jklcpa

Gene, I think you would owe that sales tax because Drake sends out the first release of the software on CD in December, so that would be canned software on tangible, and you would be taxed regardless because AL also taxes the canned software received via download also.

From the map in your link, the State of FL does require sales tax be collected on tangible goods including that software on CD. Depending on the package that you purchase, some of the larger packages that ATX offers also includes research materials in print (Max, TTO, Advantage, etc), so purchasers of those products are receiving tangible goods from ATX.

I've never heard of this, but I agree that you should be careful. Also, please be careful if this came to you through as unsolicited email and be careful with any links provided. When I googled to find the company, one of the hits was to a site called siglosoftware dot com having a description that included "provides the speed tax preparers need to work efficient and produce..." I'm not sure if that is related to the company making this offer, but if it is, please be aware that without even visiting that site I was getting red warnings about that site being high risk, dangerous and containing malicious links.

jmdaviscpa, thanks for referencing the KB # again and making it easy to find and uninstall again. From my list, that update came in again on 10/6, so about 2 weeks ago on my list. I also have my update settings to allow me to review the updates before installing.

It's beautiful. Thanks for sharing. I would like to point out though that Stacy Westfall is neither deaf nor mute. That is definitely Stacy riding though, and she is a well-known pro trainer and competitor in the reining world, and she also does these exhibitions without tack and has done it with a few horses now. Here's a piece she wrote about that email that is circulating: http://westfallhorsemanship.com/2011/09/22/stacy-westfall-deaf-mute/

I never said that paying the sales taxes personally creates a deduction on the personal return. It wouldn't and I should have said I agree with jmdavis with the exception that we don't know if this will effect basis because we don't know if this is a C or S since the OP did not provide that information, someone else made a presumption. MaxW also did not provide us with where payments of sales taxes, if any, were posted in the company's books, so no one here can say how or where that correction should be made either. The proper course of action would be to amend the corp returns to reflect amounts as if the transactions were recorded properly in the company's books as I described in my first post in this thread, and any remaining unpaid sales tax that was a liability of the company on its final balance sheet would have to be dealt with when the balance sheet was closed out and final distribution was made to the shareholder. Any liability for unpaid sales taxes becomes the responsibility of the stockholder, and its payment does not create a deductible expense on the personal return.

MsTabbyKats, Margaret expressed beautifully and exactly my sentiments in her post above. I wish you well on your journey through treatments, that it is without complication and is as pain-free as is possible, and that your return to full health is swift. I, too, hope you will keep in touch with us here even though you will no longer be practicing.

Agree with jmdavis on this and that is what I was getting at earlier. The thing is though, we don't know if this was a C or an S corp. MaxW didn't specify; it was mircpa that brought that presumption into the discussion.

Horrible day today with a dog in crisis with CHF, but that's a topic for another forum. All I can say is, thank goodness I didn't leave any work until the last day and that the last 3 returns were finished and filed several days ago. All I had to do was wait for the acks.

I will respectfully disagree with you on this. The sales tax collected by a business on its sales or revenues that is to be remitted to the state or local government that is imposing the tax is collected in a fiduciary capacity, and those funds do not belong to the company and should not ever be included in revenue or expense. They are a liability of the company until remitted to the tax department to which they are owed. The sales tax payments that a business may include in its costs or expenses are those sales taxes the business pays on merchandise it purchases for resale and that are included in COS, in basis of its depreciable assets, or as part of service costs provided to the business. Please note that this is specifically addressed in Pub 334, Tax Guide for Small Business, in the "Taxes" section with a caution: Sales tax. Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. If the property is depreciable, add the sales tax to the basis for depreciation. For information on the basis of property, see Publication 551, Basis of Assets. Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Do not include these taxes in gross receipts or sales.

A penalty may be assessed but relief may be granted using rev proc 84-35 IF LLC is taxed as a partnership and can answer 'yes' to the questions below. I think some here have also used this rev proc successfully in having penalties abated for late filing of an S corp return as well, although I have not. If you can answer the below questions “yes”, the penalties will be waived. Is this a domestic partnership?Are there 10 or fewer partners?Are all partners a natural person (other than a nonresident alien) or an estate?Is each partner’s share of each partnership item the same as his share of every other item (a husband and wife and their estate shall be treated as one partner)?Have all the partners fully reported their share of the income, deductions and credits of the partnership on their timely filed income tax returns?If the answers to all of the above questions are “Yes,” please sign this form and return it with a copy of the penalty assessment. You do not owe the penalty.

Even with amending the corp returns to remove the sales tax from revenues, it would then shift to a liability of the corporation on the balance sheet, not an expense. Had it been recorded properly when it was collected at the time of the sale, it would have increased cash and increased the liability account. Had the corporation been the entity that paid it, it would have decreased cash, decreased the liability. As I see it, this liability should have been distributed to the shareholder at dissolution of the corporation. Has the final return for the corporation been filed?

Late night brain fail.

Here's a page from TaxAlmanac online that states virtually the same thing: http://www.taxalmanac.org/index.php/State_Income_Tax_Refunds_-_Tax_Benefit_Rule.html Here's a page with a discussion about the tax benefit rule written by an attorney that practices in the areas of tax, estate and business planning that also describes the calculations in more depth. It is possible that my simplified example didn't go far enough if your client was on the borderline of whether or not he would be subject to the AMT with or without the higher deduction, and that could be an additional wrench in the works and that you are headed in the proper direction of calculating how much of that original deduction created the tax benefit. This page does give a cite to Treas Reg 1.111-(1)(b)(1), if that is helpful for you to know. http://www.jeffjacobslaw.com/taxability-of-recovery-items-such-as-state-tax-refunds/

When you receive a state or local tax refund of taxes that were included in Sch A in the prior year and were also subject to AMT, you recompute that prior year's income tax liability with the deduction reduced on Sch A by the amount of the refund you received. If the resulting recomputed tax is lower or is unchanged, there was no tax benefit. If the resulting recomputed tax is higher, as it is in your client's case, then the difference between the amount of total tax on the return as filed and the recomputed tax liability is the amount of the tax benefit that was derived by the deduction on that prior year's return, and is the amount of the refund that is taxable. Example with made up numbers: Client's 2013 Sch A included $68K in state taxes paid. Client's total tax liability for 2013 including AMT is $180,000. In 2014 $61K of state tax is refunded. Recompute tax with only $7K of the state tax on Sch A (the 68K tax paid minus the refunded portion) and now total tax liability as recomputed is $180,018. Because the resulting tax would have been $18K higher, the client received a tax benefit of $18K on the 2013 return as a result of that state tax deduction that was refunded in 2014, and therefore in this example, $18K of the state refund is taxable in 2014.

The other thing that popped into my head is the holding period of constructed assets, but unless a unit is sold within one year after completion, you won't have any complication of trying to break down a possible sale transaction into its short- and long-term components.

Well, since he's paying in cash, at least you avoid capitalized interest. The basis calcs might not be that hard if your client has a contract with the builder for a set price. There can be modifications to it as work progresses, so ask if any changes to the original contract have been made. As you say, the price is being paid in installments as the project is completed, so maybe all you have to do is add up the payments to make sure it is in line with the final price. Are there other expenses being paid on the property other than payments toward the construction? Is your complication that this a large enough project that you are considering cost segregation of the building's components?

On the 4562 input screen, make sure that the property is designated as Sch E and that the property number is entered in the "PAN" box. That number must also be on the Sch E input screen.

I searched here for "composite" and there was this post and at least one other that I recall about this issue this year. Maybe this will help: http://www.atxcommunity.com/topic/17071-small-rant-about-atx-input/#comment-124956

If the dependent was required to file a tax return, then her AGI, and t/e interest, and nontaxable portion of any soc sec benefits all must be included in the household income. If the dependent filed a return solely to receive a refund of taxes withheld or estimated taxes paid in but was not otherwise required to file, then her AGI is not included. That's all found on pg 2 of the 8962 instructions under "Terms You May Need to Know" and then see the subsections for "Household Income" and "Modified AGI"

Yikes!!! I took time to look up avg costs in Fairfield for a 60 yr old woman buying through the CT marketplace. Rates are bronze $500-$700, silver in the $800s, gold plans are $900-$1000, and one for $1100 per month for platinum. Our policy last year for the two of us with my husband at 64 was only around $1100, and we have a higher than avg cancer rate here too.

I think, we as practitioners, need to be mindful of not missing planning opportunities with clients that we put on extension that may find themselves in situations such as Lion's client is now facing. This is the sort of scenario that exposes us to more risk because of the April 15th deadline for making prior year contributions to IRAs and HSAs that have the potential to possibly save the client thousands of dollars in repayments of the APTC. By the way, I'm not suggesting that Lion did anything wrong here, only that her client's income appears to have only slightly exceeded the 400% of poverty threshold and that in these cases it is sometimes possible to lower that AGI and lessen the burden of repayment. If this client had been $1 below the threshold, she may have still owed something back, but if the income didn't exceed that 400%, the payback would have been capped. Also, I'd like to know if the entire $7000 is all due to repayment of the APTC, or is some portion of that because of low/no withholding on the IRA distribution or a penalty on that? She was only on the state's marketplace policy for 8 months, so if the entire $7K is all APTC repayment, then she was getting $875 per month in help paying her premiums? Just curious.

Yay! Glad you worked it out. Overthinking...we all do that!

I would amend the returns. Although there will be no refund received from 2011, any time there is a change in income, deduction or credit, amendments should be filed. While this is a carryover that you say will not affect the outcome of other years, the c/o had the potential to reduce income. It will also give the IRS the proper paper trail and flow of the loss carryovers from year to year that you can point back to in the event it is ever questioned. Also, be sure to include the 8582s on an AMT basis too because the IRS has no way of knowing how much the 8582 calc'd on the AMT may differ, and I've had the personal experience of amended returns being held up in processing and questioned because the AMT calcs were not included.

re: recapture - maybe all or only part. See the instructions for line 21 of the 8824. I don't know what worksheet you are trying to make work, so let's try using the 8824 step by step: line 15 will be 150. That is cash of 125 used for mortgage + 25 not reinvested into any new property. Not reivested is the 225 cash received by the intermediary - 200 used to acquire the new property. line 16 - 200, the FMV of new property line 17 - 350, a subtotal line 18 - 120, the adjusted basis of prop given up line 19 - 230, the realized gain (SP of 350 - adjusted basis 120) from there, you'll have to work through the recapture for line 21 to determine the ordinary income portion. I can't do that since you didn't give the details. Your total gain recognized shouldn't exceed the 150. I hope that helps.