Edward

Reference my Post #1: Item a: I always get copies of SSAN cards and bring the data forward each year & add any new additions. Item b: This was being done to provide an orientation on just how the program works and I've received feed-back that many of the items covered "were fairly new to them of which they were totally unfamiliar with". The client personally completes the form and I explain to them as needed. I WOULD THINK THIS TO BE VITAL DATA FOR THEM ESPECIALLY if they should happen to Self-File their returns - of which alot are doing. This is done on a FIRST TIME BASIS and is not repeated. Item d: This is definitely not planned. Just a passing thought after reading about all the fraud going on. I've always given special attention to the EITC because of the 10-12 billion dollar fraud loss for 2006 PLUS the losses since the program began; and more coming up with the expanded EITC under the ARRA of 2009. An interesting quote from the Taxpayer Advocate Report to Congress regarding IRS PROBLEMS ADMINISTERING REFUNDABLE CREDITS: According to Nina Olson the IRS will need to balance fraud prevention with the timely delivery of refunds. Refundable credits require the IRS to perform a delicate balancing act. On the one hand, if the IRS does not do enough to detect and prevent fraud, it may pay out billions of dollars as a result of false and fraudulent claims. On the other hand she states, if the IRS CLAMPS down too tightly, hundreds of thousands and potentially millioins of predominantly low income taxpayers will not receive timely refunds". Interesting!! Guess I better get back to the basics. Thanks for all the input.

a. So says a Quick Alert of 19 Oct. My EITC interviews/records now include obtaining copies of SSAN cards, and if no SSAN cards, nor prior year returns, then I ask for birth certificates. Have always wondered why SSA dosen't include DOB on the cards? Anybody know why? b. I reproduce IRS PUB 3524 (in color) with clients names/SSAN at top of Pub, and after they read and check off the answers, they sign at bottom of second page certifying that they DO QUALIFY for the EITC, and that if any inaccurate data is provided, they could face criminal charges by the IRS. I believe the IRS PUB is more effective in drawing their attention, especially the color, charts on page 2 and the requirement for them to sign. c. I also use PPC's 1040 Checklist C101 "Due Diligence Review" for EITC qualification and recording of important questions/responses. d. I don't see it suggested, but if we have any doubt about a particular clients eligibility, could we ask for school/medical records to verify where children are living? Foster children, and those taxpayers (with their children) living with relatives are a problem. Note that the QA didn't make any reference to the millions of self-filers!!! Any comments Edward

For MAS: If the trucking business you reference is to a FLEET of trucks, then the cite that kcjenkins gives you is exactly what you would need. It is kinda expensive - give them a call at 1-800-567-8385. If you're talking about records maintenance for a single unit, contact www.etrux.com as they do have something that might appeal to you. Edward

Have KLLM trucker (contracter who owns his own rig) and receives 1099-Misc. From his trip reports, KLLM prepares matching RECAP SHEETS AND MAILS to his wife. These RECAP SHEETS contain all necessary data for tax preparation purposes. Journal Entries are made from RECAP SHEETS and then entered into the bookkeeping system and classified according to the Chart of Accounts. At years end we then make required adjustments to finalize for tax preparation. The most critical element in the trucking business is that the company makes many reimbursements on some of the expenses and adjutments must be made for such reimbursements to make certain that accurate figures are provided on the tax return. If your trucker is a W-2 driver I don't think you would need such detailed accounting. Best of luck.

Thanks for all the input - believe me it's been very helpful. It looks like a hornets nest so I'm telling client to go back to his former taxpreparer. Thanks alot.....

Retired Fireman now drawing pension. Divorce decree states that he is to pay $6000.00 of the pension to his ex-spouse annually. Fire Dept dosen't distribute funds nor do they send 1099 to her so how do I handle? I was thinking I would attach a statement to Line 16b of his return explaining the 6000.00 difference. Sound OK? I suspecdt that she would also pick up the amount on line 21? or 16b? Appreciate any replies.

Are you thinking of Form 8821 "Tax Informatin Authorization"?

I'd call the local Civil Service for an evaluation. Didn't Civil Service make some type announcement on a"hiring freeze"? If not, they no doubt are hurting just like everyone else due to the current economic situation!!

Karen: I did get your message - thanks and best of luck on her speedy recovery. Edward

In the past I have been ordering and completing the GEAR UP Video DVD packages (cost of 365.00 for 2009). Too going this route requires extensive review and studying, and subsequent testing which is forwarded to GEAR UP for grading and CPE award. I've always preferred this method over "live seminars" as I believe that one can absorb much more tax data because of the obvious additional work that must be done to get the CPE. The only problem (as with this method, and possibly with live seminars) is that they aren't totally current as of 31 Dec. I note that JENNINGS SEMINARS HAS a similiar DVD program for 304.00 for 2009. Has anybody taken the JENNINGS dvd program, and if so how would you rate them as for quality and currency? Will appreciate any replies.

In case anyone is interested, the new rules for "Sale of Main Home" is contained in revised June 2009 IRS Pub 553, Chapter 1. In addition there is a recap of many other 2009 tax law changes that will be taking place for 2009. Very interesting reading.

Here's an article from the local business journal dated 21 Aug 09: "The IRS has an urgent message for would-be home purchasers: Make the most of the $8000 first-time buyer tax credit before it disappears Dec 1-- if you qualify. But if you don't truly qualify, don't try to play games with the credit. The IRS already has 24 criminal investigations of suspected fraud under way around the country. It has executed seven search warrants and last month a tax preparer in Florida entered a guilty plea on federal charges of fraud in connection with the first-time buyer credit. And with thousands of people buying houses and claiming tax credits, who's going to be able to check on all those filings? The answer from the IRS: WE ARE. In a statement at the end of July, the IRS said it uses "sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit. The IRS won't discuss the nature of the screening it does, but it's clear from the number of investigations ongoing that claims for the credit are getting special scrutiny. In the case of the Florida Tax Preparer, one tip-off evidently was the sheer number of clients who claimed credits as first-time buyers. James Otto Price III of Jacksonville entered a plea of guilty to charges that he fraudulently submitted returns claiming tax credits for 15 clients, some of whom apparently did not understand what he was doing. He's awaiting sentencing and faces up to three years in prison, a $250,000 fine, or both. '' (Article written by KEN HARNEY - 2009 Washington Post Writers Group).

The closing date on the purchase was 10 Aug 2009, not 2008. If I do their 2008 tax return it will be MFJ. They told me they were married in late 2003 and have lived together since, and have 2 children from this marriage. I will file them joint for 2008 and let IRS carry on from there.

Have new client - they put in for extension this year and came to me to finalize their return. They had a First Time Home Buyer Experience and closed on the $125,000 home on Aug 10th, 2008. Everything looks in order and the 5405 will award them the $8,000. In looking at their 2007 returns, I note that one spouse filed single and the other as head of household so as to claim the EITC. (If they had filed MFJ NO EITC). They said alot of their friends are filing via IRS free-file and also claiming the EITC even tho they should also be filing MFJ. The new clients have been filing like this since 2004. I told them they could have criminal charges filed against them by the IRS for such filings. Anyway I suggested they bring in the returns for 2004 thru 2006 and that I would advise them later on a course of action. I set up a new appointment date but don't know if they will return. WHAT DO I DO NOW?? Amend those returns; or send them somewhere else? Any suggestions? Thanks.

Here is an earlier problem that IRS ALSO HAS: (From an AP RELEASE) IRS allowed foreign workers - many of them in the U.S. without authorization - to improperly claim nearly 7 billion in child tax credits from 2004 to 2007. Most credits went to workers who didn't make enough money to pay any federal income taxes, Russell George, The Treasury Inspector Genral said in a report. The IRS allowed the credits although the workers did NOT PROVIDE SOCIAL SECURITY NUMBERS ON THEIR RETURNS, but did use government issued TAX ID NUMBERS, which are available to immigrants for certain tax-filing purposes - but are not valid for employment in the U.S. This issue highlights a weakness in curent law, according to the report. Federal Law DOES NOT REQUIRE SOCIAL SECURITY NUMBER TO RECEIVE THE $1,000 CHILD TAX CREDIT. Obviously this situation creates an additional incentive for aliens to enter, reside and work in the U.S. WITHOUT authorization. HOW ABOUT THAT!! wow!! Your thoughtszzzzzzzzzzzzzzzzzzzzzzzzzzz?

Saw this under "Smart Spending Blog - MSN MONEY" today: Is this an idea whose time has come? A new bill in the U.S. House would allow pet owners to deduct up to $3500. for "qualified pet-care expenses" for household pets, including vet bills. Would this so-called HAPPY (Humanity and Pets Partnered Through the Years) Act give pet owners a break they deserve? It might encourage more people to adopt abandoned or neglected pets? With 2 dogs this would be great for me. Your thoughts?

RoyDaleOne: You're right. I have prepared the return and made comparisons between the two options available (reporting income or deferral). Reporting the insur as income and writing off the replacement did provide the greatest amount of savings, especially in the SE tax area so I shall submit the return accordingly. Thans!!!

I didn't include all facts in my previous post. Therefore I'll resubmit: Clients generator stolen from tractor. Insurance paid 13782 for replacement. Total cost was 13782 plus deductable of 1000 = 14782. Old generator was given 179 so he has zero basis. I have been thinking about reporting the 13782 on 4797 as ord income and then give a 179 deduction for the replacement cost of 14782. What would or could be the advantage of deferring the 13782 under sectin 1033 as opposed to reporting the insurance as ordinary income? T/P is a 1099-misc trucker with taxable income of 53000. Any comments would be appreciated.

Client's generator stolen from tractor. Insur paid 13782 & he purchased new generator at 14,782. Should he defer the 13782 under section 1033, or report it as ordinary income; and therefore only write off the excess basis (1000.00 deductable). What would or could be the advantage of deferring the 13782 as opposed to reporting the insurance as income? He is a 1099-Misc Trucker with taxable income of 53,000. Appreciate any comments.

The following was pointed out recently by the Treasury Inspector General for Tax Administration (TIGTA): a. More than 130 million taxpayers entrust the IRS with sensitive financial and personal data, much of it on paper documents requiring sensitive but unclassified waste disposal, according to a TIGTA REPORT, WHICH STATES "IRS NEEDS TO BE MORE CAREFUL WITH SENSITIVE TAXPAYER DATA". There is concern that the information could be used for identity theft crimes involving SSAN's, as well as credit card and personal data. b. WHAT THE INVESTIGATION FOUND: 1. At every IRS LOCATION VISITED, TIGTA found documents containing personally identifiable information or other sensitive data in regular waste containers and dumpsters. WOULD YOU BELIEVE THAT!!!! 2. Specific responsibilities associated with the waste disposal program need to be clearly defined and delineated. Without them, "the IRS cannot ensure that sensitive info is given the protection needed to prevent unauthorized disclosure or dissemination". 3. In terms of waste disposal and document destruction, more oversight is needed with venders awarded contracts from the IRS. c. IRS management agreed with all of the recommendations made in the report and is taking actions to improve waste disosal, according to TIGTA.

How about: a. 1 x 2 = 2 b. 2 x 3 = 6 c. 6 x 7 = 42 d. 42 x 43 = 1806 e. 1806 x 1807 = 3,263,442

Last Year I took a look at H.R. 6214 in which, at that time they proposed that the standard deduction be the lesser of: (a) $1,500.00, or ( the gross income derived from the individuals trade or business for which such use occurs. It also contained an inflation adjustment for other years.

NATP mentioned that a disposition does not include the retirement of a structural component of a 15 year real property. They then made further reference to Prop Reg. 1-168-6 - GAIN OR LOSS ON DISPOSITIONS, subpara (a)(2) which says IF THE ASSET IS DISPOSED OF BY PHYSICAL ABANDONMENT: Loss shall be recognized in the amount of the adjusted basis of the asset at the time of the abandonment. For a loss to qualify for recognition under this subparagraph (2), the taxpayer must intend to discard the asset irrevocably so that he will neither use the asset again, nor retrieve it for sale, exchange, or other disposition.

Over the past several days I have been looking at references and talking with local Chapter people, other tax preparers and all these discussions led me to believe that we can deduct the remaining basis in the roof as stated by PapaJoe in his post #9. Yesterday I called NATP for an opinion in this matter and today they called stating that their review supports the fact that the remaining basis can be deducted. What Now!!

I agree with PapaJoe. The remaining basis is a write off. See page 10-2 of 1040 QF Handbook regarding Abandonment of Depreciable Property, which points out that "In order to deduct a loss from physical abandonment the taxpayer must intend to irrevocably discard the asset so that it will neither be used nor retrived by the taxpayer for sale, exchange or other dispo.". This is very fitting to this situation. EThanx for all the discussion on this.