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No, it should start sometime later this month. This was approved on Sept 25th and the effective date is Oct 19, 2023. Right now the PTIN renewal page says it is still processing for 2023 new apps and renewals. I got this info from the National Archives Daily Journal of the Federal Register here: https://www.federalregister.gov/documents/2023/10/04/2023-22103/preparer-tax-identification-number-ptin-user-fee-update

Very useful word, and yes it can be trained. I've trained myself to only remember tax info when a file is open in front of me. Once it's put away, I'm clueless. Stops people from asking me questions about their returns at church, in the grocery store, etc. "Sorry; can't remember outside my office!"

"The Internal Revenue Service is reducing the annual cost of a Preparer Tax Identification Number after a court ruled that the charge was too high. The application and renewal fee will be reduced to $11, plus an extra $8.75 for payment to a third-party contractor, the IRS said in interim final regulations. That's considerably lower than the 2023 fee of $30.75 for renewing or obtaining a PTIN. The move comes after a federal district court ruled earlier this year in the case of Steele v. United States that the IRS was charging excessive PTIN fees from fiscal years 2011 to 2017."

Not necessarily. Ordering rules come into play in calculating shareholder s corp basis to determine if any loss is allowed. I agree with cbslee that we need information about distributions.

FYI: Another subcontracted function not performed directly by the IRS.

A late client, into her 90's, frequently used the excuse of an active forgettery when she couldn't remember something. It was endearing coming from her and an important part of my life and vocabulary now as I near 80!

"Loan basis" should not be a factor unless the shareholder actually effectively loaned the money to the corporation himself (herself). This differs from a partnership where a partnership loan can be added to basis simply by the partner's guarantee on the loan.

1120S doesn't include a 7203, only 1040. Unless the 7203 was prepared as part of the K1 for convenience or in lieu of a basis worksheet. And I agree with you that the loss is simply carried forward and does not create a capital gain. Distributions in excess of basis should be the only capital gain issue here. And, being pedantic, basis can not be negative. It stops at zero.

see sec 179(b) on this page and then more specifically further down same page at 179(b)(6)A) where it says : and then be sure to see this page for sec 1.179-2(b)(7) under the heading "Component members of a controlled group" about allocating among the members and the statement needed to be attached to the return https://www.law.cornell.edu/cfr/text/26/1.179-2

This comes from Tax Advisor, Feb 1. 2022 Computing shareholder basis Under the normal computation rules, basis is computed by taking beginning basis and adding the items of income, reducing that by nondividend distributions; by nondeductible, noncapital expenses; and, finally, by any other loss and deduction items. Basis cannot be reduced below zero by nondividend distributions; nondeductible, noncapital expenses; and any other loss and deduction items. Distributions in excess of stock basis are treated as a gain from the sale or exchange of property and reported as a capital gain. The capital gain is long-term or short-term depending upon the shareholder's holding period in the stock. Loss and deduction items in excess of basis are suspended under Sec. 1366(d)(2) until the next tax year and are carried forward to each succeeding tax year until the shareholder has basis. If a shareholder completely disposes of the stock while loss and deduction items are suspended under Sec. 1366(d)(2), the loss and deduction items are permanently lost and may not be claimed. Any loss and deduction items suspended under Sec. 1366(d)(2) cannot be used to offset the gain on the sale of the stock. https://www.thetaxadviser.com/issues/2022/feb/s-corporation-shareholder-recomputation-basis.html If you read on. It seems that this is a murky area where the IRS hasn't given sufficient guidance.

There were no loans or any other complications. The client had a similar situation a few years ago with a different accountant and the negative basis was carried forward to the next year where it was wiped out by a large gain.

I stopped preparing tax returns for family members and etc. I asked my daughters to find someone else. Last spring, I fired the young woman who used be our dog sitter because she emailed me bits and pieces, never had everything I needed to prepare her return. I decided I was happier not knowing their financial details.

If the nonresidential portion is within the residential dwelling unit, then the exclusion applies to the entire gain except for any depreciation that was allowed. See reg 1.121-1(e) for details.

Forgettory! Excellent word. Mine is absent minded though, attributed to kids and grand kid taking my brain cells.

I once caught a divorcing couple making out in my office. Never say never....

I totally agree with Catherine and Sara EA and highly recommend you take their advice. Trying to prep the returns for both spouses in a divorce presents a conflict which you cannot be part of. I don't think a conflict waiver would work for me in this situation either. Can't even see how it would apply. Again best advice, return their documents to them with a letter outlining the conflict and wash your hands of it.

We had one "partnership" that put partners on payroll. Made the election to be treated as a C Corporation, and that ( a ) worked and ( b ) saved their bacon including late filing penalties, since C-corps don't send K-1s and get the individual deadline. (This may have been an April filing - long ago, don't recall, and don't recall off-hand if C-corps get extended to 10/16, either.)

Sounds like you will need to call the IP PIN help desk, with the client with you. At that time (once you have the PIN) you can ask how a return could have been filed for them without it. OTOH, if they can't find it - did a family member steal their info? Try to "help" by filing a return for them? A filed return with an IP PIN required is doubly suspicious.

I have paid for a customized WISP plan with someone who is also going to do IT support for me (which I've needed for a while). We just had a big long discussion about it all and I'm waiting for the plan to be sent to me. The discussion was very detailed and he brought up many items I would never have thought of. If anyone is interested, I've stated before I'll pass on his contact information. Send me a PM or an email. I have had one query from one of our colleagues here.

Send the documents back to the person whose documents they are, with a "can't help, there is a conflict of interest" letter to each. If someone kvetches about it being last minute, you could probably say that "working together" has fallen apart and you cannot be in the middle. Nothing else; let the lawyers gripe at each other! If you really want to keep one of the two, tell that person you can complete their return as MFS but cannot discuss anything about the other spouse's situation, at all. If you don't have a well-enough-trained forgettery (opposite of memory) and recall info for the other spouse that will negatively impact your retained client, tell them you can only work for them as of next year. And make sure you get an engagement letter signed from whoever you do a return for. Always, always, always. There are specialty engagement letters available online just for divorce situations. Drake has a standard Eng Ltr as part of the program. The Tax Book has an Eng Ltr and also a Conflict of Interest Waiver, too, if you have a subscription to their book or online resources.

"Page Last Reviewed or Updated: 06-Sep-2023" https://www.irs.gov/tax-professionals/ptin-renewal-checklist-what-you-need-to-get-started

I will just say it... who cares if they will save some money in taxes by filing jointly if they will have to fork it out to the lawyers. While we, preparers, hate divorcing clients, the IRS loves them because they share extra information and the IRS wins most of the time.

https://www.irs.gov/pub/irs-pdf/p5709.pdf Also, IRS Pub. 5708

I'm in the middle of divorcing couple right now. And what should be very straightforward just gets messy with people. I don't know why you are afraid to ask if they have other income they are not claiming. You should always ask that question regardless of what they have given you. It should be outlined in the engagement letter that you should always make them sign. You have to be a hard-nose with divorcing people. As a rule of thumb - divorcing people should just file MFS. Don't even entertain the idea that they should be able to get along.

you are correct. Tell her to look down at the bottom of the front page of Pub 547 Limitation on personal and casualty theft losses

I agree, 3 years ago i terminated two long term clients who were legally separated at 12/31, when i discovered one spouse was not truthful. I mailed them each a letter along with their tax documents saying that I could not prepare their tax returns due to a "conflict of interest."

You have one spouse accusing the other of unreported income. You don't know if this is based on fact or supposition or which one is being less than truthful. Tell them to each find a new preparer because the IRS would consider it a conflict of interest if you prepared both their returns. No need for further explanation. Invite them to come back as clients when the divorce is fianalized.

I don't like divorcing couples. I try to run them off by telling them that I will not do their returns unless they can work together to get the best result for their overall tax situation. I tell them they need to agree which checking account the refund will go to (if there is one) and who is writing the check to pay the taxes if there is a balance due. I promise them that if they fight in my office I will hand all their documents back to them and not complete the return. So far it has worked. But I may just have been lucky. It is a conflict of interest trap to do MFJ for divorcing couples. It just can't turn out right. @GraceNY My first blush take is the estranged spouse is angling for an argument in court that the other spouse makes more and therefore the halves should be bigger. I would run from it. Hand them back their docs and say "sorry, I cannot help at this time". Send back a certified letter the the estranged spouse terminating the engagement, and CC the attorney. Tom Longview, TX

Tell the taxpayer that whenever you see a 1099-NEC, you always ask about additional self-employment income that is not reported on a 1099, because most self-employed people have that. If they lie and say no, I'd recommend that they go to another preparer. And really, you should probably recommend that anyway. You don't want liars and cheaters for clients.

Due diligence comes first in my book. In this case the the only extra work is probably the form 2553 which is simple. An initial / final 1120-S is not going to be much different than a 1065. Sure they are a couple kids that made a mistake. If they were my clients I might give them a $ break but not a free pass to avoid compliance. Their actions created an entity where the members were paid wages and shared in profit and loss. Why not report it accordingly?

Interesting discussion. It's a balancing act between due diligence and getting the return out the door with the least amount of work possible

Abatement for ignorance of the law does not apply to inaccurate return by preparer. Late Sub S election and 1120 S covers all the bases with very little extra effort or cost.

I didn't use to have an engagement letter either but I have always had a tax organizer, which some clients filled out and other clients made a half hearted attempt. Lesson learned, now I insist that every client sign the engagement letter and complete the tax organizer. This year I handed back two client's tax organizer and all their tax documents and told them to come back when their tax organizer was complete. Last year I filed MFJ for a divorcing couple who were longtime business clients for 30 years. Big mistake, in the future I will always file MFS in this situation!

This is what I'd do. Reversing this will take forever, generate a huge bill for your services and end up at almost the exact same situation most likely. Tell the client that what they did was wrong and if the IRS requests information, THEN we'll fix it. It's not like they are shorting the IRS.

I can believe it and those are the same promises made to me. For a guy that promotes smart financial planning among many other things, this is not smart advice at all. Very poor decision to make an investment with less than sketchy return.

A lot of the stories are biased one way or another, so I am not going to post a link. But you can google the story. It is all over the web. IRS Consultant illegally downloaded decades of tax returns of the nations wealthiest taxpayers, including a "public official" widely believed to be former President Trump, and leaked the information to news outlets, most notably the New York Times. He faces up to five years in prison if convicted. ***warning - rant coming*** I HOPE THEY CONVICT THE JERK AND MAKE HIM SERVE THE WHOLE 5 YEARS WITHOUT A CHANCE OF PAROLE. I wish Congress would pass a law that says anyone who distributes taxpayer information without written (not click through T&Cs on a website) agreement of the taxpayer should face the same 5 years. ***rant over*** Tom Longview, TX

It's not well publicized but most of the data management, all of the computer programming and system engineering functions are performed by third parties under contract. Consulting firms like Accenture, Booz Allen & Hamilton, Deloitte Consulting, Microsoft and ID.me.

The story was just published by the NY Times, so it's for real. I won't post the link because you have to be a subscriber to read it. The leaker was a gov't contractor. The article explained that the IRS was so careful not to leak Trump's returns that they actually constructed a safe to keep the paper copies. Apparently contractors are not always adequately trained, which is the weak link. Why are contractors handling our tax data?

well - this just got worse. There is already a transcript of my clients "tax return" with the IRS. My client has not filed yet.