Leaderboard

The business probably wasn't worth $35K to the buyer. Buyers of business don't usually pay retail for the existing inventory.

In 87 when wife inherited the property, wife essentially gave husband a gift of half of the property's value at that time, so his basis is the value at the time of wife's inheritance. Then when wife dies in 2014, husband gets a step up of the other half of the property that was titled in the wife's name that passed to him. Summary: For husband's purpose of this sale, half of the property is at the 1987 inherited value, and the other half is at the 2014 value.

In my client's case, I know exactly why it is being held up (and I completely understand why). I can provide all the backup documentation for the position taken on the return so they can make a decision. I am ready to go to appeals if they deny, and tax court if the appeal is denied. When I got through to the PPL (32nd phone call over 2 days), the PPL rep told me they cannot pull the return from the department where it is held and they can't take any info from me until it is released by that department. You can't fix something if the IRS is unable/unwilling to work on the return with you. That is why I am asking my client to call their Representative. When I first got my EA license, it was not this way. The PPL was the ticket to quick resolution of disputes. There seemed to be a more professional relationship between representatives and IRS agents on the PPL that we were both working to clear up the issue and move the return to the next point in the process, either a proposed change to the return by the IRS or no change and accept the return as filed. The returns we worked on represented both our backlog and it made sense to work together to clear up the dispute. How I long for those days to return. Tom Longview, TX

My own 2020 refund was held up until I called 20 times over a three-day period in May 2022. On the 20th call, I was given the opportunity for a call back from PPS, and it actually happened. The representative resolved the issue, which may have had something to do with me making a payment with the 2020 extension request, then applying part of the 2020 refund to 2021 estimated taxes. I don't know, but she did make that observation while I was on the line. I do that all the time. Another tax pro on Facebook talked about the same scenario with his 2020 return, which is why I finally stopped waiting and started calling. It was a frustrating process, and I'm just happy it was my return and not a client's. We can never charge enough for things like this.

A full-time student under age 24 who does not provide more than one-half of her own support cannot file independently! She must check the "can be claimed as dependent by another" box and is only eligible for the nonrefundable portion of the education credit. (I sometimes do this for parents who make too much for the credit and the dependent has a tax liability that can be offset by the nonrefundable credit.)

Just to start the conversation.... At time of inheritance in 1987 wife gets full stepped up basis to FMV from decedent. At some point, W gifted half to H (per the recording document), and the basis in his hands is the same as it was in hers. So you need to find the 1987 FMV for your starting point basis. In 2014, because NY is not a community property state, I assume he inherited her half. He gets 50% of 2014 FMV basis for her half. Assuming there were no improvements or other changes to basis in the intervening years, the calculation is 50% of the 1987 FMV and 50% of the 2014 FMV. Tom Longview, TX

Purchaser doesn't. His concern is only that he paid $10K and how to allocate that for the assets acquired. Does the bill of sale break down the sales price between the inventory and F&F? Was a form 8594 prepared? That allocation is what you need to know. Seller also needs to know that allocation for reporting his side of the transaction too.

Speech to text function on my phone.

Add "Elections" form. Then the fourth tab over (tabs are at the bottom on mine) is "PPP Loan."

I think most IRS employees are doing the best they can buried under a mountain of paperwork using old computer systems that don't communicate with each other. Most of the blame lies with our elected representatives, who pat themselves on the back whenever a tax law gets passed, giving no thought to what it will take to get the changes implemented.

https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue

That's exactly why we stopped using spreadsheets and started tracking in ATX Return Manager. It was extra work to maintain a separate spreadsheet.

Turnaround time by end of February is two weeks. Becomes three weeks from March 25 on. I'm the entire staff. I worked about 72 hours most weeks, about 84 hours the last two weeks before April 15. I'm just not capable of crushing it like you did! My one suggestion: When I sat there in the carnage on April whatever it was, I told myself, "Next time, start the season with laser focus and efficiency so you're not sitting in the carnage at the end." Ok, two suggestions. I tried the drop off without looking at what they brought, and that turned out to be less efficient for me. I am better off spending a few minutes looking thru the documents with the client there, seeing what's missing, telling them, "Your mortgage payoff is not their gain, your net check is not your gain, and here's what I need," right at drop off. I do try to explain very thoroughly so something clicks, and they learn something. I memorialize what I told them, place the note on top of their documents so I don't start on it before I have everything. I thought it'd be great and efficient to scurry them outta here at drop off. Not my clients.

How I listed in the scenario is exactly as it appears on the bill of sale, the widgets just has that note. I am representing the buyer and the prior preparer did not prepare the form, I am redoing the books for the prior tax year since the client records needs major cleanup.

Here is my calculation, for what its worth... Debit....Inventory..$7,100.00 Debit....Furniture & Equipment..$2,900.00 Credit....Capital......................................$10,000.00 25k is 71% of 35k 10k is 29% of 35k Thus my above calculation. Hope this might help, Illmas

If the original 1040 was efiled, you are allowed to efile 1040X. I would create 1040 exactly as it was filed. Then I would select amend return, make the changes and create the efile file. Then efile.

aka utilizing the technology at my disposal.

Cheater! Tom Longview, TX

You beat me to the post. You must type fast..... Tom Longview, TX

I agree with Pacun. It is the same process we use here.

Then this might be a sign of identity theft.

I understand they started taking congressional referrals again in June. https://www.taxnotes.com/research/federal/other-documents/other-irs-documents/taxpayer-advocate-service-updates-case-acceptance-criteria/7dm2j

Terry D My concern is that the daughter must have done something to get the $1400 check. She insisted that she di NOT a tax return and did not go online to request the EIP. I have requested a transcript just to see what (if anything) is in her record and whether she claimed herself before I file the parent's return and claim her as a dependent to get the $500 tax credit.

Yes. Sorry. M-1

If I remember correctly, when all the laws surrounding the EIPs, no provision was made that allowed the IRS to collect on errors. Now, I could be seriously wrong here. I am still in possession of the first EIP for my deceased mother. Of course, the check is void now as it has been well over a year. However, no communications from the IRS looking for that payment. I have always wondered if the same applies to those who received the EIP2 & EIP3 in error. For what its worth, if the client has spent the funds or has cashed the check, I would tell them to watch for a letter. There is no provision in any tax software to include an overpayment or payment in error on the client's tax return. Please correct me if I'm wrong.

By your wording I assume you mean a Schedule M - 1 Adjustment?

AWLAYS use separate mailings. Putting multiple mailings in one envelope is opening the door for trouble. Individual mailings will have an individual tracking or certification proving post mark. Grouped together not so much. Good Luck

@Bart You are very wise. Tom Longview, TX

It is an schedule M-2 adjustment. Income on the books not included in the tax return.

Katherine, Your client can't be a statutory resident as he didn't spend the required # of days within MD, but you might want review MD's administrative statement from 2009 about "domicile" from its pdf: ar_it37.pdf

While hand-written charts, spreadsheets, even software may work well, they all require extra steps. You have to go to whatever system you've set up and mark off each step. Ours is a more visual system: incoming work goes in the inbox, then to the "needs info" box if necessary, then to the "awaiting sigs" box, then to the "ready to efile" box, then to the "accepted and ready to scan" box. No extra steps. I for one would forget to go to the master system to record each step, especially during the busy season.

Totally agree with the first sentence. I am not sure about the second sentence. I think you have to do a lot more discovery to come to the correct answer. Is this the only time this TP ever entered a JV to build a spec home. What was his intention when he purchased the property. How long after the purchase until he made the agreement to contribute the land to the JV. When you say he "buys real estate or puts up $" I get leary of the taxpayer's intent. But if the answers to your discovery come out the right way, I could be comfortable saying TP A just turned a cap gain on his investment. Tom Longview

There was another thread about this earlier this year, saying that a number of young adults used the Non Filers tool so that they could get the $1,400.

It's stand-alone, so you should (I don't use ATX anymore).

Heads up. NYS is giving eligible employees a bonus. Catch? it goes through payroll, but is not subject to NYS or NY local taxes. <Vent> I can see employers handling it incorrectly, and including the amount in taxable wages for NYS and NY locals, and maybe even withholding on the bonus, with employees and preparers having to fix. Employers have to apply for the money, then pay it out when received from NY. Hard to imagine something more complicated. To me, would have been more sensible to give a tax credit, but then again, their method relies on employers doing the verification, payments, paperwork, for free. Just like the Covid PTO was "no cost" to employers (ha)... </Vent>