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5% is still a ridiculously high number. Farms, Sch C, and rentals have very little if any matching with IRS database. I only remember one federal notice client received over the last 2 years, and that was part of the group last year that IRS admitted were sent in error. I know you think analysis is a dirty word, but if I didn't use it on returns I would have a lot more. If client had investment statement in prior year but did not provide for current year, they are asked about it. If they only give me page 1 on investment 1099 accounts, they are asked for the full tax forms. If amounts are significantly lower without a 1099B they are asked if they moved to a different brokerage. If they are at the age for RMD's and don't provide 1099R they are asked. If code W on W-2 but no 1099SA they are asked. Even if W-2 is significantly lower, they are asked. Surprisingly, some people forget a W-2. Basically, if anything is significantly different between years, I ask. If elderly people or others that get confused about investment have discrepancy I ask them to give investment adviser permission to speak with me. I required one client to set up an IRS account and print out their estimated payments as they would often have it apply to incorrect period. As far as TT simple returns not being in error, I disagree. I had one the took the amount of 401K on W2 as an IRA deduction. If they have HSA and don't input 1099SA, they are going to get a notice.

I just read the instructions for Form 5695 and I see this on Page 1: My bold. It seems to me from your description that the residence is not her home. I wouldn't do it. Who Can Take the Credits You may be able to take the credits if you made energy saving improvements to your home located in the United States in 2024. Home. A home is where you lived in 2024 and can include a house, houseboat, mobile home, cooperative apartment, condominium, and a manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards. You must reduce the cost basis of your home if a residential energy credit is allowed for any expense for any property. The increase in the basis of the property that would result from the expenses will be reduced by the amount of the allowed credit. Main home. Your main home is generally the home where you live most of the time. A temporary absence due to special circumstances, such as illness, education, business, military service, or vacation, won't change your main home. Costs. For purposes of both credits, costs are

Don't overlook the possibility of CNC (Currently Non Collectable). Even if OIC is feasible there is still the 5 year compliance and est tax requirements. CNC will also protect future garnishments of SS benefits.

The installer should have provided them with manufacturer documentation if the system qualifies

Kentucky is slower than molasses when it comes to debiting payments. I encourage as many of my clients as possible to utilize direct debit for payments, mostly because my confidence is the postal service is declining rapidly.

Okay, I input the details on Form 4684 Section B, Casualty or Theft Gain or Loss, and the loss went to Sch. A minus $100. Her tax went from$190,000+ to $1700+ . Unfortunately the state has no mercy. Her state tax is $20,000+. They also do not have an easy payment plan without jumping through some hoops. But she is in a much better situation now. Thanks so much to you all, especially to BrewOne, for guiding me ultimately to the Memorandum mentioned above. This group is just great!

When I have two K1s, I make the basis worksheet on the 2nd K1 work out to zero each year, and maintain the actual basis on the main K1.

Yep. Check Washing. They steal checks out of envelopes. Wash off the check but leave the signature and fill it out to themselves (well aliases). They say to use Jell Pens to make out checks. The ink smears when they try to wash them.

Holy cow! That's close to 5 times national average.

I figured it out. I was just too tired to think. Yes, the beneficiaries are the payees and they are entered on page 2. The FTB should be able to match the EIN of the original withholding agent to our 592 submission, because they put the trust on their page 2 of their 592. Everything should work out as soon as the trustee signs and sends in the 592. I know why the FTB does that, they want the non-resident beneficiaries to have to file a return to get their portion of the refund. At first I was ticked because I know that is a capital, ie corpus, transaction and it goes to the trust. But I forgot about the rule for distribution of the assets generating the withholding. My bad. Seems like I need more and more brain space for all the different rules and different taxing authorities. My brain is like a hard drive from the 90's, it is too small for the world we live in today. Thanks for replying Max, appreciate you. Tom Longview, TX

Actual number of days rented divided by the number of times it was rented will give you the actual average rental period. The number of weeks available or days available do not equate to days used.

I'm with you, Kathy. I go through the return I've just prepared against the previous year's return; check line by line and then check blank 'records' (i.e. Schwab DIV that I had last year that I don't have this year). I think it saves me tons of time in the long run, and I think clients are appreciative.

One issue with the OIC approach: all returns must be filed, so she has to sign a return that shows her owing tax on the disbursement of her retirement funds. And of course the elephant in the room is getting the IRS to respond when OIC was a very slow process even before the gutting of the agency. Sorry, I didn't notice your comment that she can't afford a tax attorney.

Have you tried the pre-qualifier site? https://irs.treasury.gov/oic_pre_qualifier/

see the thread "new development in taxpayers who were scammed" and the link Lee provided. Maybe they can zero out the income? Meets the profit motive requirement.

Nothing to report other than the sale of the house. As Bulldog mentioned, the escrow deposit is basically a balance sheet transaction. The escrow deposit is part of the sale proceeds.

It doesn't help when you have to make entries on two K-1's--maybe I was working on the wrong K-1.

I might be wrong, but here is my thinking: You have a capital transaction, the sale of an asset (home) for another asset (cash). Simple balance sheet adjustment from Investment Asset to Current Asset, assuming no gain or loss on the sale. The Cash in the account still belongs to the estate. The funds may be restricted for use to pay tax, but they are still the property of the estate until the tax is paid. If you know the exact amount of the tax due, you have a liability for taxes and a non-deductible expense (for accrual accounting). I would not overthink this one. Sale of an asset for cash. Hope that makes sense. Tom Longview, TX

Bingo, when the first year of the 7203 basis worksheet came out, I had a devil of a time finding that box. I would look at your debt basis entries and see if any "mysteriously" changed to $0. Tom Longview, TX

I have a not so old couple (in their 40's), very high earners, who pay by check. I don't know if this means anything, but one of them works for Google and the other as IT for another tech company.

You are misreading the passive activity rules per Reg. Section 1.469-1T(e): (e) Definition of “passive activity”— (3) Rental activity— (ii) Exceptions. For purposes of this paragraph (e)(3), an activity involving the use of tangible property is not a rental activity for a taxable year if for such taxable year— (A)The average period of customer use for such property is seven days or less; ****************** The exception refers to the definition of a rental activity for the purposes of a passive activity only! Note how it refers back to (e)(3). This means that a 7 day or less rental is not a passive activity and the $25,000 allowance for loss does not apply. Instead the material participation rules of Reg. Section 1.469-5T(a) must be met to deduct a loss. You only use Schedule C when the services are provided and subject to SE tax per Reg. Section 1.1402(a)-4(c). If services are not provided, it is a non-passive rental activity.

They can pay at a 7 Eleven after registering on line. A bar code will be sent by email, or directly to a smart phone. Payment can be made by credit/debit card, cash, or click to pay.

How are you coming up with the average rental being less than 7 days? 49 weeks divided by 38 rentals averages to 1.29 weeks or 9 days per rental. I realize that simple calculation may not correspond to reality, but the second comment indicates it was rented all 49 weeks, clearly states several were more than a week, and hints none were for less than a week (most were 1 week).

I thought to be able to deduct the loss you only had to meet the active participation rules, not the material participation. If the average use is 7 days or less according to Section 1.469-1T(e)(3)(ii)(A), then it appears that it is not a rental activity. So would that not make it a sch. C activity, with no material participation on the part of the owner? But with all investment at risk? I am just asking - this is an interesting discussion. And I am also curious as to how the average is calculated. If 9 out of 10 tenants use if for 7 days or less, but the 10th tenant uses it for 6 months, is the average 7 days or less based on 90% of tenants use, or is it 24.5 days based on 9 x 7 plus 182 days, which equals 245 then divide by the 10 tenants.

Do you really want to face trying to respond to a letter in the summer of 2026? When all you need do now is file? And who knows how many computers will need to be pacified before you can talk to a person? Do it the hard way, and make it easy on yourself and your client.

Long time client apprised me a few weeks ago that she was scammed to the extent of her entire retirement, some 624,000. She has, I think, some dementia and is in denial. She eventually reported it to the FBI but they told her, sadly, she is one of thousands. She is holding out hope that she will not have to pay the $200,000+ in federal and OH tax due despite my caution that I can see no way out of it. She willingly withdrew all this money to buy bitcoin then gold and never saw any of it. The scammer told her that her identity was stolen and the only way to protect herself was to give them the money and they would invest it. So here we are and all I can see is an OIC. An installment agreement is for up to $50,000. I tried to use the tool for an OIC but 'we are experiencing technical difficulties at this time.' Does she need a tax attorney which she cannot afford? I've managed some installment agreements and a discharge due to inability to pay but not an OIC. Fortunately her competent sister was finally brought into the picture and I've advised her to get Form 2848. Other suggestions?

Seems like June/July is the season for most of them. What are the error percentages? 50% the fault of the IRS, either in part or in total. 40% my customers for not giving me information, or bad information, as in "I didn't know I had to turn that in" or [tee! hee!] "I forgot. Some of their excuses are quite imaginable... 10% or less are my goofs and mistakes. They don't happen everyday, but I admit they do happen. And overall, maybe 10% (at the most) of my clients receive such letters.