jklcpa

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

My opinion without research is that a firm commitment letter does not constitute a sale. I think you need an agreement of sale with a sale date in 2014 and funds changing hands, even if it is only a downpayment. With that downpayment in place, you can then elect out of the installment sale by reporting the entire sale and gain in 2014. Basically, you have to question when the benefits and burdens of company ownership transfer to the purchaser. Additionally, the purchaser has to be on board with the timing and reporting because they shouldn't be caught in a situation of late filing simply because your client reported the sale as occurring on an earlier date. As an example, if you reported that the sale occurred on 12/15/14, the purchaser would have that short period of activity for the remaining days in 2014.

NECPA, is it possible that the son had income from his illegal activities? It's still taxable even if from illegal operations and could potentially knock him out for EIC depending on the level of his other income in '11 & '12. That may get you off the hook for the EIC, but the due diligence would include asking the parents if there is any other income, legal or illegal, that should be reported. If you do prepare the return, I think you should treat it like any other professional engagement, due diligence included, and sign you name. Otherwise, send them to one of the big box chains that handle EIC returns all the time.

It's possible to attach pdf files on this forum, but you might want to reconsider offering it here since it's most likely meant for distribution to only those that have paid to attend the seminar.

No, in order to lose S status under the rule we are discussing, it has to have the excess passive income for 3 consecutive years AND ALSO must have accumulated E & P on the books. You stated that yourself earlier in this topic in bold in your post #12. If this entity has always been an S corp and you say it doesn't have accumulated E & P, it won't lose S status. If it doesn't have accum E & P, not only will it NOT lose the S status under 1362(d)(3), it also won't be subject to the "sting" tax on its net passive investment income either. The first article that I linked to specifically discusses how S corps can distribute accum E & P to get it off the books so that it can avoid these 2 things occurring.

Mircpa, does this S corp actually have accumulated E&P? That would only come about if the company was formerly a C corp or may have "inherited" the accum E&P in an earlier tax-free reorganization with another C corp that did have the accum E & P. If your S corp doesn't have accumulated E & P on its books, you will not have the technical termination of the S status. It also wouldn't be subject to the passive investment income tax either. I have several more links that may help you - "Taking the 'Sting' Out of S Corporations' Earnings and Profits" from the Journal of Accountancy, Jan 2011 - the article talks about the tax traps of excess passive income in the S corp and possible solutions including how to structure distributions to pay out the accum E & P, or how to make an election to pay out accum E & P before AAA http://www.journalofaccountancy.com/Issues/2011/Jan/20103334.htm "Determining the Taxability of S Corporation Distributions: Part II" from The Tax Advisor, Feb 1, 2014 - more in depth about the taxation of distributions from S corps with accum E & P, more examples. This article also includes a link back to the Part I of the article from the month before. http://www.aicpa.org/publications/taxadviser/2014/february/pages/nitti_feb2014.aspx "S Corporations and Rental Income" from the NY State Society of CPAs CPA Journal Online, from 2006, includes a discussion of PLR 200339042 where the IRS ruled that the rental income received into an S corp from commercial real estate wasn't passive because of significant management services provided by the S corp. The article includes a list of those services that were provided. http://www.nysscpa.org/cpajournal/2006/1006/essentials/p44.htm

Mircpa, not only will you have a problem moving the real estate out of the corporation without triggering gain as I'd already mentioned, you also will trigger gain recognition because of the related party rules that will negate any benefit derived from the 1031 exchange if you move the property from the S corp to another related entity within 2 years of the exchange date if the same owner of the current S corp also owns more than 50% of the new entity. That would include other S corps, C corps, partnerships, LLCs, etc.

Mircpa, take a look at this Feb 2014 article from Bloomberg BNA about the IRS waiving the termination to see if this might help you: http://www.bna.com/irs-waives-termination-n17179882518/

Reference is §1362(d)(3)(A)(i). Here's a link to that section: http://www.law.cornell.edu/uscode/text/26/1362

I agree with Sara. I've taken courses offered and have done reading over the last 2 years, but there's no way I'd go into this coming tax season without taking at least another CPE course. I plan to do more than that.

Hmm, this termination of the S corp and transfer to the LLC will trigger gain recognition from the distribution of the real estate at FMV.

No, she had only 236 votes of the 250 required for further consideration. Joan, I wish you'd asked us sooner. I hit my FB friends up a couple of times pushing for votes, and those that saw it did vote, but on a Friday night in the few hours that remained there were many more that weren't on to even see the request. I know more would have voted at my asking if I'd been able to share your need earlier.

Is that what you are doing, playing hard to get? Seems to me that CCH's discount strategies leave a bad taste for the long-time loyal users, and it always looks like a last ditch desperation move by the company when they start offering this variety of discount and prize drawings.

There was never a time when a WIFE was claimed by the husband for 1/2 of the year and she claimed herself for the second 1/2. KC and Sara didn't mention children or custody in their posts.

I cast a vote for you! I also posted on my FB page asking my friends to help out too.

No fun for us!

Nah, y'all are going to milk this for all it's worth.

I agree with this. If a user is absolutely sure that they are sticking with a particular program, then go ahead and take advantage of the discount. On the other hand, if a user wants to see if major problems of the prior year have been resolved to their satisfaction, that promises made by the vendor have been kept, AND that user doesn't need the program before February, the discount may not be worth the hassle of renewing early only to find out that the program is no longer suited to their particular practice. In that case, it may be better to wait and let others test out the early releases and fixes. That small a discount only represents one or two returns for many or most of us.

I agree with jmdaviscpa. The gain in the S corp does increase basis, so as long as basis at the EOY is higher than the suspended losses, the individuals should be able to deduct those in the year the gain passes through.

From the instructions for 1040X: When To File File Form 1040X only after you have filed your original return. Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. If you filed your original return early (for example, March 1 for a calendar year return), your return is considered filed on the due date (generally April 15). However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it July 1, your return is considered filed on July 1. This forum is for tax professional only to help each other with technical aspects of using the ATX tax program and in our tax preparation. We do not give out tax advice to the general public here.

You didn't give enough info yet for anyone here to compute his basis. Clearly there were losses or distributions in prior years that created that negative balance in retained earnings, but we don't know if aggregate prior year losses were enough that stock basis has been reduced to -0- by the start of the year you are working on, and if there was a reduction in debt basis prior to the BOY. Was debt basis at BOY a reduced amount below 100% of its value? Basically, there is stock basis and there is debt basis. Once stock basis is zeroed out, the shareholder can continue to deduct losses on his personal return up to the amount of debt basis. If both have been fully used, then his basis is truly -0-. If the debt basis had been reduced below its face value, any repayments of the loan that are paid to the shareholder might create taxable income. The character of that income depends on the type of loan. The shareholder's basis doesn't have to be -0- to create this income, only that debt basis had been previously used (reduced) when he deducted losses, and if repayment of the loan is made before the debt basis is restored to 100% of face value, then he will have income.