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I'm going to enjoy this for a minute because it may never happen again!

haha, you know that's not true! You and some other exceptional members have corrected me when I'm wr...wr...wr... wrong (there I said it ), and I may not say it openly , but I do appreciate that you make sure the topic is explored fully and that we all end up with the correct answer. Don't I at least give those corrective posts a like? Believe it or not, I am still human and make mistakes.

Ha! Guess what? Drake is inconsistent from 2013 to ultimately 2018, and technical support can't deal with it. So yes - a pen and ink returns, no fewer than 5 of them. Catherine and DanRVan: You'll be deliriously happy to know this. Yes, I am required to know what I'm doing, inside and out, during the process.

Purchased Drake for 2018 and they gave me all the prior years (from 2002-2017) unlimited. Everything is in their download center, so I just download the previous years when I need to use them. They also have the converter program going back to 2008 (so I can convert 2007 tax year data if I have to).

Ahh! I get it. Nice job Judy. Here is a condensed explanation. https://bradfordtaxinstitute.com/Content/Claiming-NOL-Carryback-Late-Filed-Return.aspx

Dr Abby, the chiropractor... straightening me out.

$^%& I knew this one because I just made the election to capitalize an expense on a return a month ago, and you guys beat me to it. And here's a quarter for the swear jar.

If you put the mortgage interest on 4952 it might be there for a very long time. You can elect to capitalize any of the three classes - interest, taxes or "other carrying charges" on a year by year basis. It is important that you keep track of what you have elected to capitalize, because the whole point of the exercise is to have the capitalized expenses in your basis, when you sell the property. https://www.forbes.com/sites/peterjreilly/2013/05/13/electing-to-capitalize-expenses-can-pay-off-on-sale/#55de7e670f01

What? You say the auditor is requiring your client to prove that the people he paid cash to reported it on their returns? Did your client file 1099's on these folks? Were they complete? The Auditor can ask you for the moon. It is not you or your clients' responsibility to find out if they reported that income or not. Tell the agent to follow up back at the office and to track down the other vendors Rich

Is the son reporting the income on his tax return? I would deem the expense associated with being a Power of Attorney to be comparable to legal fees which aren't deductible.

You need proof EVEN when the person reported the income on his 1040!!! Remember that auditors DO NOT have access to all filings... they only get access to the account they are auditing so they don't know if the person reported the income or not when they are auditing your client's return.

I asked Drake for the prior-year programs. They gave them to me, gratis, for the prior years that I needed.

Max, no, it is 3 years from the due date including extensions for the year of the loss. Again, from sec 6511(d)(2)(A): That same rule is also expressed in the section I first quoted from the IRS manual. Please see #1 below:

Agree with cbslee. Plus, ATX will cut you off from its server so those back year returns you'd prepare would be paper-only whereas those prepared in Drake could be e-filed. I think once you get used to Drake you won't want to go back to ATX anyway.

If your clients report payments on a 1099-MISC, this may not be sufficient proof to satisfy an audit, even though the 1099 was properly filed. If the recipient of the payments did not report that income on their tax return, other proof is needed. This happened in a recent audit to a client of mine who made cash payments to subs. The proof could receipts, or a written statement from the recipient that the money was received.

And yes - he ended up taking 100%.

Thanks, @Catherine and @Abby Normal! I was having nightmares about it last night. Their mom does the books on Quickbooks online. I don't think any of the accounts were reconciled from the day they started. I just spoke to her and requested access. Company's initial filing was 2011. I'm also not sure if they've ever filed a sales tax return. It's an e-commerce business. I'm afraid to ask.

Tell them you need everything entered in QuickBooks with bank statements reconciled from the beginning... or they can go somewhere else. And that you'd be happy to enter it all for them a $5,000 retainer. How can a company with mid 6 figure sales not have any books! The IRS would slaughter them on an audit.

You actually seem to have made a good start already. I might recommend that you keep a bottle of your favorite tipple at hand while working on this one. If they kept Excel records, ask for those at least. Bank statements (they have a separate bank account, I hope!) for the years in question. Maybe back to the beginning. Mr 60 needs his K-1 and amended return for 2016 regardless of when the buyout happened. Mr 40's might be OK for 2016, unless he ended up taking 100%. ONLY do this one on a retainer basis. It is a royal mess, and you need to be paid to fix it. If they won't do a retainer basis, give it all back now. In addition to the headaches, you are putting your professional reputation on the line by presenting returns completed on incorrect and insufficient prior data. Never worth it.

Should go to Form 4835 then.... The 1099 from the non profit seems "normal" if she was the only one paid. Pretty easy to check the status of the NP on Guidestar or Charity Navigator to see how big they are/busy. And attorney getting a K-1 from the partnership is pretty typical as well. She might be a bad "DIY"er, but otherwise, what are your concerns? We clean up messes all the time. And then she might start referring folks to you that need tax help. Rich

Yes, the limitation for a partnership is ordinary trade/business income or loss without t/e income and without the deductions for guaranteed payments or the 179 itself. Marie, do not override. If the limitation isn't met at the partnership level it will be a carryover and won't be on the K-1. Abby Normal's suggestion will work, if the partner really wants a higher deduction now.

I'm absolutely giddy. (stated completely deadpan)

It sounds like the TP's intention was for the property to be held as investment, and property doesn't always have to be rented to be considered investment property; it could be because of its potential to appreciate in value. Mortgage interest could be investment interest expense reported on the 4952, other carrying charges may be capitalized (requires an election), and obvious items that are required to be capitalized on any property would, obviously, also be added to basis.

This gal is only renting land. She is not providing any services. Sch E rental income.

Download all forms for all states too.

I agree with Catherine, don't rely on software. You should understand NOL computation upside down and backwards before proceeding.

DANRVAN, thank you for the references. Your explanation of the my client's thought is no doubt spot on. I will be discussing this with him in the next two days.

I have been using prior year Drake programs, since my ATX 2016 program will no longer open. Since I did not buy ATX 2017, ATX will not support any of the prior year programs that I purchased.

Oh, it won't be cheap! Yes, someone else is doing the 990. One of the K1s appears to be a law firm and her name is on the title of the firm. My guess is that it is a family business. They are probably setting up all these K1s and they probably set up this "non-profit." Me thinks her 1099 for $7k means it's not really a non-profit at all. It's legalese. The farm rental income will go on Sch E out of my office. They are not performing any actions or services, so it's straight rental income. Since I'm not following another professional, just an "Attorney" DIYer, I'll do it right.

I wouldn't touch this for double or triple the normal fee !

My sympathies, @Edsel! Those complications just make it all worse. First time I did an NOL/1045 I did it three times with the same info and came up with three different answers (on ATX). Finally did it by myself, on paper, and then strong-armed the software to come up with *that* result (because I knew how it calculated, I decided that one was right - it had the other advantage that the result almost matched one of the three by computer). Then I took motrin and had myself a lie-down for a while, to deal with the massive headache. Either I've gotten more used to them, or Drake makes them easier. Maybe both!