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Please don't laugh at me. I did that. My Dell fans kept breaking and overheating the computer and frying the motherboard and video card, and Dell argued before they'd send out a tech to replace the fans again and again. So, I brought out my small fan I bought for Appalachia Service Project and set it on the floor with the CPU, aiming at the area with the most faulty fan. I nursed it through the prior tax season that way. It bought me time until I was less busy and could accept the replacement they sent me and set it up. My feet and legs got really cold during that winter, because the computer and fan were on the floor under the "table" that reaches out from my desk. Lots of air circulating. But, not overheating with the fan sitting there. I'm all for free, low-tech solutions to high-tech problems.

When he said carryover basis, it means that whatever those balances are on the books of the Sch C on the date of transfer come over exactly at those same values without adjustment to market value. If the Sch C was a full calendar year and the S Corp began on Jan 1 of the next, the fixed assets would transfer in to the S corp at their cost basis and accumulated depreciation would also transfer in at the value on 12/31. If the transfer happens part way through a calendar year, the depreciation isn't calculated as 2 short periods. You would have to calculate the full year as if it was one ongoing entity and split the full year depreciation expense for the year of the transfer into its 2 periods. Start with accum deprec at beginning of the Sch C's year and add the depreciation expense for that part of the year that the Sch C would report and add that in to get the accumulated depreciation at the date of incorporation. Then, on the S corp books, recognize the rest of the depreciation expense that relates to the remainder of the year. You might have to enter those periods' depreciation expense manually as overrides to get your program to report the correct expense, depending on what program you are using. In the S corp's first full year, your program should then be able to handle the calculations without overriding.

The carryover basis just refers to the fixed assets. You just keep the same depreciation schedule. Cash, inventory and any other assets also come over just as they are in the Sch C, as do all the liabilities. So, yes the ending Sch C equity is the beginning stock basis for the S corp. I would show it as Capital Contributions (line 2) on the ATX Shareholder's Basis Statement. ATX does a pretty good job of tracking shareholder stock basis. My one complaint is that when there are suspended losses due to lack of basis, it doesn't keep a detail list of what the suspended losses are made of (ordinary loss, Sec 179, charitable contributions, etc.). It just gives you one lump figure. It does keep a detailed list in the 1040, and since you're doing the 1040, it will be fine. I complained to ATX about the lack of detail in the 1120S (and 1065) basis worksheets and they told me I don't need it. I assured them that I do because suppose I'm doing the 1120S but one of the shareholders uses another preparer for the 1040. They need the detail. The main things you need to know is that basis can NEVER go below zero. Distributions in excess of basis are taxable as capital gains. ATX defaults them to short-term but after the first year they're long-term. And if distributions are not all allowed in AAA (M-2), you will have differences between AAA and retained earnings. 90% of my S corps have these differences. AAA is meaningless as best I can tell. I've never needed it for anything. Basis, however, is extremely important.

"Other" and list it as seminar expense.

Otherwise known as a PITA.

Keeps the dust out too.

Advanced Tax Calculations? I assume they mean Taxes Paid to other Jurisdictions. Hopefully there aren't many other calculations they are keeping from their Max package. The taxes paid should be part of Max. In my opinion, you shouldn't have to pay more for that feature. I like how they spun that..."Due to high demand." Yea,...okay.

If it is legitimate expenses and there is not a line that better fits, use it. I have seen Sched. C with almost every deduction listed there instead of on the front.

Unfortunately, it IS that bad. One of my acquaintances makes a habit of asking high school and college age kids wherever he sees them (bagging groceries, clerk at a convenience store, etc) what years were World War One fought, and who the US fought against. Not a one of them has ever been able to answer him. A few have been able to answer for WW2, but some of those gave answers learned from that alternate-history movie, Inglorious Basterds. So they are learning false history if they are learning anything at all.

I can't remember which late night show it is but these type of (difficult) questions are asked on the street. The answers really make you wonder if people are paying attention in school, or if they really care and would rather be texting, daydreaming, or maybe they have a learning disability, because there is really no other excuse for the ignorance. They don't see the usefulness of what they should be learning in school. Take algebra for instance, what possible use could there be for it in life they think. I for one use it all the time in landscaping, personal financial decisions, cooking....the list goes on. If a kid isn't made to realize early on it's better to work with your head than your back, they may be losing out. Parents should listen to that song, and "teach your children well." In our field, many people can't even grasp the basics when you try to explain the difference between a tax deduction and a credit. There seems to be no computing or reasoning ability in the head for the average Joe. A smart client makes our jobs so much easier.

Oh, I wouldn't take it too hard, my friend. These things are done mostly for entertainment and he most likely quizzed a few dozen beachcombers (some knowledgeable, I assume) before distilling these results. Besides, they were largely clean-cut kids (never mind the tattoo) and that's encouraging nowadays. The cute girl was funny too ("Go America!").

What are our schools teaching the kids? How can we know where we are going when we don't know where we have been?

Laugh at you?? I'm taking notes...

If it's mostly for marketing purposes. If not, ignore me.

Yes, me too. You can go too far in either direction. LOL.

Continuing Education

I like "Marketing Seminars Expense".

Open 1040-ES. Click the options tab at the bottom. Make sure the box is marked to print the vouchers you wish to print. Include the range of vouchers you wish to print. Then print to PDF again.

^^Thank you for the detailed response. I'm able to calculate the current year ins and outs, just wobbly regarding the beginning #. In the above, there seems to be a conflict in saying the 'carryover basis equals fixed assets' and then saying 'equity is the carryover basis'.

Andrea, if you want to keep this client when he's an S-Corp, there's no time like the present to get good at something new. We are all terrible at things until we are good at them. You can do it. Heck, I think half of my job as an adult is to Google things. We are here for you, too. And good ole IRS publications and instructions are invaluable. They act like they hate you at first, but it's an act to see if you'll hang in there.

Well...as Pop used to quote: "Everyone to their own taste said the old man when he kissed the cow." Personally, I'm like you; I much prefer the written word (there's something comforting about the wordsmithing craft). And others' advice about keeping it as short as possible is right on the mark. But, having said that, I had the following problem a couple of years ago: When filing a first quarter 2014 paper 941, I accidentally used a 2013 blank form although wages, withholding, calculations, etc. for both years were correct as filed. Client got IRS non-filing notice for 3-31-14. I check it out - send in brief explanation. IRS writes back (12-31) saying they're working on it. Nothing happens. I write again (4-15). They write back (7-15) saying they have graciously fixed it even though I did not properly use a 941X. I assume all's well until SSA writes (11-7) saying 2013 941s total $4K more (exact amount of 3-31-14 941) than the W3 I filed. I write IRS a looonnngg letter (11-24) explaining in detail what happened. They send back a $600 bill for non-payment of 3-31-13 taxes plus a year's late charges and another non-fling notice for 3-31-14. I give up, call IRS Taxpayer Advocate, am astoundingly lucky in that call goes through within 3 minutes, the sharp female agent has me fax a POA, I explain the circumstances, she pulls it up onscreen, says (of IRS' actions) "This is ABSURD!" I hear keys clicking and she fixes it on the spot. Don't know what I'd have done otherwise. And...that's how a nightmare can evolve from a little bit of nothin' and how a telephone rescued me. Paper's always worked best (for me) so I'll probably stay with it, but it doesn't seem like it used to be this hard (or maybe the clerks are just gettin' worse). Best regards and good luck. BB

Yep, that caught my attention too. A smart reviewer would note Rita's closing and say "It all looks good to me. Case closed."