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3115 charges as a separate line item too with the explanation that that is the cost of his choosing to not hire a professional in the first place and/or using TurboTax incorrectly. That's assuming you think you can train him to be a worthwhile client, otherwise dump him now without wasting any more time.

If you don't set the ground rules for the engagement this year, you will regret it. Personally, I would tell the client that it is not your practice to produce incorrect tax returns, that it is his choice to correct the prior years, but if he does not, you cannot produce a correct return this year because the carryforwards are incorrect and you will not sign a return you know to be wrong. Make him make the choice to stay or go. Tom Longview, TX

And, with his "simple" pricing adjusted for the 3115 and for his time suck to you of being a PITA.

The only way I would prepare this return is with a 3115 correcting the depreciation which would give him a 4 year forward spread on paying the additional tax. I would clearly state that in an email and as Tom says," Make him make the choice to stay or go."

Either he agrees to correcting the depreciation using Form 3115, or he can go back and cry to Ttx. I understand reluctance, but he's pushing into wanting to cheat because he sees it as troublesome and possibly expensive to be honest. Dishonesty is always too expensive for me ever to work with.

That was my reading as well. Since he took around $10,000 from his account I am assuming I would put the figure for example $3,000 on line 5. Place 5 as the exception on the exception used line on the front of the 5329 and the ATX software will compute the 10% penalty on the $7,000 unspent on medical expenses. Wallah !

If they really can't agree, have them put the three names in a hat and get a stranger to pull a name out. Seriously.

No, start with the 990-N. You can spend some time in the off-season looking over the 990-EZ, no need to torture yourself now.

Until we receive clearer updated guidance all you can do is advise your clients that you and Putnam have interpreted the requirements differently and let them decide what to do. Perhaps you could put that in writing and get your clients acknowledgement that you have informed them.

It's still early in the season and perhaps Drake isn't calculating this correctly and needs to make a program update. Have you checked the Drake forum to see if anyone else is reporting the same or similar problem? For populating the 2210 and/or the state equivalent, Drake picks up the prior year federal and state tax amounts from screen 1 that should have been created during the rolling forward of data from '21 to '22. If you are sure that the return filed did show that amount on line 30 and you would like the program to use the lesser amount of $14,506 on the 2210, you can change it to that amount at the bottom of screen 1 within the program. That is the screen that has the TP's name and address on it.

I used to maintain a separate system, but now I am using Drake whose depreciation system is a lot more user friendly than ATX.

ATX does not make the form intuitive. The concept is pretty straight forward, the income was double taxed. The US will grant a credit for the taxes paid to the other country, but only to the extent the taxpayer pays taxes on that money in the US. That is what the form is trying to do. There are more nuances to what the form does, but if you follow through the logic, it is pretty straightforward. Tom Longview, TX

If average is $50,000 or less for 2023, 2024 and 2025 you would not need to file. Instead of practicing for a return that may or may not be filed, why not spend time instead with a 990 CPE course? I would also keep in mind the practice returns will likely become public information posted for viewing on the IRS EO lookup website.

https://www.irs.gov/taxtopics/tc557

Thanks for all the feedback and good ideas. In this situation, I think this is my best way forward.

They weren't disposed of. He still owns them. Nothing until a final disposition happens. You can use the ATX disposition code, 'removed for personal use,' to get the 2022 depreciation correct, BUT that will remove the asset from the fixed assets system and you'll lose track of the assets and the accumulated depreciation. What I like to do is, use that code 'removed for personal use' and note the depreciation amount. Then clear out the disposition tab, override the current depreciation, and leave myself a note for next year to set the business use % to zero, by entering 0.001 in the business use percentage screen. I do this because I want to keep the assets in the tax software. It's way too easy to forget about that old depreciation many years down the road. If only ATX had a 'removed from service' date field so this could be more easily handled.

As an extra incentive, you can inform them that if they fail to designate a "PR", the IRS can appoint one for them under reg 301.6223-1. The PR does not have to be a partner.

If you haven’t already done so, you need to inform your clients of the BBA audit rule implications. Then let them decide whether to make the election or not. Partnerships with trust as partners cannot make the election, but an election can be made if the partner is an estate of a deceased partner. I prepared a generic letter that included the following: For partnerships that elect out of the BBA audit rules, any IRS audits will be conducted at the individual partner level. Any resulting assessments will also be made at the individual partner level. If a partnership makes a valid election out, the applicable statute of limitation for assessment of tax will be determined at the partner level and is further determined separately for each partner. If the election out is not made, the applicable statute of limitation for assessment of tax is instead determined at the partnership level.

I think it puts an audit target on the organization when you elect out. This regime for partnership taxation is not taxpayer friendly. It is designed to get the most income for the government at the lowest cost in time and effort. Someone in our government believes that foreigners, crooks and terrorists are proliferating in partnerships and s-corps and they are determined to weed them out. Enter the K2/K3. Wait until those audits start coming down. I could be all full of it on this one, but I think if you elect out, you will see more scrutiny. Tom Longview, TX

Might this partnership consider electing out, and therefore would not need to designate a representative? This blog has a brief explanation of why a partnership may want to consider this, especially this one with A & B having divorced last year. https://www.yeoandyeo.com/resource/why-an-eligible-partnership-should-elect-out-of-the-centralized-partnership-audit-regime

@Tax Prep by Deb It is facts and circumstances. Does it rise to the level of a business? How much time does she spend managing the apartment complex and what percent of her income does the payment represent? Does she hold herself out as a professional at managing apartments? Keep separate bank accounts for the payments? Derive any amount of enjoyment from the activity? Only you can ask the questions and then apply the facts to the taxpayer's situation. Just be ready to defend to the IRS when you come to your decision. Tom Longview, TX

Interesting, I used to be that arrangements like this were handled as reduced or free rent.