SaraEA

Now this IS scary. Thankfully Catherine was wide awake. What do we do? Never open any attachments without calling client to confirm s/he really sent it?

Your client could possibly report the sales separately on his tax return (he has to to satisfy computer matching) and then nominee them to the recipients and issue each a 1099. However, this could open up a can of worms. Can you legally invest for others without some kind of license? I know that cryptocurrencies aren't quite regulated by the regulators, but investing for others sure is. Maybe he can report the whole thing on his own return, calculate the tax he had to pay on each investor's gain, and then gift the remainder to each of them. (Gift tax return required only if over $15k.) This situation underscores a major problem with the cryptos: Novices are catching the bandwagon, some losing their shirts, and some getting themselves into places they don't want to be like your client.

I think that "back in the day," store cards were issued by the store, so there was a difference between store credit and branded credit cards. Now most of them are issued by banks, so those old rules may not apply in many situations like yours. It was most likely a political thing, with the banks lobbying congress for special treatment. Heck now you can get a credit card branded from your alma mater, or the NRA, or AARP, or Ducks Unlimited, and it still comes from a bank.

Does ATX really make you fill in all that info? Good grief. I hate 8283 as much as anyone, but UT goes a lot easier on users. The type of organization defaults to 50%, no property type or contribution limit questions (repetitive question), no question about goods or services received, no checkboxes about the organization and type of gain, and no entry for condition. How would you even know that? Half of the receipts I see don't even list an amount and none has ever shown condition (well, once and awhile someone lists "new"). There is a box for donor's cost but it doesn't have to be filled. I think ATX is really overdoing it and torturing users. In a National Research Program line-by-line audit I recently completed, the auditor disallowed ALL cash contribs because of lack of documentation that followed the law but didn't say a word about a lot of Goodwill donations. The clients had only skimpy lists written on the receipts, but I guess the substantiation requirements in the code and regs are not spelled out so auditor just accepted the amounts. What a racket. Hopefully our 8283 angst will dissipate now that fewer people will itemize.

Instead of a shady relative or careless preparer, it could actually be an IRS error. I've seen several in the cases of decedents. In the last couple of weeks a widower came in with a refund check made out to his deceased spouse. I told him to call the IRS, which told him it was the preparer's error. Um, the return is clearly marked with the correct spouse's date of death, and since the return was efiled I doubt the computer mixed up the names. Maybe these returns have to be handled by real people, who no longer seem to have adequate training. If a joint return was filed, the surviving spouse does not need a 1310. If there was one, then I'd be suspicious. In that case, maybe the preparer never did this before and not only filed one but filled it out wrong. It definitely requires a SS#, though, and one would think IRS matches name and number with the SSA just like they do with any return before accepting it. Best thing to do is for the client to call IRS and see what happened and how it can be corrected.

When clients don't know their total miles, just don't put the property tax on the auto worksheet but enter it directly on Sch A. So they pay a little extra SE tax, but at least the amount on Sch A is documented. This of course might not help people who already reached the $10k cap on state and local tax deductions in 2018. Thinking about that caveat, I am beginning to recognize that we have a lot to UNlearn.

I think part of the emotional letdown is that for months now you have been building up for the race, focusing all of your time and energy and thoughts into it, and now it's over and you've crossed the finish line. Think of those runners in the Boston Marathon on Monday. They spent months training, a few hours running, and now what? Go back to running their 5 miles a day or whatever they do, it's just not the same. The other part is that for these few months, we have been the most important person in many of our clients' lives. They need us, depend on us, confide in us, and now we're just another service provider. This can be a real downer. Think it through. No one can keep up the pace we do during tax season all year long. Would you really want to? Not me. And while it does make us feel valued and important that so many clients trust and depend on us, that responsibility is what overwhelms us as tax season draws to a close. I am so looking forward to a normal life after the past few weeks. It does take a little time to "come back down."

Most trusts have to use a calendar year. Estates can use a fiscal year. An estate 1041 ending June 30 2018 will be due Oct 15. You can file for a five-month extension.

This week a client whose wife died in January got a refund check made out to her. This happened in our office once before, and that time the IRS was quick to issue a new check. This time the client called IRS and was told that the preparer messed up. Excuse me, the return clearly shows the wife's date of death and has "filing as surviving spouse" in her signature area. It was efiled, so why don't they blame the computer? Looks like the reduced money IRS has for training is taking its toll. I feel so bad for these people. Both had recently lost their spouses and now had to go through this mess.

Just don't mark the 2017 return as final if payments continued into 2018. The date the trust technically closes and the date it closes for tax purposes don't have to be the same. I recently filed a final estate return that has a big refund coming. I told the executor to keep the bank account open because the check will surely be made payable to the "estate of..." and there will be no way to cash it if the estate account is closed. So the estate is closed for tax purposes but still technically open. In your case, if the income was being deposited into the trust account, was it being distributed to the beneficiaries? Then it should be taken as an "income distribution deduction" and flow through to them on the K-1s anyway so the trust will owe no tax.

What everyone is recommending is of course the "right" way to handle this. In this case I might just take a shortcut because the bottom line will be exactly the same. On the 4797 there is a line for "depreciation allowed or allowable." Calculate the depreciation that should have been taken and deduct it from basis. There is no recapture because the house was depreciated under MACRS. The depreciation not taken in 2014, 15, and 16 is going to lower basis on the 4797 anyway, leaving you with exactly the same amount of gain/loss. The prior year unallowed losses should have been larger with depreciation, which may or may not affect gain/loss taken in the year of sale depending on how the math works out because they are allowable in the year of sale. Thoughts?

IRA distributions are fully taxable, like rfassett said. Is it possible to put the estate on a fiscal year and then have it distribute the income to the beneficiaries within the fiscal year? If the estate gets and keeps taxable income of, say, $100k, it's going to be in the 39.6 bracket plus be subject to the NIIT. If that income is distributed, it goes on the beneficieries' returns and gets taxed at their individual tax rates. I don't know if time has run out for this option. Was the money already distributed? When did the person die?

Tom, every single one of us remembers the first mistake we made in the profession. I often wondered why that is, and why we fail to recognize all the good we've done--the clients who left our offices with tears of joy and brought back gifts because they had feared the worst but we knew about that exception to the penalty or whatever. So you made one mistake. You also did perhaps thousands of returns over the years that were perfect. Pretty good odds if you ask me. Like BHoffman, does anyone else have lots of clients going on vacation in April and have to have their returns done by then? Who but college students goes on vacation in April? This week I moved at least a dozen clients up in the queue because they were going away. The only place I want to go is To Sleep.

If items, including real estate, are sold to pay the debts of the decedent, the sales expenses are considered administrative expenses. If they are just sold because the heirs don't want them and the estate is liquidating them to get cash to distribute, they are deductible subject to the 2% AGI rule. If there is only one beneficiary, the sale was to benefit that one person and the costs are not deductible at all. You can, however, add them to basis. Now that the 2% category is gone for individuals in 2018 and beyond, I wonder if it will be gone for estates too.

If the mother had her own insurance, she should have her own 1095B, so her insurance payments/advances are not allocated. You can allocate the family's advances any way you want, including giving 100% to the parents. Since the daughter will not have any taxable income and is likely below the poverty level, I'd do just that.

Unless your client is on track to gift and have enough left over at death to total $5.9m, you don't have to worry about the election. Do be sure to enter the gifts to the grandchildren on the GST section of the 709.

We have had a number of audits when the 1099-K was lower than the reported sales, so I believe the IRS computers are matching. Enter the cash back as a negative number, and list the sales tax on the taxes paid line.

The support test does not apply to EITC, so the parents can still list him on their return. Be sure to review the Bursar's financial transcript...it could be that some of that scholarship money came in to pay for the spring semester tuition, so the son may have less taxable scholarships.

Rentals were not eligible for bonus depreciation until mid-September of 2018, were they? They were able to write off some new assets as supplies (first $500, now $2500). I'm not sure your client has a grip on this and think he left it all to the accountant, who probably muddled through the mess s/he was given. Maybe he bought a stove, or fixed the roof, or whatever and never thought about it. Seems like the land was depreciated too. You are going to have to treat that amount as depreciation taken. If it was too much, it will lower basis and increase gain. I have to tell a client tomorrow that he owes only $60k. Glad I'm not you.

Lloyd, you do have to have foreign income to claim the credit. The deduction has the same limitations as the credit, so no dice there either. I have a client who owns a rental in India, and he can deduct the taxes paid to that country on Sch E, but then again he has foreign income (the rent collected).

I would never use the auto check feature to tell IRS they can talk to me about the return. First, I hear they don't honor that box and want a 2484 anyway. Second, some of those clients I'd prefer THEY talk to IRS. Let them explain their expenses. Although I've asked them if they have all the required receipts, log books, records, etc., I sometimes wonder..... Most clients I do check the box, but there are others....

PS. I realize ending a sentence in a preposition makes English teachers crazy, but I subscribe to Churchill's declaration, "That is the sort of bloody nonsense up with which I will not put."

I'm so sick of picking people up off the floor when they learn their tax liability after these moves. "But, but they took 10% taxes out." Yea, that covers the penalty, but now you have to pay the income taxes, go into a higher tax bracket, lose your active participation rental loss, maybe some itemized deductions and exemption amounts, etc. " Why oh why don't they call us before trashing their retirement savings?! Plus, what do they think they are going to retire on?

This is exactly what is wrong about social media, and about believing everything you see on social media. I've heard about gals going broke buying the latest fashions so they'd look good on their social media posts. People can brag all they want about their grades, the huge gains in their brokerage accounts, their number of scores, meeting famous people, and even the number of tax returns they completed in one day, and there is no one doing fact checking. To anyone who thinks s/he is a super preparer because of their volume, I'd respond that the accuracy surely suffered. I don't think a single one of my clients would return next year if I told them that. Heck, if 16 of my clients whose returns were all done, checked, and scanned brought in that single piece of missing info, I couldn't get them all printed and assembled in one day. And if I did, I'd probably be sleeping instead of bragging about it on Facebook.

We have always thought that Austin address is actually to a great big dumpster. We all know that if a return is audited, the agents aren't going to try to recover those paper copies but will ask the taxpayer for them. Still, we send them so we are in compliance. I know one preparer who will report totals even if there are wash sales (adjustments) on "basis reported" sections. (Can't do this with "basis not reported" sales I guess.) In the end, the IRS computers list every single sale, total them, and only if there is a mismatch with what the taxpayer reported does a letter get generated. Heck, I've even responded to these CP2000s with a phone call, told the person the basis numbers, she entered them in while I was on the phone and said there was no tax due and closed the matter. It seems like we take this more seriously than even the IRS does.