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Just got a notice about this from PayPal. They are no longer refunding ANY of the PayPal fees when refunds are processed. This is gonna piss off of people. Many of my clients will probably skim right over this unaware. Just in case you've also got clients that utilize PayPal, you might want to let them know too. https://www.theverge.com/2019/9/20/20876570/paypal-refund-fee-policy-change-sellers-controversy?fbclid=IwAR3Hsky9TmN_uTd84i7CupJTuoFCSkwuSeYrM8jM2GVcp_D-KcHeiYrKvgk

We appear to use very different methods to decide upon positions on returns. I complete every return like it's my own. You probably do as well. Agree to disagree.

Notice 972CG is only a proposal to assess the penalties at that point, not actually an assessment. Did you respond to the notice within the prescribed time, 45 days? How long has it actually been since your response? Did you follow the procedures for verifying the TINs on file, or trying to obtain the missing ones? There are very specific rules regarding solicitations by the issuer in attempting to rectify this problem. There is no statute for when the IRS might respond, but it doesn't usually take years. You may think so though if you've had ocassion to call the IRS and be placed on hold these days! Did you try calling? Generally speaking about notices, the IRS' next step would be to either send another notice either asking for additional information or one actually assessing the additional tax, penalties, and any interest due at that time. Then, if not paid within the prescribed time, it will then send a demand for payment, and if not paid by that due date, then it sends a notice of intent to levy. Specifically in the case of the 972CG, the next step from the IRS would be either letter 1948C (that either asks for additional information OR documents that the penalty was waived) OR notice CP15/215 that actually assesses the penalty and demands payment. Are you sure that the letter 1948C wasn't received by your company and not routed to you?

Losses shown on Line 1 of K1 gets entered on K1 input screen of individual tax return & put check mark on calculate basis limitation & if you go further down on same input screen you would see basis limitation worksheet. For example if it has 10K of losses & if during the year taxpayer has pumped 10K as capital or loan this money into corporation then you would punch this amount on shareholder stock basis or loan basis then it carries this 10K losses on page 2 of Sch E. If you have losses greater than stock or loan basis these losses would not show on page 2 of Sch E but simply carries to future years to offset any future income. Remember whole premise is losses are deductible only to the extent of basis.

I would not take on the duty of being superwoman/man and let them obtain all the necessary information unless you have a retainer and you can deduct your fees as you go along.

If that is what you truly believe, then what you are doing is placing your personal opinion thumb on the scales which may make you feel better but may not always be the right answer for your clients.

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.

The only trust eligible for the exclusion is a grantor trust. see reg 1.121-1(c)(3)(i) I believe it would have been allowed under a provision of the EGTRRA of 2001, but that was subject to sunset.