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To be straight forward with you Edsel, if your clients truly need or want (which I cannot Imagine) financial information prepared in accordance with Generally Accepted Accounting Principles, then you need to refer them to someone who is both qualified and licensed to provide that information. GAAP is huge and encompassing. It has nothing to do with filling in a balance sheet on form 1065 or as you say "doing our job correctly". But FYI, you do not report deferred taxes for a pass through entity.

Good point about community property states, Judy. I'm in CT, but I have clients in CA, too.

In general, a spousal waiver wouldn't be needed for an IRA. However, in community property states the spouse would have a claim to any retirement savings made after marriage, but not contributions prior to that. I'm not in a community property state, but if you are advising a client that is, you'll have to take that state's laws into consideration.

@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.

@Christian, you have two different types of retirement assets in your first post, and you later brought a second storyline into the mix as well. My post was about IRAs only in response to your original question about your client, and made prior to bringing in your cousin's situation where a wife, a trust, and grandchildren were mentioned. Sara's post is about ERISA that covers most retirement plans of companies and that would include your client's 401k. IRAs aren't covered by ERISA, but SIMPLE IRAs are because those are employer plans.

That was my understanding of how things went Sara but after reading Judy's post and referencing the provided website I changed my understanding of the issue. In point of fact my financial guy was of the same opinion that the entire balance was cashed out and fell into the estate as a taxable distribution. In my client's case the fiduciary will simply have to divide the account balance into three accounts with the heirs having to take distributions as indicated by the fiduciary. This looks to me to be a much simpler process than going the extra cumbersome step of moving the assets through his estate. In my cousin's case referred to above the fiduciary simply ignored his wife's expressed wishes as stated in her will and placed the entire account balance into his account. He had provided no waiver and the attorney she used evidently was not up on the law.

Yes. I chatted with the sales person and it only reduced the price $10. He said I was getting a good deal already and there was no room for more discounts.

You have to be careful with naming beneficiaries. ERISA dictates that the spouse is the beneficiary of retirement plans unless s/he signs a waiver. I've pondered this recently regarding a divorced man who named his children as the Bs. He got remarried and later died. I wonder if his new wife has a claim because she never signed a waiver. She may not even know he had it so won't put up a fight. I just wonder if she legally could. It's generally not a good idea to let the proceeds go to the estate because it has to take the whole amount at once so the tax burden can be considerable.

The reliability of manual copy of data or apps went away with DOS... All applications should be "installed', and all data should be backed up and restored using the application's built in backup and restore functions. In many cases, the same application version used to make the backup should be used for the restore (contact the application vendor for specifics).

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!

The law went into effect 1/1/2009 so you do not go back further than that date.

Look at it this way, you can move out of your home and rent it before you sell it with out reducing the exclusion. But, if you convert a rental to your personal residence your exclusion is reduced by the portion of time it was previously held as a rental. It actually kind of makes sense.

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?