jasdlm

I have another issue with the entire "third party designee" line. Have any of you EVER had the IRS talk to you directly about a client's return WITHOUT a POA? I never had, even after explaining that the "third party designee" line was properly filled out with my info. Booger *** I have talked to the IRS several times based on the 'third party designee' line. Are you calling practitioner priority line when you call?

Thanks, Cathy. I'll do exactly that.

Thanks, Joel. What a drag. Anyway to 'unroll' the returns and re-roll them? Unfortunately, the first thing I did after I loaded 2009 software was rollover all 2008 returns.

I thought I changed the Master Form, but it's not coming through on my returns. Also, the paid preparer info prints on new returns, but not on existing clients. I have to go to 'preparer manager' for every return and enter the info. Aaargh! What am I missing???

I am a Kansas attorney, but I believe (based on a quick search of my materials) that Texas does require a divorce to terminate a common law marriage.

Peggy - thank you so much! My clients do not have any 'sales' in WA. They provide service for the Primary Contractor, who has a contract with the State to provide computer software/support. My clients actually received a letter from the Washington Department of Revenue asking them for their excise tax report, which is how this got started. I'm glad that ATX has better instructions. I will look at those immediately. I'm not sure what you are saying about the UBI, but I will read the instructions thoroughly and see if I can figure it out. I won't post any more questions until I've thoroughly read the ATX instructions. Thanks so much!

I have clients who are subcontracting with a firm out of another State to perform work in Washington State. I believe that my clients have to file a combined excise tax return. I called the Washington State Department of Revenue to confirm. According to the gentleman I spoke to, although technically it is a 'double tax' (the company with the contract is paying the tax on the total revenue, and then my clients have to turn around and pay tax on their subcontracting income), he insists that that is the system. (He actually seemed pretty proud of the double tax.) So . . . It appears to me that my clients, who are software providers, fall under the 'service and other activities' category, and I don't see any deductions that apply to them when I read through the instructions. For anyone familiar with this tax, does this sound accurate? Thanks to anyone who can provide assistance.

I still don't understand why there wouldn't be a casualty loss.

Congratulations. What a wonderful way to start the season!

Thanks, Lion. You provided a very clear explanation, and I appreciate it!

Would someone please tell me what the proper filing would look like for a QSST that also owned non s-Corp assets? Thanks.

Thanks, Tom. This is going to sound really dense, but why would any customer agree to a Refund Transfer? What's in it for them? Thanks.

What's a Refund Transfer?

I'm not sure what any of your acronyms stand for, but I'm sorry you're having such a crappy day! (I know it has to do with refund loans . . . )

Is the Farm in the trust? Is the Farm Income paid to the trust? Does the Trust authorize expenses for maintenance of the property? Is the income distributed evenly among brothers?

Has anyone been able to get the Schedule D import to work yet? I downloaded a 1099 from Fidelity. I'm trying to import the transactions, and it won't carry anything to the Schedule D except the quanity of the security. Thanks.

At least you received a 1040 Express Answer book that Lila could eat!!! Still waiting. . .

The 1041 that has been filed since the trust was created reported all income . . . S-Corp as well as income from stocks, bonds, mutual funds, etc. not held by the S-corp, but simply held as other trust assets. I read the following on cpa-resource.com: *** QSST - Qualified Subchapter S Trust One of the qualifying shareholders of an S corporation is a QSST. In order for a trust to be a QSST it must meet the following requirements: 1. There is only one income beneficiary and he or she is a U.S. citizen or resident. 2. All income of the trust is required to be distributed currently to the one income beneficiary. 3. All corpus distributions must go to the one beneficiary. 4. The beneficiary’s income interest must terminate at the earlier of the beneficiary’s death or trust’s termination. 5. An election to be treated as an eligible S corporation shareholder must be made. If there is a successor beneficiary, the QSST election remains valid unless the new beneficiary affirmatively refuses to consent. A trust can have two different components and still qualify as a QSST trust. For example, part of the trust consisting of assets other than the S corporation stock can be treated as a simple trust while the QSST portion of the trust will be treated similar to a grantor trust. This type of situation requires a bifurcated type of trust income tax return. The trust return will report the income and deductions for all assets, excluding the S corporation, and will separately report the S corporation income and deductions similar to a grantor trust return. The income beneficiary of the QSST signs the consent required on Form 2553. In addition, a QSST election is made. This separate election is made by the trust beneficiary within 16 days and two months of the date the stock was transferred to the trust or 16 days and two months from the beginning of the first S corporation year. If it is a newly elected S corporation, the special QSST election can be made as part of the S election on Form 2553. It is important to note that if the QSST election is not made, the S corporation election would be revoked. - Christopher F. Beaulieu, CPA, MST Nykiel, Carlin & Co., LTD. *** This information made me think that there should be a separate reporting of the S-corp income. However, I haven't been successful in figuring out exactly how that would work or what the final product (returns) would look like. The returns that have been filed were filed by an estate planning JD/CPA who has probably three times the number of years of experience that I do, so I continued researching on the assumption that the return he prepared was correct, and I was simply still missing pieces in trying to understand the proper tax reporting. That's where I am now . . . stuck. The grantor/donor difference also threw me, but you have answered that question. Thanks for being willing to help me learn this.

Jainen, thank you so much! I thought from my research that the trust 1041 should be bifurcated since there are mutual fund investments in addition to the S-Corp stock, but the returns have not been done that way previously. The attorney/CPA who did the previous returns is a 'Trust and Estate Planning' specialist, so I kept assuming I must be misunderstanding the research material. I will keep trying to find someone to work with this . . . it's not looking good. I might have to go to out of town to find someone. Thanks again, and thanks to all for responding.

I'm sorry to be unclear. The client created the trust several years ago while his parents were living. The parents then made gifts to the trust and filed 709s documenting the same. The parents are now deceased. I only put the information about them being deceased into the original fact scenario because it is too late for anything they did to be amended/restated/etc. The irrevocable trust was an estate planning tool (parents had a very large estate and were trying to pass value in the S-corp at a discounted rate). The parents gifted directly to the irrevocable trust. Again, sorry to muddy up the fact scenario. My real question is, is there any problem with the fact that my client was the grantor of the trust, but did not fund the trust?

Client established an irrevocable trust with himself as Grantor and he and his siblings as Trustee. He is sole income beneficiary and has rights to principle in an emergency. He did not fund the trust. The trust is funded with gifts from his parents (who are now both deceased). It seems to me that his parents should have been the grantors of the trust, but I'm not certain that it matters. I have tried to punt this case to 4 different CPAs in town, but each said that he hadn't really worked much with irrevocable trusts and didn't feel confident taking the case. Perhaps I am making something out of nothing. I have tried to research this, and I am not coming up with a clear answer. If I had been the attorney drafting the trust, I think I would have made the parents the Grantors. The parents did file 709s when they made the initial gift (which was stock in an S-Corp . . . the trust is a QSST). (QSST was another thing, by the way, that none of the 4 CPAs wanted to deal with . . . 1 even told me it was something he had never heard of.) Basically, I'm in over my head and can't find anyone to help me. Any advice I can get would be appreciated. Is there any problem with this Trust setup? Thanks!

Is the residential rental property 1 unit (i.e. is it all or nothing into the bypass trust if you choose real estate)?

Okay . . . I'll give it a stab. 1) I assume the debt is in the name of the LLC? (i.e. not just loans that son took and then loaned proceeds to the LLC himself) If this is the case, then if father sells or abandons his interest, it seems that he would have income to the extent he is released from liability on the LLC's debts less his $3,000 basis. 2) Assuming they are equal partners, doesn't this result in a technical termination of the LLC? (sale of 50% more of capital and profits interest within a 12 month period) If so, LLC contributes all of its assets and liabilities to a new LLC in exchange for an interest in the new LLC and the terminated LLC distributes interest in the new LLC to the purchasing member and the other remaining members in proportion to their interests in the terminated LLC . . . I don't think a technical termination of this nature requires a new Tax ID. 3) Fresh start approach with regard to any carryover basis of assets transferred from the terminated entity. . . I think you mean from your post that there aren't any depreciable assets, so probably not relevant. 4) Basis adjustment for son if he is assuming an increased % of liabilities? This is my best analysis; I might be off base, but hopefully it will get the thread started.

My IT guy has me set up beautifully. All of my ATX files are on my server (which has a redundant hard drive, so there is backup in addition to the tape backup). I can access the tax software from my office or my home. At home, I 'remote in' to my computer through something called 'Radmin'. (www.radmin.com) Last year was my first tax season to use this method, and it worked pretty darn well. I think back to the years when I would backup the file to a CD, take it home, restore it, work, back it up, restore back to the office computer . . . sheesh! But at the time, I was so thrilled to be able to work from home that I thought it was great. Good luck!

I am on several non-profit Boards in my community. Many of the Boards have received correspondence from an agency in town requesting that we do away with our current requirement that recipients of assistance provide a social security number or ITIN number in order to receive assistance. Basically, the issue is not a privacy/security issue, but rather an issue of whether the nonprofit agencies are willing to provide assistance to illegals. My question: Does anyone know if there is any legal prohibition or any IRS regulation that would specifically address this issue. I am an attorney, but this is not something I have any knowledge about. I have my own opinion, of course, but I have been charged by the Board to bring back any objective information that might help Board members in deciding how to respond to the requesting agency. (i.e. could this in any way jeopardize 501©(3) status, violate the Patriot Act, etc.) Thanks in advance. I really respect the people on this Board and any insight anyone might be willing to provide.