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That would potentially solve the penalty issue, and while it may not be an ethical violation to take the client's funds in payment of their tax bill like it is for preparers to negotiate deposits of refunds, I think the client that should have paid would be suspicious and would want proof that the taxes were actually paid if their payment was to the preparer and not the IRS. Plus, the preparing firm shouldn't want its funds mixed up with those of clients in any way, and there's no way for correct client to pay harmed client directly without divulging harmed client's name because that would be an ethical violation. Either way, both clients will be unhappy no matter what the solution is. Hopefully for the OP, the disgruntled client wasn't angry enough to contact IRS with a complaint of preparer error, and if they did, that the agency would see this as an innocent mistake, but we don't know that because we are supposed to be safeguarding information like this.

Has the incorrect client with money withdrawn contacted their bank? That is a start, because that bank should have refused if the name IRS was using didn't match the account information. Next, below is a link to an IRS page for payment options, and at the bottom is a section for cancellations, errors & questions, and that section contains a phone number that may have someone to provide additional guidance. I do know that with errors such as this that involve direct deposits of refunds, the IRS clearly states that it takes no responsibility for incorrect information supplied to the agency by taxpayer or preparer. https://www.irs.gov/payments/pay-taxes-by-electronic-funds-withdrawal At a minimum, your firm should pay or share in any late payment penalties and the amount charged for the invalid returned payment (like the returned/bounced check fee).

My comments are in color. I haven't had one either, but from what I understand, for what it's worth:

Thank you!

I am still waiting on one client that hasn't given me anything directly. What I do have is what I got from the year end W-2 runs from his company's payroll processor and the 1099s directly from his broker for just a few of his many investment accounts. I've had all of that since Feb or March and that part was input long ago. All of the missing stuff, he handles himself! I'm really tired of beating my head against a wall every time I try to get some data. I can't even work on it.

True, I assumed Catherine was aware of that. The reason I mentioned it is because it still has to be reported, and the taxpayer already received a letter from the state looking for the transaction. So if a loss, then the entire sale(not installment reporting) would be on the 2021 Form 8949 showing total sales price, basis, and using code "L" for the disallowed loss from other than wash sales.

Oh boy, my first thoughts are these - First, you have to figure out the basis to know whether you're dealing with a gain or loss since the sale price is so low. If a loss then you would report the entire in 2021, the year of the sale. If a gain, was this family cottage ever rented with depreciation taken? Then you'll have the recapture in 2021 and (possibly) no income again until in 2024, but with it being a sale to related parties you need to know if the brothers have already disposed of it before she got all of her money. If they have already disposed of it, then this client must recognize what they realized as if she received it herself. You can check out the IRS Pub that deals with installment sales for more on this. Also, if the transaction results in a gain, then you definitely have to use installment sale reporting which is the default method of reporting. The opportunity to elect out of installment reporting is gone because that election has to be done on a timely filed tax return, including extensions, for the year of the sale. Will this woman ever receive the money from the brother that is technically in default, or will his non-payment ultimately result in the terms of the installment sale being redefined? With installment reporting, it sounds like you are looking at 6252 and Sch D for 2021 to document the transaction on the return with no payments in that year, and then in 2024. If it was ever rented and depreciated, then you possibly have recapture income for 2021 and add 4797 into the mix. If no installment reporting because it's a loss, then only 2021.

I'm not sure why you are mad, and not to be wise, but it is a business income deduction. In general, it is a deduction based on business income, REIT dividends and qualifying income from PTPs. Do you have any other business income or sec 199A dividend income that would qualify, or did the PTP have any qualifying income or from a REIT?

My method is much like that of kathyc2 except that all payments are deposited into the bank including the cash. I hardly ever get cash anyway and very few pay by credit or debit, even from the younger ones, and since I've known a large percentage of the clients for my entire working career and some since childhood being in a small town, I'd venture a guess that they don't feel the need for the "insurance".

"Your sister" Knowing this poster's history of mostly posing hypothetical questions, I suspect that this is another one. In this context, "sister" could be replaced by any other name, especially with the title asking how we would advise clients on their options and tax consequences.

Read this topic through to the end, including the linked article.

Have you seen this? https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/military-and-clergy-rules-for-the-earned-income-tax-credit#ClergyMemberOrMinister If you decide that the income should be included in the calcs, maybe you are missing a checkbox somewhere.

I suspect Kathy is correct, but are you able to elaborate on what was stated on the form you were asked to sign? I know that, for example, Tele-Check's system has an authorization slip that the payor signs to allow Tele-Check, as the processor, to present the "check" to your bank for payment. It's a service that the business pays for to have that processor handling its deposits and helps minimize losses for the company. Also, to be clear, it was the practice owner's decision to present this; the lawyer can't make the owner do anything he or she doesn't want to.

Agree with both ILLMAS and BulldogTom above. Also, when you have the amounts pinned down, be sure to issue 1099s for each year the theft occurred. Embezzled funds are taxable income to the thief.

Allocate the total of the appraisal and broker fee ratably to each of the assets purchased and use the appropriate lives allowed for whatever type of asset it is. Some will be allocated to land that is obviously nondepreciable. Remember you are also supposed to attach the 8594 to the return, so I would also include a schedule showing those amounts and then the allocation of these additional costs to arrive at the totals of each category. On this reconciling schedule, I'd use a generic label for these additional costs, something like "other acquisition costs capitalized."

These fall under § 1.263(a)-5 - Amounts paid or incurred to facilitate an acquisition of a trade or business, a change in the capital structure of a business entity, and certain other transactions. Here's a link to that: 1.263(a)-5(a)(1): and the please see 1.263(a)-5(e)(2)(i) in the same linked page above regarding the appraisal that falls within the definition of certain acquisitive transactions that are considered "inherently facilitative", meaning that these appraisal costs must be capitalized no matter when they are incurred and one cannot use the bright-line date tests outlined in 1.263(a)-5(e)(1)(i) and (ii)

Patrick, that is good news then! Sorry I was wrong about that, and thank you for sharing that. It may be that after Drake was bought by the larger company, that it made e-filing of the 114 through the software possible where Drake interacts on behalf of its customers.

I no longer use ATX, but I'll suggest that you look at the fixed asset input to see if it's possible to generate the 3468s from there since asset basis is required on the form. Sorry I can't be of more help, but it certainly should be possible since, as you say, more than one 3468 is required by the IRS in this circumstance.

It should, but Darlene was questioning specifically where to enter the dollar amounts from boxes 8 & 9 which show the portion of the farm income that is QBI-eligible income. Drake has a screen specifically for entering every amount from all the boxes on the 1099-PATR, and also has a section on the Sch F input to designate items affecting QBI or how much of it is QBI eligible. I'm really very surprised that ATX doesn't have something similar. In any case, I don't think it is wise for the OP to enter anything directly on the 8995.

Darlene, I don't use ATX and have no farmers, but since you've not received any answers, I will try to help in a more general way. You should have an input area to enter all or most of the information from the 1099 PATR amounts that will flow to Schedule F. That input area may, or may not, have a place to enter the information for what's shown on the PATR lines 8 & 9. If you don't see a place to enter anything for boxes 8 & 9, you may have to enter it on the input area for the Sch F. I would think that the input area for Sch F should definitely have an area for you to enter the QBI-related information, and so you shouldn't have to enter anything directly or override anything on the 8995. Those boxes 8 & 9 on the PATR show the amount of the coop income already reported on the PATR (boxes 1,2,3,5) that also qualifies for the QBI deduction. I can't tell you if it has anything to do with a REIT. What type of activity is your client involved in?

I use Drake too and it does allow filing of the 8938 because the 8938 goes to IRS, but not the FinCen 114 because it is not an IRS filing. To file the FinCen 114 would require setting up direct access through another portal so, like Randall, any clients had to file the 114 themselves.

It is almost never included with the legal documents. It is prepared by either the seller's or purchaser's tax preparer, and each party to the transaction is supposed to include it with the return for the year of sale/purchase. The ones I've had, one of the party prepares and shares with the other party so that there is no chance that the forms aren't the same.

FASB is the Financial ACCOUNTING Standards Board that governs accounting rules that can differ substantially from tax law. The tax code section for amortizing these particular intangibles is 1.197-2(f) which states the period of amortization is over 15 years. I did not address any state issues, and hopefully with Deb being from CA, she is already aware of differences from the federal.

Someone should be preparing form 8594, and both the seller and purchaser are supposed to include this with their respective tax returns. If you look at the snippet below that is a portion of the 8594, from what you describe of the sale, all of the building, land, equipment, and fixtures will be shown in class V. Then, the covenant is a Class VI asset, and the remaining $700K of goodwill is a Class VII asset. You will note that the Class VI and VII assets are combined on one line, and also note that the instructions state that these items are amortized under sec 197. https://www.irs.gov/instructions/i8594

OP should have a form 8594 that shows the categories of assets. With new C corp being created, any cash or assets coming in should be recorded, and the other side of the entry to capital stock or loans from shareholders, if any is to be repaid. Then, assuming the payment for the business purchase was made from the new C corp funds, record the depreciable assets using the values as they are shown in the purchase agreement. Treat each of the items purchased as you would any other business that went out and bought these things. Don't get overwhelmed by the fact that this is an entire business purchase with many pages of terms of sale and intent documents. That is: for land, building, fixtures, and equipment. If the values shown on the list of assets purchase do actually add up to the sales price for those assets, then you may use those figures as your basis for depreciation. If, however, you were provided with a sale price for a category of assets (for example, the equipment) but the list is the seller's depreciation schedule with historical cost, then you will have to allocate a portion of that purchase price to each asset purchased. For the remaining amounts, the $5,000 covenant, and the final $700,000 you say is not accounted for, those are both intangible assets amortizable under sec 197 using a 15 year life. In your posts above saying the $700K is left over and not labeled as anything after all other assets are purchased, then I would treat that amount of $700K as GOODWILL, again amortizable under 197 using a 15 year life.