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Returning client has married and now has brokerage accounts in joint ten. I haven't yet asked whether spouse (already filed, not my client), claimed half the divs, etc. I doubt it. Client's SSN is on the account. Is it okay for her to claim all? The only other clients I've had with joint accounts, I've split the amounts. I strongly suspect that all the money is hers. He is a personal trainer making not much money. She is a pharma sales rep making much more. It may also be advantageous for them to file jointly. Spouse has already filed, though. Is it appropriate to file client MFS then amend if it is, in fact, advantageous for MFJ? I haven't yet seen spouse's return. Client skipped a year with me but feels quite nervous that TT wasn't right. Yep, we may well amend 2017 as she completely omitted dividends and security sales. She also withdrew lots of 529 $ for both sons in college. I'm having her prepare a sheet of expenses but conversation seems to cover all withdrawn amounts as valid expenses. However she claims one son, ex claims the other. 529 accounts are in her SSN but both are named on the accounts. As withdrawals only in excess of valid expenses seem to be reportable, I have suggested that she just have handy the complete list of expenses and receipts if/when a nasty gram arrives. Other suggestions? I have two more footdraggers coming in Oct. 1. I really wish this season was over! I'm ready to send out the year end newsletter, for pete's sake!

If it is more advantageous to file MFJ, amend his return from MFS to MFJ to include her. You do NOT have to file her MFS first and then amend.

Completely agree with these statements. I think there are very few gray areas; I actually study until areas are not gray to me. I think that's part of my job. I believe the activities of the clients in the examples in this thread show active participation in a trade or business and are subject to SE tax. They are rehabbing houses, just like my older son rehabs cars. It seems that clear cut to me. The article Max posted is excellent, and I might be a little too strict sometimes. I will just add that if you truly believe you have a tossup, and you're letting your client decide how to report a flip, you need to make sure he knows how Social Security benefits are figured.

Interesting. I have filed other S-Corp owner returns, but this is the first with a loss so it piqued my interest. I can see them sending letters for lack of basis reporting if a loss if reported or stock disposal, but I wonder how much enforcement there will be for distributions only as I would think most S-Corp shareholders have distributions. It's my understanding that reporting the basis information is only required if a shareholder reports a loss, receives a distribution, disposes of stock, or receives a loan repayment from the S corporation.

Is this a question about "Audit Risk" The answer to that one is easy. There isn't a lot of it anymore. But I still sign the return based on what I know and what I believe to be what is right. And I find out what the real questions are on the return and then deal with those issues until I am sure it is ok. The original issue here, is a simple one, Dealer or Investor. Your client did three flips. Does the client currently own other properties or owned other properties? There is no bright line test in the code. Too keep it simple, I would put BOTH on the return. Take an amount from the gross sales, say 10% or 5% and that is the commission to do the work as a flipper on the Schedule C with appropriate operating expenses.. (SMR, Ins, M&E, etc.) of making the deal happen. And then the Schedule D has the house sales less acquisition, remodel and selling expenses. That is what you would do if someone was in the business of doing flips, remodels, renewals or rentals. Rich

GGRNY: Lots of preparers do not have a clue how to prepare a return above the most basic returns. The rules changed in the past two years and now we are required to provide a basis worksheet with every K-1. Not that the IRS is going to do anything with that info.... IF this is your only S-Corp, then I congratulate you on paying attention. Rich