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I would do that only after receiving written instructions from the client so you have a CYA document in your file. The document can be as simple as: it is my intention to convert the Loans from Shareholders on the books of XYZ Corp to Paid in Capital on the books of XYZ Corp, effective 01/01/13". Or something like that. But for you to just do it on your own is wrought with liability disaster. Oh - and my comment assumes only one shareholder. If there is more than one shareholder, then the document should state what each shareholder's amount of conversion is and the document should be signed by all shareholders. This should also be noted in the minutes of the Corp. Hope that helps!

Straightforward! Just love it when a client says "I have a straightforward tax return, just two W-2's". OK! "Oh, and BTW, I sold some rental property and the bank sent me something, I think says 1099C". Yep! Straightforward.

I've had problems with PEO's getting payroll issues wrong. You should contact your client and let him know what the situation is. Tell your client that unless the PEO issues a W-2C, you will have to file the returns based on the incorrect W-2, then amend the return, for which you will have to charge him, when the W-2C is issued. When the client learns that he will be overpaying tax because of the PEO's mistake, plus additional prep fees, he will swing into action and hopefully put enough pressure on them to issue the W-2C next week. I would also prepare a pro-forma W-2C and circle the changes, so the client can send it to the PEO and the dummies on the other end will know exactly what to do. The 941X is not so urgent, but the client should make sure that it gets filed.

Then you should do a visual inspection. Squirrels like the taste of wire insulation. In fact, you should look at all wiring in the attic for the same reason. I lived out in the country in a wooded area and we had squirrel problems all the time.

Did he actually sell stock to an individual or company or did he sell assets? $15,000 appears to be his inside tax basis but his personal outside basis is what counts. As an example he could have bought the stock from someone else that had the $15,000 basis and paid $85,000 for the stock which would be his 1040 basis. There could be a loan to the corp from him that would increase basis. You have to find out more from him.

I was studying for SEE exams (I passed!) and learned that you are supposed to report savings bond interest the earlier of when they mature or you cash them. (Just considering cash basis for this query; I'm not concerned about the folks reporting interest every year.) Anywho, I'd bet a dollar to a donut that I've had clients that didn't know this either, and IRS never got called them out on it. Have any of you seen IRS catch that savings bond interest was not reported in the year a bond matured but it was reported in a later year?

It IS subject to early withdrawal penalty. Treat it as if it were a distribution and disregard the loan factor. If the client is not 59 1/2, they pay the penalty.

I am getting the database server error problem today for the first time for both 2014 and 2015. 2013 works fine. any suggestions? of course sept. 15th is coming and I need to restore access.

why would he buy the corp and then assume liablility for prior work? he should buy the client list, assets and name. The standing S corp, changes its name and registers the old name as a dba that he sells to the new guy. Or old and new form a partnership with both names. Once the seller is paid off then the buyer changes name dropping sellers [or keeps it if he wants] We have bought many practices but would never buy a corp and have the preparer penalties hang over our head.