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The Senate Committee on Finance voted 26-0 in September to kill the "Stretch IRA" for non-spousal beneficiaries -- putting trillions of dollars of legacy wealth in danger of being collected by the tax man. "This is going to be big," said James Lange, a Pittsburgh-based tax accountant, attorney and author. "It's not a done deal. It's not immediately effective. But in the past when you had a 26-0 Senate vote, the legislation always became law the next year." The Senate proposal will be included in a bill called the Retirement Enhancement and Savings Act, and would require beneficiaries of an inherited IRA or other qualified retirement account to pay all taxes due on the account within five years of the owner's death. The proposed law does not apply to surviving spouses. Surviving spouses may still spread the taxes due on the account across their life span or roll the money into another retirement account.

Why is he still your client? He insults your integrity and professionalism when he accuses you the second and every subsequent time. Send him to H&R. They can ignore his wash sales and get away with it.

Why are people so afraid of the gift tax? I've had many clients believe they can't give away more than $14k a year (or $12k if they're stuck with what they heard in the past). You can give as much as you want away, but if it's over $14k you must file a gift tax return. Unless you've given away $5.45m ($10.9m MFJ), you will pay no gift taxes. You file the return only because that's how the gov't keeps track of your lifetime gifts. If what you've gifted plus what's left over when you die is more than the above threshholds, you will pay some estate tax. This affects very few people. Those with that kind of wealth usually set up trusts, whatever to avoid it. Note, though, that some states have lower threshholds. Instead of dancing around with joint accounts and such, tell your client just to give the person the money and file the 709. All they'll loose is your fee. I charge $350 for federal and state.

This is my first year using Drake also. I made the mistake of using OneDesk/OLTPro and Drake cannot convert the files. I don't fault Drake for this as these programs apparently are not quality programs. So, I do a lot of rental properties, LLC's and a few S-Corps that all have assets and am entering all of last years returns for these clients to roll them forward for 2016 when the States are released. This is really giving me a lot of practice prior to tax season. So far, I really like the program. Like Catherine stated, I have entered my prices and other setup in 2015 with an increase percentage for 2016.

There's a lot more in the law, including eliminating Roth conversions. http://www.finance.senate.gov/ranking-members-news/wyden-proposal-would-crack-down-on-tax-avoidance-in-retirement-plans-create-new-opportunities-for-working-americans-to-save

I am not sure what you are saying here FDNY. But if you are saying the example in 25.2511-1 (h)(4) does not apply because an existing account was involved instead of a new account, then I disagree. The example given is just that; an example. Regardless of whether it was an existing account or a new account a completed gift has not occurred because donor has not relinquished control and no actual transfer has taken place between A and B. Since it is a joint account, "A" could draw out the entire amount, so then what happens to the 'gift" to B? It would be different if there was a transfer of an interest of real estate. In that case "B" would have title and right of ownership in his name. In the case of the joint bank account he has the ability to draw out the funds, but until that point, he does not have control over any given portion of the funds. On the other hand, "A" has does not give up anything until "B" draws the money out. Reg § 25.2511-2(b) discusses how control or reserve of control relates to gifting.

Thank you so much for this topic. I was just trying to figure out in my software at my day job how to do this for my owner. His Health Insurance is a very large amount and I did not want him to get hit for the Federal and State withholding on his paycheck (his wife would freak if the check was not the same amount this week). Issuing a second check with no withholding is the answer. I can cut his regular check and then a second check with just the non-monetary fringe, suppress the withholding and viola....box 1, box 16 and box 14 on the W2 completed. Thanks so much for posting this. Saved me a bunch of time screwing around with the owner's last check. Tom Newark, CA

I agree. I rolled over all my settings and included an across-the-board price increase of 4%. Done.

The building isn't just $534 in depreciation, because you can section 179 Restaurant improvements. And this would qualify under that section. And then we have next years income that we would like to offset... That is why I have the questions. The kitchen equipment is easy, and then I have a building, that I can use the kitchen area, but not the rest of it. So I can place a building in service over several periods. IF I get a segment analysis done by a architect, then I have costs associated with different areas of the building, and then I can have them placed in service as the permits allow. Some in 2016, and some in 2017. Rich

Didn't dawn on me you are dealing with Qualified Restaurant Property. Now it makes sense.

Thanks for your advice. In my case, the software provider we use for payroll recommends adding the non-cash fringe to the final payroll check to bring the W2's in line. The corporate CPA has already calculated the estimated taxes for the owners, who have other interests outside the S Corp. The estimates have been made timely. The owner salary is reasonable (I wish I made that much on my paycheck). I am not worried that there will not be enough withheld for taxes, I was worried that the owner's wife would call me on the carpet for a paycheck that was not the normal amount. I am wary of the IRS.....I am more fearful of the owner's spouse. Tom Newark, CA

I decided to get Drake now (Dec), rather than waiting until late Jan as I usually do. The program just blows my mind with its user-friendly features. After paying, the download took 10 - 15 minutes. I set up a few preferences, transferred my macros form last year, and did a printer setup, all in about 30 min. Ran a pro-forma for a client and all looked good. The only thing left to do is install the state programs when they are available. Drake cannot be beat for simplicity and efficiency.

I guess the aggravation, sometimes incorrect assessment of penalties and other frustration is not important even when the TP is doing the right think or trying to correct an honest mistake. Totally inexcusable on the part of the IRS to not address any filed form.

>>>>>>exclusive right to use the money as necessary<<<<<<<< I should not have said exclusive right. My client can use the money and so can the original owner. My client wants to purchase land with a portion of this money. So, to avoid a gift tax return, he could withdraw 14K this year and put it wherever and do the same next year and then purchase the property. I can see a couple of different ways he can do this as the original owner of the property he wants to purchase has defaulted on the taxes. He is waiting for it to go into foreclosure and then attempt to make the purchase.

I just watched the Tina Fey movie Whiskey Tango Foxtrot. Billy Bob Thornton has a line I will never forget in that movie. I will clean it up for this board but you will get the idea. Tina Fey to Billy Bob - "What do you think about this war in Afghanistan?" Billy Bob - "It is like having sex with a gorilla, you keep going until the gorilla is done wanting to have sex". If you saw the movie, you know what he really said. Same principle with a fired client...it just keeps going until they are done. Tom Newark, CA

Got it straightened out with the Paychex rep. No withholding, no actual check. All is well.

Why do you have to make this amount subject to withholding. This is an offsetting entry. $ 5,700 shows on line 7 of 1040 & knocked off on line 29. I don't this amount be subject to withholding either federal or state.

I've always enjoyed firing a client because it is usually for good reason and I got peace of mind. They are usually a problem for one reason or another. The last two I fired were a brother and sister, partners in real estate wanting me to be a partner in tax fraud. I politely explained that it would be better to find someone else that may suit their needs. Yes, they got mad and said I was abandoning them but I kept my cool, gave them my reasons and wished them well. Catherine, if your guy calls again tell him how you really feel about his case and what you think is best for both of you. Or, send him to me so I could fire him.

One of my two favorite pig analogies. Here's the other one, which I try to remember when tempted to explain tax rules to some people:: "Never try to teach a pig to sing. All you get for your efforts is bad music and a frustrated pig".

Well isn't this ironic timing. One of the 3 I've fired just had his brother / attorney call to threaten legal action against me for improperly preparing his return in 2015. He demanded 2 years ago that i depreciate his rental property BEFORE he placed it into service. I refused and declared he was rehabbing it and you can't depreciate an investment (he had no occupancy permit or working utilities so how could he rent it?). Last year (one of the reasons his questions were so stupid) he demanded I section 179 his residential rental property so that he could get a massive refund and buy another property. Supposedly a real estate seminar he went to said this was okay. It took about 15 minutes for his brother to recognize how uninformed his client is on the subject.

I agree with not responding to communications. I wouldn't block the person but would save all communications given to you. Fired a client about 3 weeks ago. She received a $25 bill from the state for not making estimated tax payments. Said it very plainly on the letter but she declared that's NOT what it said and that I needed to pay the $25 because that's what H&R Block would do. After admitting she never made state estimated payments and recognizing I'd warned her about it for years - I told her to go to H&R Block and never return. These people just aren't worth it. I've fired 3 clients in the last year and have never felt better about my life! I only have one more jerk on my list and I doubt he comes back. He blamed me for an "error" in his return yet recognized in our email communications that I had 2x asked a question to clarify, 2x he gave me an answer which justified my actions yet in his opinion I should have ignored what he wrote and followed through on what he should have said. He had ME explain to his ex-wife why we took the deduction "by accident" because he was such a freakin wimp.

I'd say when you are done, be done, no matter what. No communication at all. Jack's advice to return all data is great (keep a copy in case you are dragged to court or something along those lines). No response from you means no added fuel. (Hard learned lesson.) I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it. George Bernard Shaw Read more at: https://www.brainyquote.com/quotes/quotes/g/georgebern137450.html "I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it." George Bernard Shaw

I stand corrected, simply putting someone else's name on an account does not constitute a completed gift, only when it is withdrawn as Dan states. I learn something new everyday around here.

There is no gift until money is drawn out by the individual whose is name is placed on the account for his / her own personal use. So you can put kid's name on a million dollar account, but there is no reportable gift unless the kid draws out over $14,000 for his own use. See Reg. § 25.2511-1(h)(4).

Apparently, the IRS site is backup. All of my credits have been sent to the IRS as of 12/23. Just thought others would like to know to follow-up on the status of their CEU's

I'm going to bet it's Ok. There are probably other people who never registered with eservices. I only used it once or twice when they used to let us enter POAs. Merry Christmas!

My understanding is that the rule is "within 30 days, before and after", so I would add 1 more day to January 23rd.