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Good question. If i am not mistaken, SSA will look at the amount reported on the Schedule SE for earnings from self-employment and therefore the recaptured gain/capital gain will not count against what he can earn for social security purposes. But I am not sure.

I don't know what the freebie attorney was going to do. They were having trouble getting the title free and clear of the debts. The attorney wanted me to prepare the gift tax return and take the kids' value. It was an insane valuation. I am just glad to be out of it.

Legal transfer and documentation comes first.

Congress has been under-funding the IRS for so long, I usually give them the benefit of the doubt when they screw up. I'm glad the administration wants to fund the audit department better, but I hope they also increase the general funding. Meanwhile, i have a printer I'm not using....

Maybe it was his barber. Which reminds of something that happened a long time ago. My Dad was an expert at handicapping horse races. He was so good that word got around and a wealthy customer of the company Dad worked for paid to have him wire (telegram) him picks whenever he had something good. This went on for several months and one day the customer's barber also gave him a tip. The man said to himself, that's curious that's the same tip my dad had sent him. What a coincidence! The next time he went for a haircut the same thing happened. He got another tip, same as the one my dad had sent. So, he asks the barber, where did you get the tip and the barber said, "Oh, the telegraph operator is a great horse picker. He's been giving out winning tips for two months now."

It's official. Hiho Hiho, it's off to Ag I go. I wish you all the best! Thanks again for all the feedback over the years (whether I was lurking or active )

Well, you could see if the operating agreement gives the newcomer a 35% capital stake but 0% income/loss. But if that's a different class of stock than the original owner, then the company might've lost it's S election.

I am no s-corp guru, either, but the partner will be taxed on the earnings. If he doesn't want to take a distribution, it can be left in the company as retained/accumulated earnings.

I think the plan is to have the proceeds from the annuity used to pay for the insurance & LTC payments. Since an annuity only pays 4 or 5 %, the client would have to withdraw part of the principle and for that there would be a penalty, usually starting at 8 or 9% the first year and declining 1% each year after. I don't see how the insurance premiums could be funded for 10 years. Annuities are usually sold by insurance companies, so in this case not only is the sales person getting a commission for the annuity, they are getting commissions on the sale of the insurance policies. Anyone selling annuities has to be a licensed insurance agent. I certainly would not give out any advice on the purchase of the annuity and insurance, but you can point out possible red flags to lookout for and to do due diligence. I always preface my remarks with a caveat by saying that I do not give out insurance, or legal advice. However, I would give out advice on any tax aspects of the plan.

There is no free lunch. The tax was deferred on the contributions to the IRA and when the money us withdrawn, it becomes taxable. Also, annuities come with a lot of downsides, high commissions, early withdrawal penalty, no beneficiaries. The client should do some due diligence and not listen to an annuity sales persons, some of whom probably rank right up there with used car sellers.

Sounds like they are getting the cart ahead of the horse. In order to file a gift return, you need legal documentation that the assets have been unconditionally transferred to the donee. Once you have received copies of the deed...etc., there is no ethical barrier to prevent you from preparing the 709 in this case. The client is rolling the dice against the Medicare look back period, as long as you have properly prepared the return you do not have any exposure.

My motto "Procrastination on your part does not mean emergency on my part". After a certain date, clients wanting to drop things off or uploading documents or finally answering those last questions are told that they will be extended and I will be starting or completing their returns after June 1st. All clients whether relatives, friends, etc. We are in business for ourselves, we make the final decision regarding our time management and mental well being. I have rarely received pushback for giving them that information and they are free to go somewhere else.

Yes, one the life lessons that I have learned the hard way is that you have to care of yourself in order to take care of others.

Triple it and ensure he leaves! lol

It's the periodic table symbol for silver. Maybe he's struck it rich. It could also stand for Attorney General. Maybe he's going to the AG office to fight all the preparer penalties he was assessed this past tax season.

Maybe this banker prepares tax returns too

I think you can use it on the insolvency worksheet that's in Pub 4681, on line 10.

If he doesn't want income then his investment should be an interest paying loan. If they wanted to do exotic allocations of revenue and deductions then they should be a Partnership.

Section 2035(a) transfers made within 3 years of DOD are included in the gross estate of decedent. Section 2035(a) transfers are gifts where the grantor retains a degree of control. That does not include bonified gifts.

Going back and looking at everything I found that the LLC made an election to file as an S-corp in 2020. I looked at the prior two years and found negative basis there, as well. The client started as an employee and then she was made a partner with a 10% share of profits and the following year 45%. So, it looks like she is a member/partner that shares in the profits (none so far) and has no investment in it. So, I would think that she just has a zero basis.

Your client will have to pay 10% penalty on the amount above $100K, unless he is 59.5 years old, 55 and separated from service, 50 if he was a public safety employee.... etc.

This is why I decided in the mid-90s to never have book depreciation. I don't have any publicly traded clients. But, to answer your question, the balance sheet is supposed to match you books, so you are correct. But he is correct that AAA should be 33,000. ATX has a reconciling worksheet for AAA to RE and get rid of the 2,000 other reduction in AAA (assuming that is your depreciation difference).

Usually, for those that come in after March 31st in a normal season. But I've been so burnt out this month I forgot all about it, so I only charged a couple of PIA folks.

Usually their bill is slightly higher plus the cost of the extension if needed. I especially take pleasure in charging the extension fees and then completing the return the day after for those special types of clients.

I needed the extended deadline. And, my clients right now just cannot get it together, or they get it together and hide it from themselves. H*ll if I know. So, yeah, they pay more than a "normal" client, but I betcha I make less per hour. One couple picked up yesterday, sweetest people ever, big project: Form 1040 with A, B, C, D, E, three 4562s; Form 1041, TN FAE and PA returns. He came in to pay this morning, I guess it would have been too easy to handle that part yesterday. Talked my ear off. After he left, I looked down at the check. Not signed. Agree with Ron: it's them, not us.

If I weren't winding down my practice or it was just cash, I might not be worried. After 42 tax seasons, I am thinking very seriously about getting out sooner than my previous plan of 70. We lost my mom and my husband's brother already this year. My husband's COPD is much worse after having Covid and I need to do more around the house than ever now. Life is too short and I think that I would like to enjoy the first several months in the year for a change. Once I hit full retirement age in a couple of years, I might just find something else to do that is not so stressful. My sister is a mess mentally and it is taking at least two hours every day to talk to her and calm her down. I can't wait until she gets another cat scan to see if her brain tumor is coming back. I still love my clients, but this year has been hard on them because I have had so many personal issues.

A gift tax return is not that hard to prepare. At some point you should take one on. Date of the gift, description of the gift, value of the gift and the donee. Pretty darn simple. As to the potential client in question, your choice, and I think you made a good one. But I would not be too concerned about the creditors. You prepare the returns based on the information provided. You are not an auditor the the IRS, nor the creditors. If a person completes a gift, whatever their motive, there is still a tax return to be prepared and filed. Tom Modesto, CA

Passed to the bene's on the K-1. Very common to see on a 1041. Tom Modesto, CA

Double your fee and hope he goes away!

Interesting you bring this up. My fees are not unreasonable. I went up some $25 on a client who I had just given his return which will get the couple a refund in excess of $10,000. I simply told him that I considered investing $225 dollars to get a $10,00 return was a good deal. He mumbled he had not got back a like amount from last year they being victims of ID theft with the 2019 return still in process. I kept silent as I had read the letter sent to them by the IRS which pretty clearly indicated his new wife had herself filed the return with her social as the primary social. And this from a marriage his mother said was "A marriage made in heaven." When you wait to become 40 years of age to marry a dingbat with two like minded teenage daughters I should have expected little else.

I have NEVER regretted turning a client away. But I have, many times, regretted NOT doing so. Run!

may 17 still not enough time

This extension has been the worst idea ever!

It's amazing how many customers think the IRS is doing preparers a big favor by giving them an extra month to prepare returns. No way. I wanted this season to be over April 15th, and I suspect most of you felt the same way. To answer the original question, my fees tend to go up during the season after I am drug through the garden on ongoing changes and PITA stuff I hadn't foreseen going into the year. So late filers are subject to the maximum fee - not by design but by what happens.

Unbelievable! The daughter of a close friend has been trying unsuccessfully to collect unemployment since the beginning of 2021 and I believe she deserves it. On the other hand I have had two clients that have been and continue to collect unemployment since 2020. One is a retired 76 yr old that hasn't worked in almost 20 years. The other is a legally blind 52 year old on social security disability that hasn't worked in over 30 years. How do these people collect unemployment? Also, are tax preparers under any obligation to report possible unemployment fraud?