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Jack offers a great tip. it is usually less risky to obtain a new computer with the desired OS preinstalled, compared to upgrading an OS. Arguably the main bene is having a known working setup (the old machine) on standby for 6 to 12 months while you get moved into the new machine. Hardware is CHEAP compared to recovering from a loss of data (via hardware failure, human failure, etc.).

Have a client who owed on his original STATE return about $100. He pays it We did an amendment and he owed $100 more and he pays it He gets a letter stating he owes another $100. No clue why but he pays it. When I called they said I needed power of attorney to talk about it even though I had power of attorney and the checkbox. They hung up on me. He gets a check in the mail for a $800 refund and no explanation. State sends him a letter saying he owes $200 and he pays it. Next year we aren't submitting the efile until the 15th of April. The IRS hasn't sent him any communication at all - only the state.

@schirallicpa, read the linked page for sec 121 for yourself and see what you think regarding the period of nonqualified use as it applies to your client's fact pattern where I believe your client falls into the exception in sec 121(b)(5)(C)(ii)(I) . Here's what it says:

Find a qualified computer tech and buy a new computer. There is a chance that the server you are using will not support WIN10. I upgraded our entire network to WIN10, and replaced 5 out of 12 workstations, for that very reason. I have been through it. Get new hardware. Bite the bullet, otherwise, you will have never ending troubles from now on.

Almost cannot believe it. IRS processing must be eons behind. Last year I efiled my extension return in October-mailed check the same day-they cashed it five days later-then immediately billed me for that exact amount stating I owed them for the income tax. I mailed front-and-back copy of cashed check to expedite correction (against a board member's advice to just let it work it's way out). Thus began a series of IRS monthly letters, each advising they had received my correspondence but needed an additional 45 days to look into the matter. The fifth letter (five months later) stated that yes, they had, indeed, received and cashed my check after all and to forget the whole thing. Same thing this time; efiled and paid October 1st, check cashed October 9th, received IRS letter October 21st demanding payment of same. This time I WILL take that advice; they'll throw me in debtor's prison first.

Based on past posts from members of this board and posts on the official ATX board, your quite likely to have some problems. The most trouble free approach will be to follow the process just like you are moving to a new computer: 1. Back up everything for every year. 2. You will need to do fresh installs of ATX software for each year 3. Then reinstall your backed client files for each year. Based on what I remember from other posters, ATX doesn't respond well to the upgrading of operating systems on the same computer, I assume due to changes in the Windows Registry. Good Luck

Same thing here. Except sending a copy of the check (10 to 15 days late) ended the problem. "This time I WILL take that advice; they'll throw me in debtor's prison first." Don't you have to be in "good standing" to renew PTIN?

Thank you for the confirmation. I goofed on one of my clients and in researching this helps right a wrong. Should have known that but don't remember coming across the info until just now. Will amend and client will get a pretty good refund!

@Pacun, no, this is not correct. Please see the exception in the code sec I posted above. Because all of the rental came after the period of being used as a residence, as long as the taxpayer used it for 2 years out of the last 5, hasn't used the exclusion on another home in the last 2 years, and meets the use requirement, he or she will be allowed the full exclusion. The only thing will be to segregate out the gain resulting from the depreciation taken that will be taxed at ordinary rates.

I would invest that money on a new computer and will bring Windows 10 at least 1803.

False. W7 can be used as safely as today, via paid support, for three more years. The paid support is not cheap, but it is available.

Is she reporting on a purely cash basis because her receipts allow her to be a small business that doesn't require inventory reporting that would make her either modified cash or accrual? Artists have exemption from the unicap rules if they qualify. As for distinguishing materials & supplies in COS from other supplies, you should have that discussion with the artist. I'd think that items such as canvas, paints, frames, framing costs, hardware, freight and other expenses to acquire those items would all be in COS. Other more general supplies such as easels, brushes, solvents and cleanup chemicals or shop rags indirectly related would be in general supplies in other deductions. That may be splitting hairs and the client should be able to elaborate what is contained in each total.

Can't offer an opinion on how ATX will operate after the upgrade. But, there are "unexpected" things to be aware of, and not panic. For instance, if you have software which installs and uses a custom font, the new version of Windows may not "see" the custom font until you reinstall the application which provided and uses the font.

Margaret has it right! Love your brain picture. After 10/15, many of us are "vacationing" or needing to do this:

From handy dandy Quickfinder - If the business or rental portion of the taxpayer's home was used as a personal residence for two of the five years before the sale, the taxpayer can exclude the gain on the entire home (except for any depreciation allowed or allowable after May 6, 1997). An example provided even uses the same years as your client! So up to $250,000 less the part of the gain equal to the depreciation allowed while renting the house.

https://www.irahelp.com/slottreport/what-happens-when-estate-inherits-ira

This too is what I found out researching it yesterday. I had a client in a similar situation except it was a rental before she moved into it, do there are non qualified days, but correct me if I'm wrong, we don't go back to when the house was first purchased to establish non qualified days, we begin from January 1, 2009 correct?

You don't have any choice. Windows 7 is going away so back up your data and move to windows 10. By default, windows 7 will not comply with the security regulations after Feb2020. Do it now so you don't have to do it in the middle of tax season.

That's the first thing that occurred to me and was worried about the first time, but I timely applied for and got my PTIN back then, so nothing came of it even though it was February before it got cleared up. This time I've already applied and received my '20 PTIN even though I (officially, I suppose) owe them money. The bit about debtors' prison is just big talk, of course - I'm sure I'll pay it twice more if it comes to no pay-no file. I extend my condolences. You've one-upped me!

Indeed! As seen when the OS is updated, having application items affected by an OS upgrade causes issues (which is should not), and while the issue is MS caused, the support is pushed away from MS. There are other ramifications, but the result is still the same, so what cbslee says.

I agree, the nonqualified use occurred after he used it as his personal residence so it meets the exception. On the other hand, if he had rented it before it became his residence that would be nonqualified use.

Don't have any now; cancelled about twenty years ago after carrying it for about fifteen. Only thing that ever happened to me re litigation when I had it, is a lowlife suing his ex-wife to make her pay his delinquent taxes threw me in the mix because I'd done her taxes that year (don't know what that had to do with his tax - lawyer probably told him to sue her, her dog, her relatives, and all others possibly-involved). The debt was seven years old and a lawyer friend told me the court wouldn't do anything on such stuff old than five in AR, so I didn't even call the insurance people - just went to court and judge threw it out - told him to take it up with IRS. Didn't particularly want E&O involved anyway; I've seen/heard of them paying off undeserving people instead of fighting a good case just to take the easy way out.

There's something about days of non-qualified use, but it's different if before primary residence use (or after primary residence use), so do track down the new code before you tell client.

love you guys on this forum

My quick google search told me the taxpayer forfeited the exclusion when he converted house to business. That's why I'm confused again. I swear - after October 15, just don't ask me to do any tax work again until December 15.....

yes - so in this case the spouse did get her own 1099. I guess I had just never seen that spelled out before on a 1099 so it threw me.

I see society in a way where sense is no longer common, and where the first reaction to any issue is "it could not have been my fault, who can I get to pay". Nuisance/go away/key money is large enough to be life changing to some, and those who pay (us) seem to not want to fight with dollars, and would rather pay for the problem to go away. My first message of the day was from someone who just updated their computer to a new OS version, and wrote me a nastygram about how my software failed after the OS upgrade (it did not). Now uncommon sense would have triggered the OS upgrade as the cause of the issue, but I can be easily reached, MS cannot, so MS successfully offloads their support on others (again).

Sniffing out where data are stored requires you to be quite the computer sleuth. Besides the usual suspects (Documents, Downloads, Music, Pictures, Videos, etc.) you should look in: C:\Users C:\ProgramData First, go to Windows View settings and set it to show hidden folders. I believe both of the above are hidden by default. You can buy a relatively cheap hard drive enclosure, for the old drive, so you'll be able to access any missed files for a long time. Or just keep the old computer around, as has already been suggested. And, of course, I always recommend a backup service to keep your files safe. But that brings us back to having to know where all your important files are scattered across your drive.

New computers are needed, but the "moving" is alway6s tough, even if one practices and has loads of experience. #1 Do NOT reply on someone such as the you know who squad. While they may transfer most things, they will more than likely not transfer everything. Then, when you pint out things are missing, they cannot really help as they have their "one way" of making the transfer, and do not really go any deeper. #2 Make a list off all applications which have important data. Contact the application vendor for their instructions for moving to a new computer. The application vendor is the expert with their product, so rely on them for their expertise. Remember, software is best "installed", not copied or moved, then use the software vendor's instructions for backup.restore/moving data - after the software has been installed on the new computer. #3 Do the steps learned #2, DO NOT wipe or discard the new computer for several months (I use 6) in case you discover something was missed. #4 While I have not used one in decades, there is still likely specialty software to mass move data to a new computer. (This is likely what the squad people do as well). The problem is, things WILL be missed, and you will still have to install your needed software anyway, so these things, without loads of experience, may not really save time. If you ignore #1, those in #2 cannot help after the fact.

I have carried it for 27 years and don't regret paying for it. I have never had a claim, however it's like paying for fire or earthquake insurance. Paying for it is annoying until you need it, then it's a lifesaver.

The client I spoke with who has this arrangement has now gone to a local hospital in not good condition. I decided to ask this question to the PPS as I may now have to confront this problem. The individual with whom I spoke said she did not know in fact stating " I don't know what you are talking about" and further advised she would transfer me to another area. Shortly thereafter the phone connection ended. So much for IRS assistance.