenda in 2016.” The Senate Finance and House Ways and Means Committees have worked on efforts in Congress to overhaul the tax code through working groups, hearings, roundtables, issue papers and markups. "Passing this legislation and making more tax policies permanent will provide significant tax relief for hard-working taxpayers in every walk of American life, from the middle class to military families to the working poor," said Senate Finance Committee chairman Orrin Hatch, R-Utah, in a speech on the Senate floor Wednesday. "It will do the same for businesses and job creators throughout our country, resulting in a healthier U.S. economy, increased growth, and more American jobs,” Hatch said. “Put simply, more permanence in the tax code will be a good thing for our country, and the PATH Act will provide just the kind of permanence we need." Earlier this year, the Senate Finance Committee reported out a bipartisan tax extenders package that extended provisions to help families, individuals and small businesses for two years. The House Ways and Means Committee advanced several tax bills that would make permanent a number of policies, like incentives for innovative research and development, among others. The PATH Act includes a number of bipartisan legislative policies that were advanced by the two tax-writing committees. “It makes absolutely no sense the way America handles its tax code,” said House Ways and Means Committee chairman Kevin Brady, R-Texas, in a statement. “How can families and local businesses count on tax relief each year as long as Congress can't decide what's permanent and what's not? That confusion ends now, and our economy will be stronger for it.” However, the bill will come at a cost of billions of dollars added to annual budget deficit, which may complicate passage in Congress. “This bill highlights clear priorities for reforming our tax system,” said Wyden. “What does that mean? Millions of working families with children will not find themselves suddenly taxed into poverty. Millions of college students won’t have the rug pulled out from under them when the tuition bill arrives. Charities can confidently plan and expand the good work they do. And small business and enterprises on the forefront of innovation now have the economic certainty they deserve. At the same time we are phasing out provisions like bonus depreciation which were always designed to be temporary. But now is not the time for Congress to slow down and pat itself on the back. Today is a down payment on tax reform and our work continues as we strive towards a complete overhaul of our broken tax system.” The tax extenders package also includes a five-year extension of the wind energy production tax credit to lead to a phase-down of the industry-specific tax credit. The wind production tax credit will be 100 percent in 2015 and 2016, 80 percent in 2017, 60 percent in 2018 and 40 percent in 2019. Sen. Chuck Grassley, R-Iowa, had advocated for passage of this provision. “As the father of the first wind energy tax credit in 1992, I can say that the tax credit was never meant to be permanent,” Grassley said in a statement. “I also can say that the wind energy industry is the only energy industry that came forward with a phase-out plan. The oil and nuclear industries have benefited from tax incentives that have been permanently on the books for decades. The five-year extension for wind energy brings about the best possible long-term outcome that provides certainty, predictability and a responsible phase-down of a tax incentive for a renewable energy source.” The tax package includes an extension of the existing biodiesel fuel blenders credit, the small agri-biodiesel producer credit, the tax credit for cellulosic biofuels producers, the alternative fuel vehicle refueling tax credit, and bonus depreciation for cellulosic biofuel facilities. To view a copy of the bill text, http://www.finance.senate.gov/download/?id=13AC9A16-73EC-4B1F-87B6-1072E08C6D22. A section-by-section summary of the legislation can be found here.http://www.finance.senate.gov/download/?id=15AE9623-1151-415D-8A69-D124A446BDC0

It is a "lose" only situation. If the employee comes clean and pays their share of taxes, the employer will eventually maybe get caught, and even if not, the employee will probably lose their job. Been there in my naive youth as the employee.

Thanks Ringers! That actually makes a lot of sense. So by the employee not claiming the income, as it is for services rendered, he is essentially committing tax evasion? I'm glad I stayed away from this one.

Them's the rules. Depreciation is taken or assumed taken when it is suppose to be taken. Your over the road truck has a three year depreciable life. If he placed it in service six years ago, you are out of luck. His basis is zero. Hopefully this was not your client six years ago and this can be a teaching moment for you. And you can show him how tax smart you are. Of course, none of that will lessen the sting. But at least he will respect you.

I would always give them another copy to give to the bank themselves. Never, would I give a client tax return to anyone other than the client.

piggies noshing parsley piffle. this was supposed to be an adorable video of two Guinea Pigs sharing a parsley stem but I can't get it to display. let's try this one Yes! This link works. Four or five tries later...

For trusts, the capital gains rate is 20% for the 39.6% tax bracket, 15% for the 25, 28, and 33% tax bracket and zero % for the 15% bracket - according to the USMTG 2016 - paper version.

I seldom do estate returns, but one big reason to file anyway is to elect "portability" by filing a return to move the deceased's unused exemption to the surviving spouse. She/he might win the lottery or the house or other asset might skyrocket in value during the rest of her/his lifetime. It's a CYA so her/his heirs won't sue you for not protecting their inheritance from estate taxes down the road. At least put in writing that you discussed the benefits of filing and have her sign it for your files.

A dual member LLC will be considered a partnership for tax purposes. Even if husband and wife, if it's an LLC it's a partnership (no joint venture where they can each take half the income and expenses). The properties should be retitled in the LLC's name. Yet I have partnerships that own real estate and when a property is sold I discover the member's name is on the HUD, not the LLC. (Kind of defeats the purpose of having a a LIMITED LIABILITY company, doesn't it?) When I look up the property taxes I often find them in the individual's name. Sometimes the mortgages are in the LLC's name and sometimes in the individual's. People seem to do whatever they want with LLCs, most likely because they don't understand what they should do and the point of doing it. The banks don't seem to care as long as the mortgage gets paid and neither do the towns as long as they get their taxes. The IRS may be the only one who notices. Agree with others--the passive activity loss rules still apply, as do the basis limitations. Say your client puts his spouse on as a partner in the LLC, but she didn't co-own the property and didn't contribute anything. Her basis is zero, and her half of the losses is not deductible. This could backfire on your client. Get more details on the other member(s).

I read this earlier today. Is it not correct that this bill still has to be passed? Is that going to happen and how long is it going to take? Seems like every year we are sitting on this same fence at this same time of the year. As far as making extenders permanent; I often tell my clients that "it is the law now, but who knows what will happen down the road!" I hate that I am becoming such a "Doubting Thomas"!

You've got that right. Actually my post hade a typo, I meant to type Mar 1st. LOL

Well, I think that's just out of our control, because they BOTH own the joint return, so they both have a RIGHT to a copy of it. And anyway, if they are fighting now about money, odds are you are going to lose one of them anyway, when they split up, or at least decide to file MFS.

A good reminder that we never really lose the people we love. They live in our hearts.

And congratulations. I also agree that there *should* be official designations aside from EA or CPA - such as RTRP. I'd just rather see the IRS spend the funds on "required" new licensing on cracking down on crooks. I don't care if the crooks are CPA's, EA's, RTRP's, or have no designation whatsoever.

There ARE still blacksmiths - one of our family friends is one. No licensing. Just fyi and my own amusement at the example you picked.

Glad you caught that one. Just having fun. Merry Christmas and a very happy new year to you and your family KC. Tom Newark, CA

clients are such a PITA. If only we could do this work without them.

ATX is not designed to be used via by VPN. It is a violation of the license agreement. Call tech support if you don't believe me, or, read your license agreement.