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I'm going to be installing a medium-sized forum update in the next few minutes, as soon as my backup has completed. There are lots of new features, but most of them aren't relevant to our community. Emojis will be added, lots of them. They are the standard emojis you are used to seeing on mobile devices. I've installed a security certificate and the whole site will default to https. I'll be implementing Google's newish invisible Captcha service as an additional layer of protection against spammers. It works by magic. Unless something goes horrifically wrong, there shouldn't be more than a few minutes downtime. Thanks!

Let the attorney do the 1041 if he knows so much more than everyone else.

I am considering stepping back out of this whole thing in order to avoid ethical issues.

I have a 1099Q in the wife's name. Box 1 distributions are $5000. Earnings in box 2 are $2018, and Basis in box 3 is $2982. There's a lovely note here saying her husband "pulled money from here to pay his college tuition. When the college funds were reimbursed, we put all the money back into the 529." Wait, there's more... This is followed by a 1098T in the husband's name. Box 2, amounts billed was $2440. Scholarships or grants is $1900. Wait for it, there's more... There's another lovely note attached saying, "(husband) paid for 1 semester of schooling. He didn't complete the semester, so 80% of the funds were returned." It looks to me like he doesn't qualify for any education credit. Billed tuition minus scholarships is only $540. If 80% was reimbursed, he only paid $108 for classes he didn't even complete. So, no education credit. It's obvious he didn't use $5000 that he took out of her account for education. As I see it, $2018 goes on L 21 and $202 on L 59 for the 10% penalty. I think her notes were just an attempt to blow this off all together. Can I get a discussion or confirmation? Am I right?

Yes, when her name was on it, and he is the one who used it, I knew I had a problem. Then, when I got to "page 3" of their package and saw that 1098T with the love letter saying he didn't even complete the classes, that was it. Thank you for steering me to the documentation backing up the position.

Not that I am the biggest fan of ATX, but one feature that it has that I can't live without is the watermark on the client copy. I change the watermark to "Corrected Copy" on the amended version of the return, and I print off the original return with "As Originally Filed" splashed across it. I don't know if that pisses off the IRS or not, but this is so much better than the way we used to do it by writing those things on the top, highlighting them, and then hoping the IRS employee noticed what you put on the top of the page. There is no way they can get the two versions mixed up. I cannot fathom living without the watermark feature ever again. Tom Modesto, CA

I think you are correct. No education credits because he dropped out so he isn't at least 1/2 time for the AOC, and he wasn't enrolled for at least one semester for the LLC No relief from the taxable portion or penalty on the 529 withdrawal if they put the money back in to the same 529 plan. If they put it into a new plan within 60 days it would qualify as a rollover.

Well we did finish this up. We did submit the corrected forms, included receipts showing actual expenses as required and the form 1098T they asked for and included an explanation of the error. I did amend the return to claim the tuition and fees deduction as it returned a lesser difference than the life long learning credit. I am hopeful that all will come out well. Thanks for all the advice. BTW, all documents were mailed to the address on the letter as instructed. My client also included a check for the difference.

Next time you go to the bank, have the person cash a $ 100 check into $ 1, $ 2 and $ 3 bills.

Remember, too, that the charity is not supposed to state a value of the goods donated. It is the donor's job to do that.

I once prepared a tax return for a OTR trucker, was home 2-3 times a month for a few days and back to driving, gross income was about +200K, actual expensive were like +150K a year. I had to ask him if all this driving was worth it, being away from his family and only pocketing 1/4 of his earnings.

And, for those who want to know, if someone pukes in an Uber, they are hit with a $200 fine immediately, before they sober up! I didn't learn that by accident... my client told me.

DITTO!!!

thx - my thoughts exactly! you all are so good!

You guys are the best. It is not my problem and my client knows that. I haven't been asked to solve it nor will I offer to. Not unless I'm hired. She called because her stepdad received a paper check at his address with the wrong name on it (not "in care of") and the preparer was rather rude to her. He said "I've done your parent's taxes for 25 years and never had a problem until now. Just cash the damn check and give him the money. It's not like it's income to you." She was offended. So was I. That's not how I do business. I've known the family for a very long time, long enough that I went to the Mom's funeral last year. There may be snakes but not the stepdad. And not the daughter. One of the reasons I follow this board is to see what you all see in your offices. It's always helped me to read about some crazy thing you've never had happen. I learn from that. From you. For me - this was one of those things. Take a break but don't go away. I appreciate all of you.

How silly. The donor puts on the date and the FMV of the goods given. Most of these forms have a scribble (signature?) on them - and if not, who cares? you ca only get them by giving something, and they don't get sent in. I suppose in an audit someone hard-nosed might disallow the receipt for lack of signature - but if you're in an audit, being certain your GW receipts all have signatures is going to be VERY low on your checklist.

And you're searching because....... Consider the source and carry on!

Done! Edit: Almost done. I have a few more things to take care of before those last two bullet points are finished. Testing emojis. Modifying style sheets to increase their size a bit. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aenean aliquam in dolor vitae condimentum. Nullam tincidunt mauris eu congue ornare. Integer sit amet diam nunc. Vivamus vestibulum aliquam neque ac congue. Proin et nibh vitae risus faucibus viverra rutrum id arcu. Phasellus vulputate sem vehicula nisi ullamcorper lacinia. Pellentesque vehicula scelerisque est et sollicitudin. Cras viverra, dui et tristique blandit, quam urna scelerisque lacus, nec semper sem massa quis odio. Nulla vulputate ut ligula at aliquet. In congue mi purus, a molestie tortor congue eu. In mattis gravida egestas. Aenean pharetra pretium hendrerit. Edit2: Alright, seriously this time, all done.

No I did not ask this, and don't think it is fair. Many of you will respond "Fair does not matter in tax law" but there logistically is no commuting other than the mileage to the first pickup and mileage home from the last pickup. Only those few miles would qualify as commuting under the "business stop rule". And if the driver does three pickups in a night, and comes home between pickups, then those commuting miles would be multiplied by three. Had I asked this, I don't know that any of those drivers would keep mileage records to that extent. All of them have other jobs and I'm sure they regard their "tax home" as being their residence for purposes of a 2nd job. In a town the size of Nashville it would be typical to drive 3-4 miles to the first ride, drive 1 mile, and then 3-4 miles home. My portrayal here is not strained at all, but really quite typical. In such a case only 10% of his total mileage would be deductible. I don't think the IRS is being ripped off under this scenario. It is the driver that is being ripped off. Interesting to hear from some of the rest of you - your drivers are making money. Judy, thanks for your response. Adds spice to the conversation.

IRS, Security Summit Partners warn of new twist on phone scam; crooks direct taxpayers to IRS.gov to “verify” calls IR-2018-103, April 24, 2018 WASHINGTON — The Internal Revenue Service today warned of a new twist on an old phone scam as criminals use telephone numbers that mimic IRS Taxpayer Assistance Centers (TACs) to trick taxpayers into paying non-existent tax bills. The IRS and its Security Summit partners – the state tax agencies and the tax industry – urge taxpayers to remain alert to tax scams year-round, especially immediately after the tax filing season ends. Even after the April deadline passes, the tax scam season doesn’t end. In the latest version of the phone scam, criminals claim to be calling from a local IRS TAC office. Scam artists have programmed their computers to display the TAC telephone number, which appears on the taxpayer’s Caller ID when the call is made. If the taxpayer questions their demand for tax payment, they direct the taxpayer to IRS.gov to look up the local TAC office telephone number to verify the phone number. The crooks hang up, wait a short time and then call back a second time, and they are able to fake or “spoof” the Caller ID to appear to be the IRS office calling. After the taxpayer has “verified” the call number, the fraudsters resume their demands for money, generally demanding payment on a debit card. also have been similarly spoofing local sheriff’s offices, state Department of Motor Vehicles, federal agencies and others to convince taxpayers the call is legitimate. IRS employees at TAC offices do not make calls to taxpayers to demand payment of overdue tax bills. The IRS reminds taxpayers it typically initiates most contacts through regular mail delivered by the United States Postal Service. There are special, limited circumstances in which the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations. Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail. Scammers are endlessly creative aren't they ?

Thanks for sharing that information !

It almost seems like they got advice from somewhere or tried to look it up themselves because of the wording of wife's note. There are times when putting money back into the same account is allowed, but not for your client. Take a look at sec 529 (D) where it says that sec (A) doesn't apply in the case of beneficiary who receives refunds of tuition that are recontributed. I didn't mention it because the way I read paragraph (D) is that it would only apply if the wife was the one receiving the refund, and in your case the husband was the one with the refund, and he was not the beneficiary of the 529 account.

That's interesting! I didn't even think of the rollover. I will ask them, but she already said they put money back into that same account. He borrowed from it and blew it, I think. Thanks for the teaching moment!

Agree with this 100%. Distributions come first from income. I still think you should get a copy of the will to check for any anomalies before you sign off.

The attorney thinks we are getting out of tax by distributing the income. My thoughts are he has told everyone that there will be no tax. He is trying to bully me by saying the distribution will wipe out the income on the estate and eliminate tax to the estate. But unless I have been missing something for years - I understand that the distribution triggers the movement of taxable income from the estate to the K-1.

No - I have the executors green pad of income and disbursements. I have not received the accounting of the assets at the dod. I was put in my place by this attorney, that "maybe I was not aware that it is not necessary to do an exact accounting of assets anymore." To which I replied that regardless there should be a fiduciary responsibility to account for what she owned and what needed to be distributed. Surely it wasn't a hat throw. Like I said, I don't like the attorney and I don't think he's worth the $30000 they have given him. Regardless, if the money were required or not required to be distributed, as long as it was, it triggers reporting of the income - right?

As a prior IRS auditor I would go with Catherine, Max W, and Bulldog Tom. I would handle it just like schirallicpa said his experince was.

You have to report what actually happened, lawyer be damned. Did the lawyer provide you the final accounting for the estate?

I never even noticed this option til about the last couple weeks.

I hope you told them that wouldn't make them any safer... unless you were doing paper and pencil returns.

This does not sound like your problem to correct. DON'T get in the middle of this. Send her to the "professional" that did the return. RUN AWAY. There is more here than she is telling you. RUN FAST!!

When I asked to get copy of will, I just got big blow of smoke about everything is to be distributed - what do I need the will for.