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I think it may be even worse next year. If they signed up in November 2014 for 2015 insurance and subsidy, they are probably basing the income numbers on 2013 figures. Now, they should be able to go in and adjust it once we get their tax return done for 2014 but will they? I hope no one is holding me responsible for reminding them - I am NOT in insurance business.

JB, On a simple 1065, don't overthink it. You still have the same revenues, cost of sales, and expenses to get to net profit. The 1065 just asks a lot more questions about the partners and their business. Then it gets different when you have to put in the balance sheet (do it even if not required) and the partnership percentages to get the K-1's to spit out. ATX is not real friendly in that area, but once you go through it, it is not bad. Take your time and ask questions here about where to find things in the software. From what you posted, this is a nice introduction to the 1065 and well within your ability. Tom Newark, CA

Another point, most likely not required on your 1065, but I ALWAYS do the balance sheet even if not required. Keeps things cleaner from year to year.

You don't give yourself enough credit. From your description, it seems as though you are correct. This is going to happen frequently for clients that buy insurance from the marketplaces. They "estimate" income to establish the subsidy. Then we, (the bad guys) get to tell them that the IRS is going to snag some of the refund due to the differences between estimates and reality. FUN FUN!

Are we having fun yet? The advanced credit was based upon her projected income, family size and insurance plan she was buying and how the income flirted with the poverty level or 4 times that number or something like that. She would have had the choice of taking the credit in advance or taking it with her return. Since she took it in advance, as you are seeing, she may have too much advance credit and have to pay some back. Don't cry too deep of a river for her. It was still a good deal for her. But your point is very well taken - this is so weird! By the way, you are seeing first hand how the preparation fees are going to be higher for those that can least afford it. And trust me when I say that I have, six times now while I have been typing this, got up and then back down off of my soap box. I am fighting hard to stay off that.

A rose is a rose, by any other name, it is still a rose. They can call this whatever they want, but on audit, my bet would be it is, for whatever reason, a disguised installment sale. Are there depreciable assets that Daddy does not want to recapture depreciation on? I would not treat this as any kind of 1099, but as what it is, an installment sale. That is my opinion, for what it is worth.

Not guaranteed payment unless the partnership (LLC operating) agreement says so. Not salary unless the LLC is set up to do payroll. It would be a draw just like you would have a draw on your Schedule C clients. The bottom line of the 1065 goes to the K-1 which goes to the members individual 1040s. My guess is it, the K-1 amount is also self employment income. Are you certain that the multi-member LLC has not elected to be taxed as a different entity, say 1120S? Just asking to cover all bases.

Over the decades, the CPA organizations have promoted themselves so well that the American Public thinks that a CPA is the only accounting/tax credential that has any value. If the IRS would copy some of those processes for EAs and then new FSHP designations we would have much more recognition. Ask any CPA about how much of the test was concerning taxes. Answers are 10-15% of the test. Ask an EA how much of the test was concerning taxes, answer 100%. Therefore, the EA test has more validity at expressing the tax knowledge of the person taking the test.

I feel that I have a responsibility to myself as well as my clients to acquire as much knowledge as I can. Even after the fact, I am not sorry that I took the RTRP test. I have voluntarily attended tax classes and seminars for many years now; not because I enjoy them or can afford them, but because I feel that if I walk away with one new piece of knowledge; that is something I didn't know before. This year I walked away with several pieces of knowledge and the fact that I had taken the RTRP qualified me for the AFSP; and I know that many of you will say FWIW. Well, it is worth a lot to me because I know that I am doing what I can to make my business more productive and worthy. I am not responsible for unethical preparers, but I am responsible for ME and have an obligation to the clients who put their trust in me.

This is the last season for me and I am not sure I am going to make it through the whole season. I cannot find a cite that states we have to use the W-2 for preparation and not the last pay stub but I know we have to. I have a client that has made an appt. called 7 times and even had her MIL call then the last call was...I don't have husband's W-2 but we can use his last pay stub. Sorry....make another appt after you have the W-2. She makes an appt for Monday but doesn't have the W-2 yet...really? Please tell me where to get the cite so I can include it in her packet to take home. Another client called, made a appt. didn't show up, called the next day and said her boyfriend didn't know about the appt so he let her sleep. She wanted another appt as soon as possible but was told that 3 people wanted her original appt time and I was booked for 2 weeks. Another local bookkeeper e-mailed me so I could create 1099-MISC for one of her clients. She did forget to put amounts in the e-mail. Last year I did this for her and she called a couple days later to say that the amount was incorrect and I needed to re-do the 1099-MISC. This year I told her that I didn't buy the software. Mostly rant and thanks, Karen

I have been doing that Tom. I keep getting "What am I going to do?" and they get really upset when I say "I don't care". I am moving to so I won't even run into them at the store. HEE HEE Still would like to see something in writing about the W-2 in my hands prior to preparation. Karen

I played with an 8962 before I plugged some of my income into the return. At 38k for a single 54 year old with no dependents I was getting about half of my premiums paid back with a credit; over 3k in credit. I was very surprised at how high the credit was. and 400% of the poverty rate was much higher than what was in the calculator I used to determine if I should even buy through the marketplace. So the credits can be quite high. Then I put in more income.....

Also, there is a new rule this year regarding In Home Health Services provided by a family member. I just ran across it at my update seminar and I don't have all the details in front of me. The way I understand it, those payments will not be made on a 1099 or W2 anymore from the counties. I will post more when I get back to my tax office if any of you are interested. Tom Newark, CA

No reason to feel dumb. Geez, for real, if that is how we are going to gauge people, they do not come dumber than me. And I say that with complete sincerity. I would set up an intangible on the clients books and call it "Client list". I would take some reasonable number of years of payments for each client that Dad will receive payment for and call that the sale price and start amortizing that as of the day of the transaction. The offsetting entry would be to Note Payable. All payments then would be debited to the note. Now the right way to do this would be to take the present value of the revenue stream and use that number. The difference between that and the actual received would be the interest component of the payments. It would be interest expense to son and interest income to Dad. The rest of the payment would be capital gain to dad. If you are not comfortable with present valuing, put some real numbers on here and I am sure someone that does that can help you. And keep in mind that this sale price will be subject to adjustment at the end because you are using estimates (completely legit) now.

Deb, It really was a sale. Again, they can call it whatever they want. If Dad no longer has any interest other than a % of revenue, then he is receiving payments for the sale of his client base, goodwill, what have you. And issuing a 1099 Miscellaneous is the wrong thing to do. This is often the way professional practices are sold. The seller will get a payout % of continued billings that were in place at the time of the transaction. That is no different than what you are describing. If I sold my practice like I just described to fund my retirement, it would be a sale. Continuing the argument, in proposing the transaction the way you are, you are penalizing the Dad by converting capital gain income to ordinary income.

I agree with Ron that those payments are part of the purchase price and you have an installment sale. Since you won't know the final price until the end, you'll have an adjustment of the final price in the last year. Is there a limit on the number of years these payments will continue, or was 2014 the only year? One reason a sale may be structured like this is because the purchaser will not want to pay full price if customer retention could be an issue, but may not be the case here since it is a son that presumably worked in the business.

Agree with both of you. If the realtor received a 1099 for commission he didn't received, he should either take that issue up with whatever entity paid him to have the form corrected, or he should report the gross amount and take the discount as a business expense. The discount he allowed your client in no way falls within the definition of any payment that would require the issuance of a 1099 to your client. That doesn't even make sense.

Well, partners don't receive salaries. See the operating agreement as to guaranteed payments, likely they don't have them. More likely these are just distributions from the capital accounts.

I am a lifetime member of the NRA. Does that get me any points?

You could do a nice screen shot of your Avatar and frame it. After all, "ATX Supreme Guru" just about says it all insofar as most clients are concerned.

Maybe we should get a certificate on this forum after answering some questions and posting important information about tax matters. KC and Judy should decide who gets the certificates and they should be huge posters because you learn more here than anywhere else.

Well, the cleaning lady just cleans. If I don't clear off the kitchen table, she can't wash it. If I don't get stacks of newspapers off the living room floor, she can't vacuum it. Today she really couldn't clean the family room, because I have two corners of it filled with boxes I'd moved from my office when clients came and from my usual "holding tank" guest room when I actually had guests and some more stacks that are hubby's plus some stray Christmas boxes and things. Once upon a time I cleaned my office well at the end of tax season and before the new season began, but now the season never ends. One time I'd even picked up enough that the cleaning lady cleaned my office. But, I can't get things cleared out enough to really dust and vacuum. It's one section at a time when I expect clients. I have a friend who sees clients in his conference room so his office can stay the way he works. I have met clients in my dining room or living room when I don't want to move my stacks while in the middle of a complex return. Thank goodness most use the mail slot in my front door, upload to FileShare on my website, FedEx to me, etc.

I am SO jealous. Cleaning Lady? You can't even see the top of my kitchen table which still has the Christmas tablecloth on it. We had the carpenter who is working on our enclosed porch and my assistant for lunch today. Had to move around papers so we could all sit at the table. My assistant actually furnished the lunch of homemade bean soup and homemade bread. What a blessing. My office is the cleanest room in the house because it is the newest. One of the few things I insisted upon when we were building my office addition, was a deadbolt lock in addition to the other lock. Also, the full door glass has the blind between the panes of glass so it can be opened during the day and closed at night and on weekends. NO dust on THAT blind.

Had an attorney in my office yesterday with a mutual client. I do not work with this attorney much but he was sharing with the client and me about his recordkeeping system. He keeps everything in a desk draw until it gets too full (and in his car console) then he transfers that to a big box in a closet and repeats that exercise until the end of the year when he goes through it paper by paper to get it organized for his tax return. And he went on to share what his wife does for a career. Are you ready for it? She is a CPA. Some people just can not be helped.

How is the IRS going to even hope to enforce the ACA requirements? Most people are simply going to check' full year coverage' on the 1040. Do health insurance companies have to file anything with the IRS that indicates who had coverage during which months in 2014? Not to mention coverage for dependents, plus the partial year coverage scenarios, and all the exemptions. So many exemptions..... For the advanced premium tax credit I can understand how it's simple determine if someone received the credit, and confirming if the person had coverage all year. But for everyone else, it just seems unbelievable that any of these can even remotely be enforced.

http://www.irs.gov/uac/Tips-for-Choosing-a-Tax-Return-Preparer See bullet point six. It's probably in here someplace: http://www.irs.gov/pub/irs-pdf/p1345.pdf especially pages 11, 12, 27 (what to keep)...

Something you do at your desk because one of the front office people offered to g pick the food up. Lunch is that collection of those brief moments between pages on the computer that you take a bite of the food brought to you.

I know it is early in the game for this kind of comment, but the facts are the facts, what's a lunch, Jack and Eric?

Clarify a couple of things if you could. The attorney said that your client is going to receive a lot of money to manage the wife's care so she qualifies for aid? If she not well and needing care now? Or is this a plan to spend down the estate so that she WILL qualify for aid (when the time comes)? The personal service contract makes sense if she is not well, but what is the purpose if she is well. My understanding is that the spend down only works if the care that she is getting at home is just a substitute for the care that she would get in a nursing home. In other words, but for the care that she is receiving now, she would be in a nursing home. Not sure about the Schedule C - I would have to research that. If it is Schedule C, then I guess you could fund a retirement plan with most of it. That may be what the attorney is referring to. Anyway, those are just some things that pop into mind right now.

Plus if you put it on a 1099 the IRS will definitely assume that it's self employment income and make you prove that it isn't. The only other alternative would be to create a non compete agreement going forward but that door is closed for 2014. I definitely agree that treating it as a sale of of goodwill or a client list is by far the best approach.

oh, the chocolate lab, for sure!

Client is condo assn. that files 1120-H. I inherited them, there isn't a balance sheet and the income is all exempt from condo owners and the expenditures are all for exempt purposes per the 90% test. So a capitalization policy when they don't have any depreciation? A supplies and repairs policy? Should I just whimper (thanks, Rita, for the perfect reaction)and send them on their merry way? It's always been so simple before.

I occasionally have a new client ask if I am a CPA. I give them a firm "No, but I do have a few CPAs as clients!" My endorsements are also hanging on my office wall and they can look at them or not; as they choose.

I thought it meant "Awesome Tax Xpert". I think you could sell that concept to most clients.

I do about the same as Catherine. If clients mention my working alone, I tell them about my virtual water coolers such as this forum and my favorite local group the NY/CT-ATP (Association of Tax Professionals) if I need to stress that I have backup when needed.

Our office is fairly paperless, but not when the return is in progress. We keep the client docs with the return until it is completed, then scan them and give them all back to the client when the return is picked up. This way you can mark right on the document that each number has been double checked, or put a sticky that this particular doc hasn't been entered yet because you need further info or to do more research. We track all returns with a cover sheet (yes, a physical piece of paper). Docs that are brought in with appointments, mailed or emailed in get attached the the sheet, which lists the client name, contact info, date received, and who is working on it. There are lines on the bottom for the preparer to list questions, missing info, etc. There are also places to put the fee, method of payment, whether 8879 has been signed, whether 8453 has to be mailed, that the return has been placed in our electronic file cabinet, that it has been efiled, whatever. When efile has been accepted, the sheet is scanned and shredded. The sheet is essentially our record of everything and serves as a tracking system. The sheet is filled out for every client. If it's an appt at your desk and you finish the return on the spot, it goes into the "efile" tray, then the "awaiting acceptance" box, then to the scanner and shredder. No way to forget any of these steps because that piece of paper is somewhere in the line. For drop-offs and mailed in returns, the sheet goes on top of the client docs. In my office the whole thing then goes into my in box. If I get to work on them and find I'm missing info, I contact the client and put everything into my "need info" box. When done, I give everything back to the client and put the sheet into the "efile" tray, or into the "wait" tray (need sigs or payment). I'm making it sound more complicated than it is. Basically, in my private office I have an in box and and "waiting for info" box. The office manager has a "ready to efile" box, a "hold" box because we need sigs or money (or just want the client to have a few days to think it over), and a third box for efiled returns awaiting ACKs. The routing sheet makes all these rounds. Once efile is accepted, the sheet goes to the "scan" box in the receptionist's office, then into the shredder. You can see everyone's workflow just by looking at the size of the in box or need info box. Both are always overflowing!

Not acceptable, says the state of Massachusetts. File cabinets and desks must have locks; ALL client files must be in and locked whenever you are away. They do NOT care if you are the only one in the building, or that you are locking the door to your office while you dash to your car for the second load of office supplies from staples that you left for later, or that your office is locked. Plus encryption on ALL disks and drives. Plus NO ssn's on paper copies. Plus password-protected pdf's of ALL documents on CD's given to clients. The usual one-size-fits-none regulations: what might make sense in a huge company with cubicles does not make sense for me and vice-versa. The intent is to "prevent" identity theft. They could have merely said, "if someone's id gets stolen and it's traced to you, you're dead meat" and let me (and all others) figure how to protect the data. Instead, they have to micro-manage every paperclip.

For next year, employers will be giving their employees a 1095. This is when enforcement will start. Right now, only the purchases off the exchange can be verified for PTC. Tom Newark, CA

Except the client did the work themselves.. and hopefully did an accurate job.

I just hope that Eric will take one of us up on the offer. It is a small gift we can give him for all he does here.

The offer stands -- and I can pretty much guarantee that you would NOT be the most disorganized client I have, by a substantial margin. The worst? Therapists. Universally horrible/clueless/utterly disorganized with money. I have never had a therapist client who has *not* been through bankruptcy AT LEAST once. (edited for spelling error)

I don't have anyone prepare my return because I keep terrible track of my expenses (doing my taxes involves an extensive and careful search through my email over the past year for receipts). 3/4 the reason I don't claim OIH is because I'd have to dig through EVEN MORE records. I'll do the simplified OIH method this year though. With the amount of money we spend renovating our home, and the size of my office, I know I could get more, but I don't care. I can't be bothered. And I'm sure that's the worst kind of client to have, so I'll save you all the trouble--seriously. The shameful disorganization of my finances should be my burden to deal with. The level of discomfort that I feel when dealing with these things is so high, that there is no tax refund amount that could get me to file before April 10. I could win 100 million dollars in the lottery, and I would put off receiving it as long as possible due to the paperwork that would be involved. Nice of you folks to offer though, thanks anyway

We have offered to do his return for free. I would do it, but I don't have the state expertise for where Eric lives. But I would learn his state rules if he asked me to. I think I am not the only one on the board that has made the FREE offer to Eric, and it is a standing offer. Tom Newark, CA

  I would consider myself an average taxpayer, but I am WAY too paranoid to take that route.  The closest I get is "it's unfortunate that I have to check that box, my return just took a nosedive" You're right though, they shouldn't show the average person their dollar figure in real time--it's probably irrelevant and just acts as a temptation to be dishonest.   I've never used their online service, which at the price mentioned seems awfully expensive considering their home and business software for doing a Sch C costs less than that, even if you include federal and state efile.  I find that it's pretty thorough, but it takes me FOREVER to get through my return.  I read and re-read every stupid box that pops up to make sure I'm getting everything correct, and then i leave my desk because reading that much gibberish makes my head hurt after a while.

A cousin had a defibrillator implanted. Surgeon told his wife they test it while he's still on the table via remote control. Wife asked if she could buy a remote. As far as we know, the answer was No.

For your information the fraudulent tax preparer doesn't sign the return and doesn't need to register with anyone. So, that will not be stopped. What will be stop is the fact that there are many un-prepared preparers showing their clients that they know because the IRS issued them a PTIN. They frame that letter and clients think they know a lot when in reality they don't know anything. Your ideas are coming down the pipe, but the IRS has to start somewhere. So the starting point will be to force tax preparers to take exams and then other actions will come. I learn something from the classes and if I were not an EA, I wouldn't take them because I don't want to fork out 200 bucks or because I don't have time.

Sometimes I have a prior year return open, usually the .pdf. But, most of the time the prior year numbers/info on the current year data entry screen is sufficient. Today my office is a huge mess. My first firm appointment isn't until Monday 2 February, so I'll probably clean that weekend !!

My two year old computer was getting "windows arthritis". Installing an SSD as my main drive breathed new life into the computer. It was never this fast even when brand new. All my staff have two monitors. Did that at least a year ago. I have three, cuz I'm the boss.

I do not have the physical room for even 2 with the current layout of my office. This WILL be changed for tax year 2015. I am totally jealous of your three monitors. At the firm, I have two. When I work at home, it feels like I am working with a huge handicap.

Hey Terry, I appreciate where you are coming from. I am taking a different tactic in my practice (that some may call reckless - and that is OK). I am not going to grill every one of my clients this year. There will be a couple of simple questions. 1. Did you have health insurance all year? If Yes: Did you get that health insurance on the exchange? If no: Why not? And then I am going to take it from there. I don't see any reason to subject all of my clients to the questions that may not apply to them. If they say they had health insurance all year and it did not come from the exchange, I am checking the box and moving on. If they did not have insurance, then I am going to see if there is an exception. If not, they pay up. If they got their coverage on the exchange, I am going to calculate the credit and include either the additional credit or the clawback on the return. I know I am making this out to be a little simplified, but I just can't go through the brain damage of trying to figure out every possible scenario that might be presented in my office this year. I am going to take it one client at a time and do the best I can for them. I will learn things as I go, and hopefully I will recognize when I don't know one of the nuances of the law. Not changing my engagement letter for this. Just treating it like any other provision of the tax code. Tom Newark, CA