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I use Carbonite and it shows me what is being backed up with a little green dot. Even still, I have to check it often to be sure it's being done. So, I'm still a detective, just not a real good one. Off topic; @RitaBdidn't realize that PMS was first documented in the Bible. It says, "Mary rode Joseph's ass all the way to Bethlehem." Or something like that. I'm glad I could validate her. Maybe this can help others, too. You're welcome.

I was remote supporting a client for QuickBooks this morning, and after I deleted his duplicate transaction, he asks, 'can you check my backup to make sure my QuickBooks data file is being backed up?' First I looked in QB and it was not prompting for a backup every time you close, so I set that up to back up to his documents folder. When you upgrade QB, your backup settings and some print settings (like check font) do not rollover with your data file. Who knows where Intuit even stores that info. QB should walk you through the backup options the first time you close any new or rolled over data file. The I looked at his CrashPlanPro backup settings and it defaulted to backing up only his user profile. Well, QB uses the Public user profile to store the data file so his QB data file was not even being backed up. He had gone an entire year with zero backups of his QB data! Why, after 40+ years of computer use, software companies haven't agreed upon a single location where all data and user configuration settings are stored so backups can be easily done is a testament to our stupidity. I have several programs that store data in the user folders. Some (like ATX) store it in a hidden system folder (Brilliant!) and others store data and/or settings in the program folder. I'm lucky to have been involved with computers since the mid-70s, but the average user shouldn't have to be a detective to find out where their data and settings are stored and then make sure those locations are included in the backups!

Disagree, on the foundation that "freight in" is value-addition, whereas "freight out" is selling expense. I should add that there is more involved than just freight - as "handling" implies other activities such as logging, scrap handling, etc. I'm relying on GAAP somewhat in the presumption that "freight-in" is inventoriable and adds to the value, whereas "freight out" simply charges against the amount of the sale.

No, ^ this is incorrect for David's client's situation as he described it. Because incorrect depreciable bases and lives have been reported on 2 or more years tax returns, the proper handling to correct this is by filing Form 3115. They are both considered changes in accounting method. Amended returns are appropriate only if the error is discovered after only one year's return is filed. Please see "Change Your Accounting Method" here for more details: https://taxmap.irs.gov/taxmap/pubs/p946-008.htm

I use TaxWise, so there aren't any hidden files as far as I know. Sometimes, ignorance is bliss. I only have a few more years to work. Don't give me tooooo much information! LOL

If the property is inherited with a step up in basis, I don't think that depreciation prior to the date of death will have any bearing on the calculation of gain or loss.

I agree wholeheartedly. Basis issues are accommodated in tax software, but inadequately instructed with confusing narrative menus instead of direct entry. Basis and Capital Balances are rarely the same. Accumulated E&P is another problem. I have gone behind other preparers who have done corporate and partnership returns, and immediately see there is no balance sheet from the prior year. Regardless of how small the entity, if we do not prepare a balance sheet, together with reconciliation of taxable-to-book income, we are failing the customer. Balance sheets are promulgated by GAAP, not by taxable income, and we should be on top of this, or we need help.

So if it was personal, the basis will be the FMV at the time of death. Since it was recently, whatever the scrap dealer pays for the "equipment" is the basis for your client. If they were equipment used in a business, maybe your client will have a gain and pay taxes on it if all the items were fully depreciated while the farmer was alive.

Yep exactly. Know a couple where the guy purposely failed to report income so he didn't have to pay. Filed the MFJ return without the spouse's knowledge or signature. During the divorce the court ordered each to share the tax burden. This was CA and the guy's lawyer dug up all this crap in court regarding community income, community expense; etc. I worked with the spouse in this case. Without getting into lengthy details, we filed equitable relief with the IRS with all the claims of fraudulent signatures; etc. Took a while but, the IRS ruled the spouse does not have to repay any of the tax bill. The guy had 90 days to appeal the decision. He appealed and the IRS still ruled in her favor. I loved it.

I cannot put names to these items as I am unclear as to what they are. I merely stated what the transaction was going to be. Are these items personal? I am going out on a limb and saying yes. My client inherited the land and the so called equipment when his father passed approximately 3 months ago. The reason for my confusion is there is a commercial lot involved in the inheritance as well that this so called equipment is on. It is highly possible his father just owned a piece of commercially zoned property and not actually operated any type of business. With all this said, I still feel, and I will clear it up, this equipment was personal and not business use equipment. I know the guy was a farmer, but I think it was his personal property. I guess I was not clear enough in my original post.

We should start a separate topic on all of the things preparers don't do or don't provide to clients that cause huge messes later on. Basis issues is one that shouldn't be that difficult since the tax programs have input and worksheets for this. Another one that is missed and that is not in the tax programs is calculating accum E&P for C corps.

Congrats, we needed you in the seminar.

I've been doing that since 1996.

Please now add stock and debt basis worksheet to your 1120S, supposedly it’s been required since 2016, it’s in the instructions, but out of a seminar group of 500 plus people no one knew about it. This only applies in certain cases, but it will be a good idea to review the instructions.

Additional information on the K-1s will be required due to the definition of what constitutes Qualified Business Income, more than what was required for the DPAD.

Also, the QCD must be done AFTER the person reaches 70.5. Simply making it in the year the person reached 70.5 would meet the RMD requirement, but to qualify as a QCD it must be done after the birthdate.

You have be careful that the client doesn't include the contribution as a deduction and end up double dipping.

Yes, the Qualified Charitable Distributions (QCD) count toward the RMD, and the QCD also reduces the taxable portion of the distribution too. Up to $100K is allowed, and the person must have reached age 70.5 also.

Reading this thread drives home the point that I am a total luddite. I was proud of myself this year for simply scanning documents in to dropbox as they came in. ***Sigh***

OK. But I still believe that FMV is 50%, which in turn is the basis of the items. If you don't have any other better offer, that's the FMV, correct? To me this is exactly the same as what they do in my country. You have a corn field ready... all the sudden someone shows up and says... I am giving $2,000 for your field and I will bring my people and my people will do all the work and I will take the end product. To the seller, there is no transportation expenses. The seller cannot say, I got $3,000 for the field but I have $1,000 in transportation expenses, just because if he would take it to the city they will give him $3000.

Most of my clients who are divorcing have court orders to file jointly. I've even had some who have court orders to file jointly even when the divorce is final by the end of the year! Love to have to explain to them that federal law trumps civil.

Yes, filing the 3115 is definitely the right way to handle these issues.

It's probably referring to a newer USB 3.0 port instead of an older USB 2.0 port which your computer probably has.

Unless of course, it was something he was dying to give...

Exactly. I know they did this to prevent dishonest people from abusing the tax laws, but this ends up hurting people who are divorcing but can't file jointly, or as HOH or single.

There are several lucrative adjustments and tax credits that are not available to MFS, e.g., EITC, AOC and Lifetime Learning Credits, child and dependent care credit, student loan interest. You really have to run the returns both ways to be sure.

Under the TCJA, the MFS brackets are exactly half of the MJF, and Pacun gave a good example of when MFS may be of benefit. With that being said, we must still consider factors such as the composition of income and anything on the returns that may be affected by AGI or taxable income limits, and possibly run scenarios using each filing status because there are still items that aren't treated the same under the two filing statuses. A couple of examples I can think of off the top of my head: MFS may result in more of the social security benefits that are taxable if the couple lives together anyone wanting to contribute to an IRA for a nonworking spouse under the spousal IRA rules must file MFJ and I have some wealthy older couples with huge investment portfolios, yet the returns are fairly straightforward with only SSA benefits and investment earnings for income. I've prep'd returns for them where one of the spouses will make a huge charitable gift annuity that would have definitely exceeded 50% of AGI if they'd filed MFS and ended up with a carryover. In fact one year, the gift exceeded 50% of AGI on a MFJ basis so they still ended up with a carryover.

Makes good sense. Thanks. Any conveyance of property thus becomes an "inheritance" instead of a "gift."

No, all decedent's assets go into estate on date of death.

I've only fired a few over the years and did it by a telephone call telling them I think they would be better served by someone else. I also let them know that I will be available to their new preparer if needed. I like to leave on good terms, but it feels so good getting rid of the PITAs, usually people that call all year for every petty nonsense reason you can think of. I've raised their prices but the money is still not worth it. Lucky for me I like most of my clients and am more than happy to give them added value with answering their questions during the year, as long as they don't abuse my good nature, or else they get the call.

I want to congratulate all that have put their foot down and fired clients, I fired two clients via letter about 2 years ago and my stress level went down from 100% to 0%.

You know, that is an excellent point Catherine. I have been thinking that I want to sell my business and get out so I can work less hard. Maybe if I don't have much luck selling, I should just keep raising my fees until I am working less hard because people leave but I will still be making money on the ones that stay. Something to think about before the first of the year......

Oh well. I already requested a new code. I'll try the old code on the 21st but my guess is I have to wait now.

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I guess the programmers never allowed for the possibility that the codes could expire before the letter was mailed, and to just generate a new code to be mailed. The lady told me they had a glitch that delayed the letters and that they're normally mailed in about 5 days.

Years ago, while in the Coast Guard, in November, the ship I was Communications Officer of received a 6 month supply of a brand new form for a monthly report to headquarters. In April the following year I ordered a replacement supply of the forms. The reply from headquarters was "In November we sent you a six months supply of this new form. Why are you ordering more in April?" (In essence: 6 months ago we sent you a 6 month supply. Why do you want more?) I realize that someone never read what they sent as a reply. Joel

That's OUR tax dollars!