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Showing content with the highest reputation on 01/21/2019 in all areas

  1. Given that there may be more non-clients than usual calling with questions this year, what's your plan? Here's a possible script: Caller: "I just need a little bit of info about the new tax law so I can finish my return. Do you answer questions?" Preparer: "Yes, I answer one question for free and then there's a charge for each additional question." Caller: "How much do you charge for each question?" Preparer: "My fee is $200 per question. What's your next question?"
    5 points
  2. Caller: I have a question.... Me: Let’s setup an appointment and I charge $XX, and if you become a client I will credit the payment towards your next invoice. Caller: Let me check my schedule and I will call you back. You know the rest.
    5 points
  3. The proposed regs have knocked out all of my rental clients except one whose qualification is questionable since he is always juggling multiple business issues and the probability of him maintaining a contemporaneous activity log is pretty low. For those of you with clients who might qualify, here is a step by step in depth analysis : https://www.forbes.com/sites/anthonynitti/2019/01/19/irs-publishes-final-guidance-on-the-20-pass-through-deduction-putting-it-all-together/?ss=taxes#55344e92d9f0
    3 points
  4. No problem. We all need help with this new software. I spent 30 minutes screwing around with the form trying to figure out how to make it work. There are no silly questions related to QBI. Tom Modesto, CA
    3 points
  5. BullDog Tom, thanks for clarifying! I felt silly asking, but I do appreciate you taking time to answer.
    3 points
  6. I was setting up my seasonal office last weekend. No client appointments, just making sure the new computer connected to the old printer, setting up the internet, that kind of stuff. One of the other tenants in the building stopped in for a quick question. Was sure that his CPA was working for the IRS and not for him. 20 minutes later, he was convinced we all work for the IRS, but he got his answer confirmed. The next tenant who dropped in to say hi was a general contractor. 20 minutes later I had the answer I was looking for from him about some work I want done on my home. What goes around comes around. I try to be generous with my free time. I know that if that first tenant ever decides to move his tax work, I will be on the short list. He may never do so, but I have planted the seeds of my knowledge and experience. Who knows if it will ever blossom into an invoice. And the guy I took 20 minutes from may be able to invoice me for some work I want done on my home. No guarantees, but he gave me some good information and for that I will give him a shot at the work I want done. Tom Modesto, CA
    3 points
  7. In simple terms a Qualified Business is a pass through entity that qualifies for the deduction. A service business is a Specified Service Trade or Business as defined in the TJCA. The first box means you can take the deduction, the second means that if you exceed the income limits, the deduction may be phased out or eliminated. Hope this helps. Tom Modesto, CA
    3 points
  8. I do answer tax questions for people I know, with qualifiers sprinkled liberally through the answers. As an example, that would be for someone at church who asks me during coffee hour about "this new pass-through deduction" he heard about. I do NOT answer tax questions for random callers. I recommend they engage a preparer who can work with their entire financial situation or that they call their tax prep software company for advice.
    3 points
  9. As a practical matter and aside from the attempt at humor in this post, I often answer simple questions for people who are not my clients. If the question is uncomplicated, the person is known to me, and we have a cordial relationship, I will often provide an answer with the proper qualifiers.
    3 points
  10. Drake software provides an engagement letter. Attached please find a redacted copy of 2018 letter.
    2 points
  11. My mistake, Terry. I mis-read your scenario that the guaranteed payments were what caused the income to go into negative numbers. Since guaranteed payments are disregarded the negative total income would be irrelevant and get you back to the total income for QBI. I am not sure without looking what effect, if any, having negative income on the partnership that isn't caused by guaranteed payments would have. I was calculating guaranteed payments by taking 41187 plus the loss of 1678 and dividing it by 2 to get the guaranteed payments. My main point was to be careful about telling people they will get 20% of their QBI for a deduction, because after all the gyrations and the standard deduction it might be less - even a lot less.
    1 point
  12. If I read the Notice 2019-07 correctly, I don't think your client will be able to use the safe harbor. Please see Section 3 - RULES OF APPLICATION, para .02 where it says the taxpayer must hold a direct interest in the property, or if it is in a passthrough it must be a disregarded entity described in 301.7701-3. The way I'm reading that part of para .02 for other than those reporting directly on page 1 of Sch E, it seems that for passthroughs, only an SMLLC would be able to use the safe harbor, and that partnerships, multi-member LLCs and S corps may still qualify for the 199A deduction but that they can't use the safe harbor. The interesting thing is that a H-W partnership in a community property state may be able to since it can be considered a disregarded entity, but don't anyone hold me to that because I've yet to look into that and probably won't since I'm not in one of those states. I was hoping that the safe harbor would be available to one of my larger real estate clients, but I think his LLC is knocked out because it's owned 50-50 with his wife, and not in a community property state.
    1 point
  13. I pick and choose from the content available free with my CCH SiteBuilder website each month. I added the opt-in newsletter feature, but no one has signed up for it to be emailed to them yet. Tenenz has newsletters, as does Tax Coach.
    1 point
  14. Statement 7 in your scenario shows them getting QBID on the amount eligible from the partnership. However, it is my understanding that the deduction is also limited to the amount of taxable income, such that other factors may come into play. In other words if one partner is married and his wife earns more that the standard deduction so that their taxable income is greater than the partnership income, your calculation might be correct assuming no capital gains, or losses or other QBI. But the other partner could be single, with this as his only source of income. That partner would have $21432.50 in guaranteed payments, minus half the partnership loss of 839 for gross income of $20593.00. If the Guaranteed Payments are subject to SE tax, half of that would be subtracted from his income (1514) to get an AGI of 19079. After the standard deduction of $12,000 for single tp, his taxable income would be $7079. So his QBID would be limited to 20% of 7079, or $1416. Not the $3950 you calculated. So 50/50 partners can wind up with different amounts of QBID on the same income depending on all the facts and circuses. At least that is my limited understanding at this point in time. Ask me again tomorrow and I might have a different answer.
    1 point
  15. Gail, I agree. The paragraph below is taken from the revenue procedure and is fairly straight forward. So, if a rental property owner hires an HVAC contractor to replace the Heating/Cooling unit, those hours should be documented and apply toward the 250. Same with a roof replacement or lawn maintenance. .04 Rental services. Rental services for purpose of this revenue procedure include: (i) advertising to rent or lease the real estate; (ii) negotiating and executing leases; (iii) verifying information contained in prospective tenant applications; (iv) collection of rent; (v) daily operation, maintenance, and repair of the property; (vi) management of the real estate; (vii) purchase of materials; and (viii) supervision of employees and independent contractors. Rental services may be performed by owners or by employees, agents, and/or independent contractors of the owners. The term rental services does not include financial or investment management activities, such as arranging financing; procuring property; studying and reviewing financial statements or reports on operations; planning, managing, or constructing long-term capital improvements; or hours spent traveling to and from the real estate.
    1 point
  16. If I read the notice about the safe harbor right, the 250 hours are not necessarily provided by the partners and not necessarily documented by a log. Part of the time counted towards this could be by contractors, and the time shown on the invoice they send you could be counted towards the 250 hours based on that invoice. Did anyone else read it that way? I am just getting tired of the service requiring separate signature statements for everything - I thought when the taxpayer signed the tax return it was under penalty of perjury and applied to everything on the return.
    1 point
  17. So Bart, did you have multiple letters for him so he could choose which one to sign?
    1 point
  18. The trouble with a nine-page letter is that the judge will sympathize with the guy who says "Nobody could read that amount of legal mumbo-jumbo." That's the reason the life insurance companies no longer get only a signature on your four-page life insurance policy app; they make you go through the list of illnesses and initial each one - thereby nailing it down that you don't have each dread disease listed. I agree with Roberts that mine is a blatant attempt to avoid liability, but even if the judge doesn't like it he can't hardly go along with a client's claim that my paragraph was too much to read. I think he'd have to ask "Did you read this? It's fairly straightforward." Still, it's a horse race either way. A lawyer once told me "A million-dollar insurance policy is best. Litigants will sue you, your wife, kids, and anyone possibly or remotely involved." Ha! A couple used to come in every year-hubby never said a word (no hello-no nothin'-stared at the floor). Wife handled all talk-everything. One year they itemized and I got the med records; he'd been a diagnosed schizophrenic for years. Then (comes the dawn) I remembered that every year she slid the engagement letter across the desk for him to sign.
    1 point
  19. I am still waiting for the state of Virginia to decide how they are going to handle the federal changes and whether it will affect the tax returns for 2018. So even if we can file federal by the end of January, I doubt we will be able to file state returns.
    1 point
  20. Form 8275 is our very good friend this year. If we take positions not supported by final regs (which is a boatload of the new law), that disclosure statement showing why we are taking whatever position we are taking will at least save us from preparer penalties. "Most closely in alliance as this office could determine with tentative/proposed regulations as of the date of filing" basically means "hey, we did our best considering you dweebs had given us nothing better to go on" only said in a polite fashion.
    1 point
  21. Since you seem to feel it's a joke - let me describe a real situation that I had about 3 years ago with a MFJ couple Husband was about ready to die from sickness. Knowing that, wife tells a prospective beneficiary of his assets to contact me regarding tax benefits/consequences of inheriting his assets upon death. That person called me on the spot - never knowing who she was, never heard her name before, only introduced herself as beneficiary of future deceased asking me to answer blanket questions, confusing income tax, estate tax, and gift tax all in one question. Of course I refused to provide any answers. I asked the wife about her afterwards and she said "I gave her your name because she'll be a future client". Well - that never came to be because within a month after the guy's death, wife took that beneficiary to court for embezzlement, since she was the ONLY other person to have access to the bank vault where his assets were stored. I lost the widow as a client as well.
    0 points
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