jklcpa

Jack is answering about the recipients basis where the recipient acquires the donor's basis (steps into the shoes of the donor). If you are actually asking about how to prepare the gift tax return and about determining the fair market value at the date of the gift to report on Form 709, Sch A, column F, that is a much more complicated answer about how to determine the value of an ownership interest in a closely held business on a piece of property. If that is really what you are asking about - If by property you mean real estate, I'd suggest your client use a qualified professional to appraise it because the documentation of how the FMV was determined is required to be attached to the gift tax return, and gift tax returns are reviewed by humans at the IRS. That is a risk area for tax preparers since doing valuations aren't within the normal scope of a tax preparation business. A typical scenario that I've encountered a few times goes something like this: A parent owns his own residence and a 2nd house that the child is living in (for little or no rent) and transfers that 2nd home to the child by gift. Yes, the child's basis comes from the donor's basis, but in preparing the gift tax return, the preparer must explain the method used and report the FMV on the date of the gift because that determines how much of the unified credit is used up by that gift and calculates whether there is a taxable component to the gift at all. Business valuations are much more complicated and especially so when the business is closely held. There are business appraisers that do that too. There are methods that the IRS finds acceptable and that take into consideration a variety of factors that I feel are really beyond the scope of something that could be easily or completely explained here. Again, an explanation of the valuation method used must be filed with the gift tax return. If you are considering doing this, you might want to check with your malpractice insurance agent to make sure that type of service is covered. As an example, I had a C corp client that gifted 76% of his ownership in his closely held business to his son in stages over several years. To highlight a few of the areas considered in that valuation, those factors included the type of industry, the size of the business by volume or asset base, its locale, its competition, stability of client base, discounts for lack of marketability due to being closely held, adjusting for owner compensation that might be in excess of what the business would pay an outsider or manager to perform those same duties, and much more. That list of factors isn't meant to be a full discussion, obviously, so don't shoot the messenger. I was only trying to show how business valuations are complex. A full explanation of how those valuations were done was attached to each and every gift tax return that was filed. No funds changed hands, the son received something that had appreciated close to 50 times more than the dad's basis in the company, and son's basis in the company is equal to 76% of dad's basis. The gift tax return filed by an individual tracks the total gifts given by that person over his or her lifetime so that one knows how much of the unified credit has already been used up while he/she was living, and that is used in determining if there is a taxable estate or not at the person's death. To be basic, the current law says that a person can transfer $5.34 million of assets either by gift during his lifetime or at his death via his estate without paying tax. That is what the unified estate and gift tax exclusion is all about. Does that help you at all?

Are you asking about the method to determine the FMV of the gift to be listed on the gift tax return filed by the donor, or the basis of the gift in the hands of the recipient? What exactly is being gifted?

What is being gifted?

Sorry about not including what Lion added to make it completely clear. I thought it was obvious since each person would be filing their own Form 5329, so the form would limit the amount excepted from the penalty, limited to the amount of the withdrawal up to the max exclusion of $10K, whichever is less. Of course, each person must qualify to be a first time homebuyer too to be eligible for the exception.

The $10K exclusion from the penalty is per person, and each of them would file their own form 5329 showing the appropriate exclusion code filed with the joint return

That's correct. I am no longer an ATX customer but used it for many years up through the 2011 tax year. I have from 2009 through 2012 (only includes the very early update in Feb 2013) on my current computer. I still have all of my program archive CDs along with the installation codes and would need them if I ever wanted to install any of those years on another machine. I could not download those from their server online. I can go online and look at my account and look up the access codes, but that is about all I could do there.

Also, are you able to connect to the server to update forms or download any new ones? As I responded on 10/30 when you posted about this the first time, according to the license agreement, "support" includes access to the server for functions such as updating the program and forms, and also e-filing. Do let us know if you are still able to e-file.

^ exactly. Drake software does it automatically too.

Maybe not quite, Jack. You had a blank post with a "." in it at 5:09 in the topic about timing of organizer mailings. I deleted it.

Near the top of each forum, toward the right and just above the first post there is a link that functions to mark all in that forum as being read. Also, out on the main page that lists all the forums and subforums, you'll see a balloon (like used in comics) that has a set of quotes in it. If you click that, it marks that entire forum as "read" without having to open it.

I'm not having any issues, but around midnight last night I could not access this site. The message said that it couldn't find this site's server, and then it came back within a short amount of time. All other sites I tried were working, so I assumed this one was having problems. Maybe Eric will have some answers as to what is going on.

Doesn't sound like a scam to me. Cancellation fees are spelled out in the contract.

Have you successfully e-filed this return in the past? I am not familiar with PA's wording of errors, but it may not be due to the timing at all. There were problems with some vendors' software in prior years when filing an RCT-101 by itself when the federal wasn't also filed. For example, a single member LLC that was a disregarded entity for federal purposes where income was included on the member's personal return but was reported on the RCT-101 for state reporting. In those cases, paper filing was necessary for the RCT-101, and if the preparer is subject to the mandatory e-filing rules, an explanation should be attached of why the return is being paper filed.

The highlights aren't any surprise: ACA complications, possible late legislation of extenders, telephone service and hold times will deteriorate further, possible relief of penalties incurred because of Columbus Day shutdown, more identity theft expected. http://www.journalofaccountancy.com/News/201411270.htm Filing season complications loom, IRS commissioner tells AICPA By Paul Bonner November 4, 2014 The 2015 tax filing season “will be one of the most complicated filing seasons we’ve ever had,” IRS Commissioner John Koskinen said in a keynote address Tuesday to hundreds of attendees at the AICPA National Tax Conference in Washington. He also held out hope of penalty relief for taxpayers affected by the IRS’s shutdown of its e-services over the Columbus Day weekend. Two new provisions for tax year 2014 introduced by the Patient Protection and Affordable Care Act of 2010 (PPACA), P.L. 111-148, will figure prominently on many individual returns, Koskinen noted: the premium tax credit and the individual shared-responsibility payment, or “individual mandate” to maintain minimum essential health coverage. He said the IRS has so far attempted to ensure affected taxpayers get the word via a new webpage at irs.gov, plain-language tax tips in fliers and other publications, social media and YouTube, and organizations serving taxpayers. Inaction or late action by Congress on legislation to extend temporary tax provisions—most of which expired at the end of 2013—could not only complicate filing season but delay its start, Koskinen said, repeating his other recent warnings, including to Congress directly. He thanked the AICPA for also writing to Congress to urge immediate action on the expired provisions. “The continuing uncertainty about the extender legislation imposes stress not only on the IRS but the entire tax community, including everyone in this room,” he said. If the legislative uncertainty persists into 2015 and/or contains new or modified provisions—as happened two years ago in the congressional “fiscal cliff” debates and resulting legislation—the IRS would be forced to delay the start of filing season, delaying the processing of returns, Koskinen said. IRS budget issues At the same time, reductions in the Service’s funding have imposed “serious obstacles” to its ability to fulfill its mission and provide adequate levels of taxpayer service and enforcement while improving its outdated information technology systems. That mission has expanded to include, besides the PPACA provisions, new responsibilities under the Foreign Account Tax Compliance Act (FATCA). “Right now, the problem is trying to figure out how to survive with the constraints we are under and the obligations we have,” he said. The IRS in fiscal 2014 and 2015 is operating under the same level of funding as in 2013, a total of about $11.3 billion, or $850 million below its 2010 funding, Koskinen noted. That means that its budget has declined 7% since 2010 and full-time employees dropped by 13,000, while the number of taxpayers it serves increased by 7 million, he said. Taxpayer service One result of the decrease in funding is that, while during the 2014 filing season the IRS was able to answer taxpayer’s phone calls 71% of the time—higher than in the year before, but “still unacceptable,” he said—that percentage is likely to drop to 53% in 2015. The latter call-answering rate was also decried earlier Tuesday by National Taxpayer Advocate Nina Olson in a session on her priorities for the Taxpayer Advocate Service she heads. Olson also noted that taxpayers who do manage eventually to get a person at the IRS on the other end of the line in the upcoming filing season will have waited on hold for an average of 34 minutes. For the practitioner priority hotline, that average wait time is expected to be 52 1/3 minutes, making “priority” a dubious adjective, she said. Questions from CPAs to Koskinen also homed in on the call wait times. Koskinen echoed Olson’s disapproval of the situation, but said the IRS’s obligations to process returns timely and implement law changes—without any increased funding—have necessarily reduced resources for taxpayer service. For example, to implement the PPACA provisions, the IRS requested $430 million for processes, forms, and regulations and $300 million to adapt its information technology systems for fiscal 2014, he said. “Of which we got zero,” he said. In the upcoming filing season, the IRS will try “to do as well as we can,” Koskinen said. But, he added, “As well as we can is still going to be miserable.” Online services Besides hoping to improve taxpayer service in the near term, Koskinen said he has been advocating a longer-term goal of providing online taxpayer and practitioner services at least comparable to those offered by a typical financial institution—which he characterized as a comparatively modest and reasonable aim. “We’re not trying to go to the moon; we’re not trying to be at the cutting edge of technology,” he said. A sore point for many AICPA members present had been addressed by Olson and came up again in questions to Koskinen: the Service’s having shut down its e-filing system for maintenance during the Columbus Day weekend Oct. 11 through Oct. 13, on the eve of the extended due date for 2013 returns. Koskinen said the IRS perennially needs most holiday weekends, Columbus Day included, to perform such chores. But he also said anyone who filed a return “that week” would be given relief from late-filing penalties. Identity theft In response to another question, Koskinen outlined the IRS’s efforts to combat tax identity theft, calling it “one of the three or four most important issues we’re dealing with.” The problem “exploded” in 2010 through 2012. After criminal investigations, arrests, and sentencing of between 1,200 and 1,500 individuals, plus better refund safeguards, improper payments to identity thieves are now lower but still a significant problem, with an anticipated 3,000 to 4,000 victims likely this coming year. “We’ve gotten most of the amateurs off the street; what we’re left with is organized crime here and organized crime syndicates around the world,” Koskinen said. The IRS is also doing a better job than before of correcting victims’ accounts, reducing the time required from a year to under 120 days, “which is still too long,” he said. Ongoing initiatives to stem the problem include consolidating victim assistance in a single IRS unit and a pilot program offering identity protection personal identification numbers to all taxpayers in regions where identity thieves have operated. The pilot program is available in Georgia, Florida, and the District of Columbia.

I'll have to send it by PM to you. This subforum doesn't allow attachments to the posts.

Of course you may still participate here. This is not an official forum run by CCH. It is a private group that was started after CCH shut off the official forum in 2007 on April the 10th or 11th. I haven't used ATX in 2 years, and I am here along with others that have migrated away from ATX as their main software. I don't think you can access the Drake forum until you purchase it, and that is why I offered to send you some screen shots.

I'm going to move your post to the Drake subforum here on this site. To answer your questions: Yes, Drake has a very nice extensive forum that stays active with some very knowledgeable people participating year round. I could send you a few screen shots if you'd like. I can't answer about how long it would take you to be comfortable with the software or if it would be suitable to your practice. If you are seriously considering it, why not get a copy of their software and try it out between now and year end? It is free and a fully functional copy of last year's program. The biggest hangup that people have is moving away from forms-based input and learning the quirks of any new program that you would try. Once I got through the conversion it didn't take me all that long before I was comfortable with most returns, and I started with it in mid-February. You could try it now and rework some of your returns with it that are most representative of the returns that you prepare to get an idea if it will be something that you are comfortable with and will work in your particular practice.

8948

Some people like the off topic and chatty posts mixed it and say that it gives a welcome break, but I'd like to see those types of posts separated out in the Off Topic forum too with the General Chat being relabled to include tax and practice management issues only. I also wanted to separate the software issues out of tax because there are numerous software questions mixed in with the tax questions during our busiest time and end up all jumbled together. What would you think about these categories: Tax and Practice Management Software and Technology General Chat for all the fun and off-topic posts Help

For anyone that asks for help, I send the individual or business owner to one of the insurance agencies in my area that specialize in only health insurance. The particular agent that I usually recommend has helped me personally over the years with my mother's medigap and drug policy choices as her situation and health has changed, and also when my husband needed short term coverage before a new employer's insurance became available due to the waiting period because of the job change. I don't give insurance advice, and I won't be in the future either.

I do that too because I am also a solo practitioner.

Although in many/most cases the depreciation schedules are prepared and maintained by the practitioner, they are considered to be part of the schedules that make the client's books and records complete, and are necessary to fulfill current or future tax obligations. Depreciation schedules are considered client records and not providing it would fall under Sec 501 as an act discreditable to the profession to hostage records. Even if this CPA is not a member of the AICPA, he or she is still held to the state standards and those of Circ 230 and state revenue depts. My state society actually uses the AICPA standards and rules so that even if not a member of the AICPA in this state, we must still abide by the AICPA rules. The rule you are looking for is Circ 230, sec 10.28 (b ). Here's an article from the AICPA's publication, The Tax Advisor, from Aug 2014 that covers your issue. http://www.aicpa.org/Publications/TaxAdviser/2014/august/Pages/TPR_Aug14.aspx Here's another good summary by the Pennsylvania Institute of CPAs: http://www.picpa.org/Content/cpajournal/2006/summer/8.aspx ETA (again): I see you are in NY. If this CPA is also in NY, here is part of the NY code of professional conduct that says the same thing, that the deprec schedules are part of the client records, and that they must be given to the client: http://www.nysscpa.org/prof_library/ethics/Rules/codeother.htm

This means that my computer will most likely break next week. That is how my luck usually runs.

The question isn't really "can they?" but "will they?". According to the agreement "support" includes access to the server for e-filing, so if they choose to follow their agreement to the letter, it is possible for ATX to cut off access from Nov 15th until the user renews.

Sure they can. It's very clearly spelled out in the license agreement that everyone accepts, and it does include the Nov 15th date. Specifically, here a cut and paste taken directly from the ATX licensing agreement (bolding is mine): 4. TERM & TERMINATION 4.1. Expiration of Rights. Subject to the terms of subsection 4.2 - 4.5, the License granted under this Agreement to use the Software will be perpetual. Notwithstanding the foregoing, Customer’s access to Support, including Updates, will expire one (1) year from the initial date of delivery for the applicable Software. Notwithstanding the term set forth above, access to Web-based Applications and access to electronic filing for tax compliance software will expire on November 15th of the tax processing year for which such particular Software was purchased (for example, the 2014 tax year software, which is used in the 2015 tax filing season, will expire on November 15, 2015), unless stated otherwise on the applicable Order Confirmation 4.2. Expiration of Agreement. This Agreement will stay in effect until Support and access to electronic filing and if applicable, Web-based Applications, have expired pursuant to Section 4.1 above. The following sections will survive the expiration of this Agreement under this subsection 4.2: subsections 5.3, 8.3, 8.4, 8.5 and 8.6, and Sections 1, 2, 4, 7, 9, 10 and 11 Link to the entire license agreement: https://www.cchsfs.com/pdf/license.pdf