jasdlm

Clients owned a partnership that sold on 12/31/2010 (LLC - buyer purchased all membership interests). Buyer has assigned a number to equipment based on walking through the business and making a list (desks, computers, chairs - no real estate or property longer than 7 year life). I am trying to do the asset disposition on the 1065 because of the technical termination. The number on the buyer's 8594 is completely unrelated to the depreciation schedule on the 1065. If I take their number and subtract my current book value of the assets, I come up with a gain of $78,351. However, I have no idea how to go about allocating the amount among the assets. They don't even have all the assets listed that I have on the 1065. Also, I know that I also have to submit an 8594, and that my numbers should basically match the buyer's numbers. ??? In over my head. Thanks in advance for any guidance.

No. I always forget about it. Thanks for the reminder. I will go look now.

My computer shot craps. I now have a new system thanks to a great IT guy who works on Saturdays. The problem is, my ATX software is in italics (everything in the software - prints out that way also). My IT guy has tried some internet fixes, and it has taken care of this issue with all of the other programs, but not ATX. Anyone else have this problem? I have lost probably 10 hours of work timet his weekend . . . couldn't do anything else because I was here with the tech guy and testing this, that, calling internet support, etc. I am trying not to have a complete breakdown. I am one grouchy wife and mother right now! If anyone else has had this 'windows 7 italics' problem and fixed it, please let me know. I am not giving client a 1040 in italics, and my IT guy says it probably won't efile, anyway. AND KU just lost. I'll quit whining now. Thanks.

My IT guy is coming to upgrade me to a new computer tomorrow morning. Mine is on its last leg and is slower than molasses! Very frustrating (but not as frustrating as issues Lion and NECPA are having). He promises me that I will do taxes on my old machine while he sets up the new machine, I will leave to get a cup of coffee, and when I come back, I will sit down and start doing taxes on my new machine, which will supposedly run at the speed of light (okay . . . maybe a slight exaggeration). I am going to hold him to his word (or have a screaming baby fit).

I had a client get audited this summer. Return was prepared by our favorite big box. He is an executive recruiter, and Block told them they could deduct a $200/mo uniform allowance on his 2106. They also created a Schedule C for him and deducted the health insurance premiums that he already paid pre-tax through his employer. Also deducted the cost of his land line at his home and a myriad of other 'expenses'. Listed a computer and a desk as expenses and all numbers were round numbers. Many of the expenses we could not even identify, and the 'preparer' could give us no information and had no backup or workpapers file. I realize that the taxpayer is responsible for reviewing the return, so certainly my clients were at fault, but geez. Auditor was incredibly kind. We decided to just go in and lay the cards on the table. Client ended up owing several thousand dollars in tax. However, the auditor waived the accuracy related penalty. Also, IRS had indicated they were going to look at the following year, also. The auditor said that she would be willing to simply adjust the following year's return by the same percentage she adjusted the audited year's return. This was really good for my client, since the next year's deductions were even higher and equally unsubstantiated. Sheesh.

I am so sorry to hear about the loss of your sister-in-law. I agree that many of the 'fair settlement' payments have websites that give information on tax treatment. When I can't find information, I have been including the payment on Line 21 (however, I have never had one great than $100, so it seemed just as well to include the income on line 21 rather than spend billable time trying to find illusive information). What was the specific stock and/or mutual fund? Maybe one of us has information.

Thanks to all for the great input. Yes, the client knew from the beginning that the piece had to be removed. Sorry for any ambiguity in the original post.

Since an S-corp is a pass-through entity, I don't think it would avoid the passive loss limitation rules because the income/deductions retain their character as they 'pass through'. Also, I remember threads (can't find them now because I'm not very good at searching this site) where Jainen, OldJack, etc. discussed other downsides to owning real estate in an S-corp. Basic consensus was 'don't do it'.

A very good idea. I will suggest it and hope the University agrees! Thanks to both of you.

I am struggling with a schedule C. Client is a University Art Professor. Client was commissioned to create a large piece for installation at another University, through a federal grant, as part of a non-profit program working to promote awareness of violence against women. Client received $16,000 for the work. Client has document expenses (mostly materials but some travel costs for installation in another state) totalling more than what the client was paid. The University that commissioned the work was unwilling to reimburse client for expenses - simply paid the $16,000 and issued a 1099. The problem is that after the non-profit campaign is over (not sure on time - maybe 1 year), the University wants my client to retrieve the piece. The piece is not resellable in the opinion of my client because it is very specific to the campaign and the instructions of the University. However, how do I deduct all of the costs (or can I) when essentially the piece is still 'owned' by my client? I really hate to see this client owe several thousand dollars in Income tax and SE tax, but I'm not sure how else to handle this. Thanks in advance.

I had a microwaved 65 cent chicken pot pie full of preservatives and sodium. It was delicious and reminded me of childhood . My Mom cooked 3 meals a day when I was growing up, and those meals did not involve processed food, but when my Dad went for his 2 weeks active duty every year . . . it was chicken pot pies, TV dinners, sugared cereal, and Chef Boyardee. I used to think I was really deprived as a child. Some of my friends got these foods every day! Now I'm relieved to have avoided the chemicals and wouldn't let my son eat any of them. Wow. I am rambling on. I must have needed a break!

Last year, the IRS debited one of my client's accounts twice for the same payment. It took weeks to get the money refunded,although when I called, they agreed immediately that the payment was made twice. I am currently in the 'I will never allow the IRS to debit my clients' accounts again' mode. Direct deposit of refunds - great, but payments due - I'm making clients write checks.

I know I sound like a complete moron, but I can't even figure out where to look to see what version mine is. I do manually update every day. Where do you find the version?

I am sending lots of 'tax' energy your way! Knock 'em dead!!

Wouldn't the amount that he paid while he was actually self-employed go on the front of the 1040?

I am trying to efile a 1065 with multiple rental properties. I have efiled the return in previous years without any problem. I am now getting an error message that tells me that for returns with multiple properties, I must attach a .pdf of the 8825. It tells me to go under the efiling tab and choose .pdf. Really? When I do that, of course, there is no file found, because I haven't created a .pdf of the 8825. Do I just create a .pdf, save it under a name I choose, and then attach it using the tab under efiling? Doesn't sound very efficient. Thanks.

I make them keep the log. They probably bad-mouth me behind my back, but I don't care.

I did NOT intentionally put in that little smiley faced dude with the sun glasses. Aaargh!

Medical expenses paid for dependents may be deducted. To claim these expenses, the person must have been a dependent either at the time the medical services were provided or at the time the expenses were paid. If either parent can claim a child as a dependent under the rules for divorced or separated parents, each parent can include the medical expenses he or she pays for the child. This is true even if the other parent claims the exemption for the child. Support for this in IRS Pub 17, pg. 141. I do realize that Pubs aren't 'gospel'.

Hi, Margaret. I think the 'hang-up' on deductible 401(k)/403( interest is whether the money you are borrowing is from employer contributions or employee deferrals. My understanding is that if the interest is on money borrowed from an employer's contributions(not employee deferrals) and used for an appropriate business/residence purpose, it is deductible, but if the interest is on money contributed by employee deferrals, it is not deductible. I think this would effectively rule out deductibility in most cases. This is my understanding of IRC 72(p)(3); however, I have never worked with this in practice. Hopefully more experienced practitioners will weigh in.

I often see the 1099 R with the 'taxable amount not determined'. I think some fund companies code the 1099R that way when they were not the original custodians (i.e. client changed investment companies). They do not have the full history on the account, so the safest thing for them is to check 'taxable amount not determined'. I would pull it all into taxable income unless the client had information to the contrary. If she can't even find her returns, there is no way that you are going to be able to accurately chase it down.

I'm having trouble this evening on the IRS efile services, also. Perhaps the IRS is having the system troubles now that all were fearing?

Thinking of you today! I hope it was better than you could possibly imagine.

Thanks much to both of you! I'll see how it turns out.

Hello. I am in the 2nd course (of 10 required) for a Masters in Accounting. Ultimate goal: sit the CPA exam. (I have to do it this way because my undergraduate degrees are in English and History, so I cannot sit the exam without these courses. The State will accept some courses from my JD/MBA coursework, but I still have to do this coursework. Given that I can't figure out the homework, I have to say that the State is right in its requirements! I am looking at the following problem: 1. Assume that the City of Amber maintains its books and records in a manner that facilitates the preparation of the fund financial statements. Amber City maintains a general fund, a capital projects fund, and a special revenue fund. During the current fiscal year, the City engaged in the following transactions. Record all transactions. Be sure to clearly indicate the fund in which the entry is made. e. The City acquired a new tractor for $75,000. The City paid $20,000 in cash and signed a note that is due in three years. I have answered as follows, because I think I should be using modified accrual given that it says 'assume that the city maintains its books and records in a manner that facilitates the preparation of the fund financial statements'. ANSWER: General Fund Cash (Debit) $55,000 Proceeds from borrowing (CR) $55,000 Expenditures for vehicles (DR) $75,000 Cash (CR) $75,000 Under full accrual, I think the answer would be: Vehicles (DR) $75,000 Cash (CR) $20,000 Notes Payable (CR) $55,000 Am I correct that I should assume modified accrual? If so, is my first answer correct? I am not wrapping my head around this yet. I am having trouble because the recording feels backward. Thanks in advance.