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I had a great season, finished the returns a little early, have already completely several clients' 1st quarter work and payroll returns, and today I'm taking it easy. I was able to add to the client base, grew the practice some, and made more money! Yay! Thanks to all who participate here to make this a great place to visit. I hope it will continue to grow and thrive, and maybe we'll will entice some that left to call this forum home once more. Finally, I want to say THANK YOU, ERIC, for providing this site and taking good care of us.

More questions. Did these returns also have refunds due back to the taxpayers that are being held up until the documents are provided? How long ago were these returns filed? I haven't had any clients receive requests to provide the 1095-A or any other data related to the PTC. I did have a client contacted by the State of PA requesting proof of 529 plan contributions for her grandchildren, but that is a different story.

Just because a client wants to do something doesn't make it correct. Unless the partnership had a change in ownership of more than 50% and therefore had a technical termination, then you and your client would be in error by filing 2 tax returns years, and even if they could or did this, the one for the period ending in Oct would already be late, so an extension is totally inappropriate for that situation. You need to file one extension for the entire year using the EIN and the new name. When the return is filed, you will check the box for name change on page 1 of the form 1065. The partnership can make its allocations to all of the partners for that short period based on the actual results of operations through the date in October and give only those details of that income/expense split to the partner that left. The remaining partners will also get a portion of that plus a split of the activity for the remainder of the year.

I haven't had one of these in quite a while, and it came out on the 1099R the following year, but I don't remember how that data was presented. I think it had code 8 and was reported the following year. The 1040 instructions say that the plan administrator must notify the participant which year to properly include the income. It's in the instructions to lines 16a and 16b under "corrective distributions". If the plan administrator said that the form will be for 2015, then I'd report it in that year since that is what the client told you, document the convo, and not worry about it today. Did the client receive anything in writing?

I had an issue with ATX handling one with a code Q back in 2012, and it was my husband's distribution so I knew all of the facts. Program insisted it was taxable unless I entered info on the 8606, completely contrary to the forms instructions and that code "Q". I'm glad to hear they've corrected that, at least, because it was quite frustrating. I had a client with one with code "T" for the past 2 years, and it is interesting that Drake didn't require it and didn't even mention it in the notes and messages. I'm not pumping up Drake here because that could allow someone to file an incomplete return, but if the taxpayer meets all the requirements for not having to file 8606 with code T, then ATX should allow the practitioner the ability to get rid of the form 8606 or override the taxable portion on the return and still allow the e-file.

From the IRS site regarding excess contributions and deferrals: Correction of excess deferrals after the year. If you have excess deferrals for a year, you may receive a correcting distribution of the excess deferral no later than April 15 of the following year. The plan can distribute the excess deferral (and any income allocable to the excess) no later than April 15 of the year following the year the excess deferral was made. Tax treatment of excess deferrals not attributable to Roth contributions. If the excess deferral is distributed by April 15 (of the following year), it is included in your income in the year contributed and the earnings on the excess deferral will be taxed in the year distributed.

I think the only way you are going to get this to not show up as taxable and still e-file the return is to fill out the basis on the 8606 because of the code T. If it had code Q, it would (should) automatically know that it is entirely nontaxable, but the program can't determine that with code T.

Sure feels good to be done, doesn't it?

Yep, and for the 3 years I've been using it the price hasn't increased, and probably hadn't before that. I don't miss those annual 10% price increases from ATX each year or their "handling" fee tacked on either. It's much more for much less. It's lightening fast so I can prepare more returns More easily prepared Handles out-of-state credits without any fiddling around like ATX required that was a big time suck Allowed me to easily convert to paperless by using their integrated document manager Program, document manager, and scanner all work seamlessly together Integrated email to contact clients or Drake and attach anything or all from return Automatically password protects and encrypts files for emailing or storage Great price and negotiates a great discount on tax research

Agree with Lion. We have to read what those transactions are to determin how to report them appropriately. The latest one I had with code "X" were noncovered "other transactions" that included the cash in lieu payments for fractional shares and the sale of a PTP.

I agree with you, cbslee.

What numbers do you put on those extensions?

What kind of information is being requested? Are these self-employed?

I just got this in my email: IRS Reject F8962-043 The IRS recently confirmed a processing issue regarding reject F8962-043 and has indicated that the issue will not be resolved in the near future. The IRS's recommendation at this time is to paper-file any returns that receive this reject code in order to ensure they are timely filed. Reject F8962-043 states: “Form 8962, Line 28 'AdditionalTaxLimitationAmt' must be equal to the tax limitation amount from the Repayment Limitation table (see Form 8962 instructions) based on Line 5 'FederalPovertyLevelPct' and filingstatus 'IndividualReturnFilingStatusCd' on Form 1040 or 1040A.”

Do you think the premiums will be different if the marketplace could calculate all 10 people's coverage at once vs. calculating them separately and then adding those numbers together?

form 1116, line 2 - put any expense deductions directly related on this line. Those might include state income taxes directly related and investment expenses on Sch A (for example - investment advisory fees for a portfolio that holds all foreign investments) line 3a - those indirect expenses from A that are listed in the instructions - medical, r.e. taxes, general sales tax line 3b - any other indirect expenses from A that aren't on lines 2, 3a, (but not any interest, it has separate lines) plus any deductions on form 1040 on lines 23 - 35 lines 4a and b - prorata share of mortgage interest and other interest. You might find pub 514 helpful, especially around page 16. I think you are getting hung up on this because you have to do some thinking and input a few numbers, and because you don't know how to prepare it and have 2 programs that you are trying to rely on to do the work for you instead of understanding the process. If you understand the goal, maybe it will become clearer about what goes on the form. Take a step back and look at the entire form and you'll see that what the form does is takes all the deductions and breaks them up into pieces and comes up with the portion that applies to the foreign income.

Lion's correct. You can e-file extensions with refunds or with balances showing where the client isn't paying in with the extension. Only those that are authorizing a withdrawal for a payment needs the 8878

I answer your post in the Drake subforum. This isn't specific to Drake; you should check and enter proper amounts no matter what program you are using. As I said in my other answer, I can't tell you what else might belong on that line specifically for your client because I don't know what is on that return. Are there any other deductions on the return that aren't related to any specific item of income?

I can't adequately answer your question beyond what is in the instructions for Form 1116 because I don't know the other items that you are reporting on the return. Are there any other deductions from gross income that aren't directly related to any specific income?

I still have it on my computer and am half afraid to uninstall it in case it creates some sort of disaster in the process.

I didn't think we were allowed to make the 481(a) adjustment in the final year, but someone posted in another thread about it and a rev proc that said we can. Here is that topic: '?do=embed' frameborder='0' data-embedContent>> You'll have to look at that Rev Proc 2011-14 to see if you think it applies. The pertinent sections are: Scope - Sec 4 .01, sec 4 .02 and especially sec 4 .02(5) and Terms and Condition of Change - Sec 5 .04(3)© for ceasing to engage in trade/business or terminating business, but please see the appendix reference. Sorry, I don't have a whole lot more time right now. I just finished inputting all the details for one last night. I thought was only 46 assets, turned out to be 59(!) and I still have to check all of that. When you say "what do I put or fill out to do this properly?" do you have a specific question on that form 3115? It's really hard to answer a question like that, or do you not know where to even start with that form?

Yes, IRS wants a second copy mailed in.

JM, I do too. Years ago at the last firm where I worked, I had a client actually ask if I had any work remaining unfinished because everything was put away and tidy except theirs.

Gail is correct that the basis in the hands of the donee will usually be the adjusted basis from the donor, but if the FMV of the gifted assets is less than its adjusted basis, then the basis in the hands of the donee is the FMV. If you make a gift of depreciable personal property or real property, you do not have to report income on the transaction. However, if the person who receives it (donee) sells or otherwise disposes of the property in a disposition subject to recapture, the donee must take into account the depreciation you deducted in figuring the gain to be reported as ordinary income. Para 1788 from Master Tax Guide here, and it has the refs to the code and regs- 1788. Gift of Code Sec. 1245 or 1250 Property. The recapture of depreciation as ordinary income when a section 1245 or section 1250 property is sold or otherwise disposed (,-r 1779) does not apply in the case of disposition by gift or to transfers at death (except a taxable transfer of section 1245 or section 1250 property in satisfaction of a specific bequest of money) (Code Sees. 1245(b) and 1250(d); Reg.§ 1.1245-4).182 Upon a later sale, however, the donee will realize the same amount of ordinary income that the donor would have realized if the donor had retained the property and sold it (except in the case of a tax-exempt donee). Also, if the taxpayer contributes section 1245 or section 1250 property to a charitable organization, the allowable charitable contribution deduc­tion is reduced by the amount that would have been treated as ordinary income if the taxpayer had sold the asset at its fair market value (,-r 1062). Danrvan is also correct that if about the recapture. If a person gifts listed property or property that sec 179 has been taken on, part of those provisions requires that the person always uses that property greater than 50% business use, so the gift triggers recapture of accelerated and bonus depreciation and sec 179 because the gift causes business use to drop to 0%. Hopefully you don't have this complication!

Interesting post. I have lots of questions. What type of entity is this business, a Schedule C? How was the value determined? Wouldn't the artwork be your client's inventory for sale, or inventory in process? Does your client record costs as inventory? If so, there are 2 methods a business can use to report a casualty or theft loss involving inventory. The first method is to account for the loss by using the actual opening and closing inventories, and since the items are written off as no longer in existence at the year-end, the deduction is in cost of sales, and you would reduce this by any insurance proceeds received. The other method is to report the loss of inventory as a separately stated item, reduced by any insurance received. If your client doesn't record inventory but instead just has his materials costs, does the portion of the insurance reimbursement related to the artwork exceed those costs for the year? Then it seems like he would have a gain from that portion, and I'd be more inclined to show that as a separate line item and not through COS. The damages to the studio would definitely be reported on Form 4684 with the FMV being ignored since it is related to business or income-producing property. That's without doing any research specific to an artist, but I've had many thefts of inventory over my career with my retail clients, and I've always run it through COS with any insurance received as a reduction.