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I am starting to get millennials in the 16 to 18 year old range, mostly kids of my clients, who are filing their first tax returns. I have to make a conscious effort not to laugh when I watch them try to sign their names in cursive. They get a pained expression on their faces and it takes forever. Many just give up and print or make an illegible mark. I'm afraid that within a another generation cursive writing will be lost art.

That reminds me when I went to elementary school we had phonics. As a result I am a good speller. When my wife went thru elementary school they dumped phonics for "sight reading". As a result my wife struggles to spell, even though she was a good student.

that was able to use a passive loss carryforward - in full! I have been waiting for a very long time.

It's a husband and wife partnership. They were referred to me by my largest business client. The wife works as a Human Resource Manager for a good sized company. The cash appears to be from the sale of their previous house. The husband used to work for his families painting business which I know nothing about. My current working agreement with them is that I will be doing their monthly recordkeeping plus their payroll. He plans to hire his nephew as an employee. In addition I will make sure they will handle any independent contractors correctly with respect to their liability insurance, workers compensation coverage and 1099 NEC reporting. I plan to very proactively stay on top of everything and if questionable stuff starts happening I will pull the plug. We see what happens?

One of the dumbest moves ever. How can people pronounce or spell words when they're just learning the shapes of words and not the individual letters? I had an employee like this and whenever we had a name like Elisabeth, she would always type it as Elizabeth, and I would ask her why she didn't just type what was there. Her eyes were trained in sight reading and could not detect subtleties in spelling.

I always take the word of the client, unless there is a suspicious reason not to. It is the job of the IRS to audit them, not mine. One concern is that these assets were purchased prior to the formation of the partnership, and were contributed as capital investment - i.e. "hot" assets. They will have to be tracked if that is the case for five years. Also, my experience is that the partnership will not last long, unless they are bound together like family members. I don't know how many of these partners love each other to start with, and after six months they are ready to go their separate ways. Running a business is not the same as painting.

They formed an LLC with both spouses listed as members in late 2022. They obtained an EIN in early 2023 as a Partnership and the IRS expects to see a Form 1065. They also registered with the state Construction Contractors Board as a MMLLC. I plan to file a 2553 and have them elect to be taxed as an S Corporation for 2024.

If they haven't formed a state entity (SMLLC or MMLLC or whatever your state allows) and are H&W and are filing their first return for 2023, they can choose between a QJV and a PTS. (IF in a community property state, can choose QJV even with a state entity.)

They have already obtained an EIN as a PTS Form 1065 over a year ago. I wouldn't use a QJV for this type of business.

Sounds like a good client - or like you have decided they are a good client. Back to the original post. FMV of the items on the date contributed to the partnership is the Basis of the Fixed Assets. Depreciate under the normal rules for used equipment. Most conservative approach is to get an appraisal. If they want to be a little less conservative, use Garage Sale or Craigslist pricing for used items of similar value. If they insist on using the amounts they say they paid for them (and if you believe them), get them to write a letter to you signed and dated that says this is the value of the property they contributed to the partnership. It does not have to be confrontational, just explain that you are there to protect them from audit risk. and the riskiest way to go is take their word for the basis of the property. Tom Longview, TX

Absolutely correct!!!

Just curious about the 2022 return. Any Sch C Painting work on that return? Seems that this guy was already a painter before he started this business. Was he calling it a hobby, side gig, hustle or some other term that on the street means "I get paid in cash and I don't have to tell anyone". The part about "paid cash" is I think what has all of us looking at it twice, because cash is so easy to put in your pocket instead of into your bank. Tom Longview, TX

and I could see this type of client paying cash to "independent contractors"

That's why we need to move to Colorado. Our son DIL are there to help us. My step-daughter came over today and cleaned and dusted since I don't have a robot that can dust or clean bathrooms yet. This was a first in 34 years and I was super grateful. I highly recommend RoboRocks! I had a Roomba and a separate mop before, but they are not nearly as advanced as the RoboRock. Hubby came home yesterday with 24-7 oxygen so now I have 50 feet of tubing running through the house. I have to find a way to get it off of the floor. This is a new phase for us, but we will figure it out.

Is this a client you would want? Would you have confidence that they would count the sales they receive cash payments? Don't forget that if they paid cash there is likely use tax due on purchases.

Oh....I love that. Is that your own or is it a quote from someone else. I am stealing that line. Tom Longview, TX

First question I have is how much money are you talking about? A couple thousand bucks of ladders and drop cloths and stirring blades? Or tens of thousands including scaffolding and compressors and sprayers? If the latter, and they honestly don't have invoices, send them to get you (1) a detailed & annotated list including item, who purchased from, for how much and when, and then (2) prices for new same-type items from Lowes or Harbor Freight or specialty suppliers, showing prices. If comparing those two shows a reasonable price paid for used - as opposed to new - equipment, then I would accept it. After reading them the riot act (in print - and get them to sign & date that, give them a copy and you keep the original) that they are never, ever, to buy substantial equipment again without at least a sales receipt showing date, amount, what, and from whom purchased. If the former, I'd still do the letter riot act, and have them bring price sheets for similar ladders etc., but not necessarily require as strict an itemized list. If that means they go on extension while they dredge this all up, that is not your problem, but theirs. Of course, if you think they're cheating, or that they stole the equipment, hand 'em back their docs and wave bye-bye.

I'm glad I'm winding down.

I remember taking payments to the bank with the voucher. Then it was the call in to the IRS and we had a "cheat sheet" that told you what you were supposed to enter at each of the prompts. Ahhhhhh......the good ol' days Tom Longview, TX

My favorite is "Why is my 401(K) distribution included on my return? I already paid the tax (pointing to the withholding box). It shouldn't be on my return." Some people are convinced they are "paying" the tax twice and can't grasp the concept that the withholding is just a prepayment of the tax that is going to be due, not the tax itself.