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I'll chime in with something that came in just this morning. Long-time clients, married couple; they do online training of some kind. C-corporation for years and a couple of years ago made a (late) election for S-corp status. So now they need the corporate return done before they can do their personal. They were warned about this before they made the S-election. We do the corporate return only; they (he) do the personal returns themselves using Ttx. What they send in every year is a home-brew spreadsheet that comingles balance sheet and income statement items. They don't peel out their asset purchases (technology related, computers, telecon equipment, etc) but those have to be excavated from the charge card spreadsheet they also send. Their payroll gets done by a big bank (of amerca; shh I didn't say that) and always has to be checked for over-contributions to 401k's because the pr processor allows those to go through. Then they always want to see if there are any last-minute changes that can be made (additional company contributions, something). So late last night they send in an email. "Hi Catherine, Hope you are doing well. I wanted to alert you to the fact that we are applying for our daughter's middle school application this year and the schools we have applied to need a copy of our personal 2017 tax returns. That means we have to file our personal taxes by April 15. I believe our [company name] taxes impact our personal taxes so we would like to have everything in order prior to the April 15 deadline. I will work on sending you our [company name] financials over the next few days. Please let me know if you have any questions/concerns regarding this." March 1st. They'll send in info "soon" which traditionally means a week or three. Can we have it done and back immediately. Candidates for Rita-hugs!

I'm soooooo lonely in this topic all by myself! I'm going to start it off by nominating someone that isn't here very often but always tackles the very hardest questions, gives succinct and informed answers, and many times with the cites. Vote for DANRVAN using this post.

the reasoning is that when faced with an RMD, the t/p can designate the charitable donation rather than taking the taxable distribution. for the 65 year old, the distribution is not required. That person can just leave it i the retirement account and not have a taxable event.

I just got off the phone with a client that is dumb as a rock. Seriously. Two years in a row I discovered that she wrote down her phone number wrong. I tried to call several days in a row for answers to my questions to no avail. "That number is not in service." With that, I sent her my printout of notes with 2 simple questions 10 days ago. Days go by with nothing but crickets, and then she called from the (correct) number that she should have given me, and it is apparently in her boyfriend's name, so I assumed it was a spoofed fake name from a robocall and didn't answer the call. After listening to her message and calling her back using redial, she wonders how I had the correct phone # to call after I told her that she wrote it down wrong. When I asked if she got my notes in the mail, she said 'no' and then said, "well, I didn't open anything from you anyway" Arrrrggggghhhhh! I suffered on with the conversation and mentioned that tax law changes should benefit her but that it might be a good idea to check her 2018 withholding (because she's one that likes a big refund) because the IRS revised the withholding tables, and if she would like to discuss that to please bring a recent pay stub, and ... wait for it... she said "oh, one more way they are screwing us." Did I say Arrrrggggghhhhh! already? She's one that won't be invited back next year.

Mine's not tax related. When I work, I have my back to the client. My computer table is behind my desk. I have a beautiful ivy plant on the corner of my desk and when it got too long, I just took the end and looped it back up to make it look fuller. When I was finished her return, I turned around and she tells me she's 'untangled' my ivy plant, removed the dead leaves and now it's draped down onto the floor. (Oh. Gee. Thanks?) The icing on the cake was she wore one of those sickeningly sweet perfumes that older ladies like, and it irritated my throat and made me cough. I asked to please not wear perfume in my office because I have asthma. She sniffed herself and said she only put on a few drops. I think they become immune to the smell and just put more and more on every time. She perfumed our restroom so much that it still smelled several hours later. But I really wanted to tell her to LEAVE MY FRICKIN' PLANT ALONE!

Not to mention overloaded brains long 'bout now... It's a village here and we look out for each other, no worries!

First of all, get the Bursar's Office statement. What the 1098-T and the 1098-Q say do NOT match up. If a scholarship paid all but a couple hundred of "amounts billed" then why a gross distribution of $14,100? There is information missing here that is crucial. Does that "amounts billed" field only include costs NOT paid by the scholarship? Were education funds (529, Edu IRA, whatever) used to pay private housing instead of campus housing? Start there. Then we can help you figure out which payments qualify for what treatment, and if taking some of the 1098-Q money as taxable then makes the family eligible for credits.

Thanks, Abby. It's good to know that the IRS is still lenient on this.

Qualified education expenses paid by a 3rd party for the dependent of a taxpayer are considered paid by the taxpayer.

Terry, the information in your post is not clear to me. -How do you know his original basis (contribution) was not reduced to $2,475 over the years? -It appears basis of $2,475 was reduced to zero in 2016. -In 2017 he received $6,000 for exchange of stock which now has a basis of $0...? -I don't see how he can take a deduction for $3,000 proceeds he never received from the sale of stock The unpaid balance was never included as taxable.

Pic of ivy after I 're-tangled' it. https://photos.app.goo.gl/9I7Mlr1dXgSVfeCE3

I vote with Pacun . Gail's remark brought back a memory in which a very conservative older client argued with the state over an $8.00 penalty for some six months.

Foxit Reader has a free e-sign service of 5 per month. Honestly, probably all I need. I can physically sign / scan the rest.

@jklcpa don't we ALL do that from time to time? Mis-read, mis-understand, conflate with a similar-but-different situation we've seen before, and then post in accordance with what we think we understand? 'Salright. We all still love you.

I had a company that was almost a year late with the S-election form. It went through, no questions. Just some scolding of the client from me... not that it helped this particular group.

Almost any explanation will suffice. The IRS doesn't fight S elections.

I did get that totally wrong, and when that happens, it's usually pretty awful. It wasn't even a post from the middle of the night that I can use as an excuse.

Very interesting. Hadn't thought of that.

I scanned my signature and added it to Adobe as a "custom stamp" that I can put on any document, just like a watermark. And I can adjust the size to fit the space.

How do you get your signature in there? Do you use just a generic script font or do a cut/paste of your actual signature? I use Foxit but not Phantom. Even with the free version you can highlight, type stuff into a pdf. It's freakin awesome for FREE.

Except when the trust pays something for the beneficiary, it's a deemed distribution.

This was a card that the client used occasionally. When she got a bill, she knew that she hadn't made any charges and the locations where it was used were not in this area. She filed a police report, etc. but the card issuer balked, then agreed to cancel the debt when she cancelled the card. I have seen this type of thing before, but always after the fact. Thanks all for the advice.

Had the IRS mail me back a 2848 I had faxed them because they determined that the signature had been done electronically... which it had. I just need to make it look a bit better. Before I got the letter from IRS, I had faxed it several more times, and one of those times, someone processed it.

What we do is scan everything, and return originals to the client as soon as possible. The only paper we keep is interview notes (one sheet of paper) and signature pages. Even those get scanned at season's end and the originals shredded. We have locking filing cabinets that all client documents get stored in. Two offices; the main office is alarmed and is very secure (it was a former police station). Secondary office (my house) is also alarmed. All the pdf documents are stored on encrypted drives. Without the passphrases, anyone who steals the drive just has gobbledygook, not data. Massachusetts' rules are that everything not being immediately used *must* be under lock and key at all times. As is usual with one-size-fits-none regulations, rules that make sense in a big office with common desk areas also apply to me if I am alone in my house and just want to duck to the kitchen to rinse out my teacup.

thank you so much! I did the same thing, didn't round up the federal wages on first and used that dollar on the second

There is a link at the bottom of the w-2 input screen to a knowledge base article on how to make this work. I just went through this two days ago. If my memory serves me correctly, the article suggested creating a second W-2 and putting federal wages at $1 on the second W-2 and reducing the first W-2 federal wages by the same $1.

I had a client with 21 state W-2s. The way i got the federal to e-file was for a state (say Alabama) I posted the exact same amount in box 1 for federal wages as was reported under state wages. Once I have every state done, I then created a W-2 with the remaining federal wages and claimed it was for a state with no income taxes (like Texas, etc). The city portion was easier because I could add them to a state and there was only 5 city returns. Once I made sure the total wages matched the total of all the W-2s it e-filed without a problem. Good Luck, Peggy Cobb

It is a moot question, now. I see that the phase out for AOC, for HOH, is $90K, which is the exact amount earned. It is even lower for Lifetime learning. Thanks for all the input. It has been very interesting.

Agreed. Been a big fan of Foxit for years. I bought their old PDF editor but went with Nuance when I wanted more features.

EITC has no place at all in this scenario. Both are retired and financially stable. I was just asking about proper assignment of real estate taxes paid. Thanks for all this input but I think we've come to a resolution, easier than I thought. Back to the really hard issues now - they always appear later in the season when we are crunched for time and brain power, right?

If I am understanding the scenario correctly there would be no addition to basis fro the $200,000. Or I guess you could increase the basis by $200,000 if you first reduced the basis by $200,000. It sounds like the courts or the facilitator simply redistributed the assets. The family member would have received $200,000 of the building and your client would have received $800,000 of the building. When your client writes the check, his basis then goes to $1,000,000. I do not see the legal fees as being a Schedule E deduction. Maybe schedule A because your client is trying to protect his assets - but Schedule A might even be a stretch. I would probable lean toward increasing the building basis by the $50,000 of legal fees.

That is where I was going. And then, to follow my thought process, the expenses paid by the child can be deemed to have been paid by the parent. I don't know what the phaseout is for the Ed Credits off the top of my head, but if the parent is otherwise eligible, then I think she can take the credit for the education paid for by the trust for the dependent daughter. It is no different than the child taking a student loan in her own name, and the payment goes strait to the institution for the tuition. The parent can still take the ed credit. Tom Modesto, CA

Just a point of bookkeeping clarity. Some of us (me) will keep 2 equity accounts for each shareholder of a small S Corp. The first is the "Paid In Capital" or the initial investment of the shareholder to purchase the stock. I never post to that account again. The second equity account is the "Shareholder Retained Earnings". I post all of the distributions for each shareholder during the year to this account. Then there is the running retained earnings account, to which all of the profits and losses of the company are posted monthly during the year, without any breakout by shareholder. At the end of the year, I close this retained earnings account to the shareholder's individual retained earnings accounts based on their ownership percentages. To get the "true" basis for the shareholder, you need to combine both shareholder equity accounts. I know, it may sound incorrect to do it this way, but I like to keep the initial investment clean in the balance sheet. This may have provided no insight at all to Terry, and I apologize if I am muddying the water. Tom Modesto, CA

Substantial presence is needed when you are deciding to file 1040NR or 1040. In your case, you must file 1040 and the rules for EIC are: Your child live with you more than 6 months in the tax year and that both have a social security number without a label that reads "Not authorized to work" and that that number was assigned before the due date of the return.

I agree with Dan, and I am also wondering about some of the data in your post. In an S corp, there isn't a basis called "cash basis" separate from "stock basis". The owner's stock basis in an S corp is the original investment of cash and property that the owner contributed to the entity in exchange for the S corp stock. There could be "debt basis" also if some of the funds put in were loaned to the S corp, but you didn't mention anything about debt basis, so for purposes of this discussion, the entire amount initially invested is this owner's starting stock basis. The stock basis is adjusted each tax year by items of income and expense on the K-1, plus additional capital contributions, less distributions, generally speaking. There's are specific order and more detail rules, but that is the general idea. Think of it as keeping a running total in a checking account with the initial starting balance as the investment, then each year making +/- adjustments for those items I mentioned, so that at the end of each year the stock basis is a new number, never going below zero. From what you said, over the years this owner's stock basis had been reduced from its original investment down to $2,475 at 1/1/16. With his share of the 2016 loss exceeding his starting basis, he was able to deduct the the loss up to remaining basis, and that loss took his basis to -0- at 12/3/16. Has your client received a K-1 with activity for 2017? Was his 2016 K-1 marked as "final"? That may make a difference in your reporting if he had any share in income for 2017. What was the date of his stock redemption?

And lemme know if you need an MA insurer EIN. I have a list of just about all of them.

If it's a local (Salem Five, Belmont Savings, Rockland Trust, Winchester Savings... etc) it's a no-brainer. Ditto the nationals; none of the big ones (BoA, Wells Fargo, Citi) are MA-based. Else go to the home page of the bank in question and under "Contact Us" it always gives the headquarters. Some years ago I was surprised that Citizens is based in RI; there are so many branches and it acts local. I guess it is, but not MA-chartered. If it's so little interest and not instantly obvious, assume not.

Whoa, I forgot about the health care program. Thank you soooo very much! I have his last year return to use as a guide. No rent paid, owned two houses, sold one. Wife has retirement income, which he told me is not taxable in MA. How do you determine if a bank has a MA charter?

It's not an allowable trust deduction, so it becomes a distribution to the beneficiary. I'm leaning towards allowing the credit, because I've had divorced couples where the parent who paid the expenses did not claim the exemption that year, so the other parent got the credit.

You got most of it. Insurance EIN (I have 'em all) and subscriber number for the MA health care form. Apportion socsec tax (read it off the MA W-2). Don't forget the $3,000 adjustment to income for rent paid on first page of Form 1. And the deduction from interest income for the first $100 ($200 for a couple) of interest from MA-chartered (not just located) banks.

Well, at least it's working now. I tested it by posting the lyrics to Thick as a Brick and it didn't crash.

I kind of suspected from the beginning that you had unchecked the wrong box.

Yes, I did. And I can't go back and redo because it is grayed out. I could only 'reinstate' what I thought I deleted to redelete. But that didn't work either. I've been using this program since 1997 so am sort of familiar with how things work although don't know everything - and there is always some new thing. Like now on Sch. A for Tax preparation fee, you can't just put in the number. There is a whole new link to billing. Yes, I can put in the number at the top but it is one more click I don't need. Rant over....

while looking through Pub 525 for something unrelated, I read this: Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner. I would live to know if anyone here has ever had occasion to include this on a return!

Oh, &^%% to the no, that's the only way I can find it when I need it. One more year, $%^&*#.

What I say in the privacy of my own office is only subject to my own soap! Not outside sanctions!

Is that income "earned" and can it be used for EITC? Tom Modesto, CA

He told me that he had an offer that I couldn't refuse....

"The crime had not been especially well thought-out, she said. Most of the group paid with credit cards, including the man who stole the napkin dispenser." Crying.