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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.

You have to work through the basis worksheets. It is possible that your colleague is correct. Also, the repayment of the loan can be either capital gain income or ordinary income, depending on the structuring of the loan. If the loan is evidenced by a note, it's possible that the repayment will be capital gain income. If the loan is "open" with no documentation in place, the taxable income triggered by the repayment would be ordinary income. http://www.journalofaccountancy.com/issues/2004/nov/avoidthetaxtrapwhenrepayingshareholderloans.htm

Shareholder is taxed on his proportional share of the company's ordinary income and other flow through items. If the $5K was salary, then the shareholder will report the $5K as W-2 income on line 7 of the form 1040 plus the $13K of ordinary income on Sch E. If that is the case, the $5K in salary was a deduction on the 1120S to arrive at the remaining $13K of ordinary income. If the $5K was a shareholder distribution, then he/she will report only the $13K. Like a partnership, the shareholder reports the income from that entity whether or not he/she received any money or property as distributions at all.

Another page from IRS site: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business

If they are truly running one business, they should be filing a partnership return, or they might be able to be a qualified joint venture and report on separate Sch Cs and Sch SEs: http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Small-Business,-Self-Employed,-Other-Business/Entities/Entities

Articles with an overview are from the AICPA and Journal of Accountancy: http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2012/CPA/Nov/PenaltyAbatement.jsp http://www.journalofaccountancy.com/Issues/2013/Jul/20137885.htm

Does the Sch C have a profit to allow the home office deduction?

Lion is correct. Both the buyer and seller file form 8594 that reports the breakdown of the sale/purchase by class. The instructions for the form describe the classes. Depreciable assets are class V; inventory, stock, products are class IV; many intangibles fall into class VI; goodwill and going concern are class VII.

I would check into this to see if NY will continue to use the definitions going forward that they used for the 2013 year. Jack from Ohio, this might help you too, since NY has different definitions for "tax preparer" and "commercial tax preparer". CPAs, EAs, attorneys licensed to pratice law, employees under direct supervision in firms of those CPAs, EAs, attorneys aren't considered tax preparers under the 2013 definition. This is from the NY website: http://www.tax.ny.gov/tp/reg/tpregmore.htm It seems that the EAs need to check to see if the definition has changed.

Yes, there are statements like that in many of the states' instructions and still on the forms for those that are paper filing, and the forms are also unchanged. The proper instructions for tax preparers and other e-filers should be included in the e-filing guidelines put out by each state, but in many cases those instructions are lacking this sort of detail.

Jack, that is very similar to DE. They want paper-filed returns to include the other states' returns, but have no attachment method when efiling with any software. For efiled returns, DE contacts those other states' revenue depts later in the summer to verify the credit is accurate and only asks for the actual return if there is a problem. I bet IN works in a similar manner. Lion, PA has the ability to accept pdf attachments of the other states returns from within the software. Both ATX and Drake handled it that way, and I can't believe that your more expensive program doesn't have that function.

If you are asking about the post I made regarding the Sch A deduction for estate taxes on IRD, that deduction is limited to the federal estate taxes only, and is allowed only in years in which the recipient reports IRD income. No deduction for state taxes is allowed.

If the estate was large enough to have paid estate taxes, there may be a deduction for income in respect of a decedent. Here's a snippet that explains how it works: An overlooked deduction. Most taxpayers and even many tax advisers are unaware of the deduction for 'income in respect of a decedent. But many people who inherit a substantial IRA are eligible for this deduction, which essentially is a deduction for the estate taxes that were paid on the IRA. The deduction is best explained with an example. Suppose someone left a large estate with an IRA. The estate tax accountant computes that the IRA was responsible for 36.7% of the estate tax paid, and that the IRA's share of the estate tax was $175,000. When the beneficiary takes distributions from the IRA, a miscellaneous itemized deduction (not subject to the 2% floor) of 36.7% of each distribution is allowed. This continues until the beneficiary has deducted a total of $175,000 over the years. The estate tax accountant should determine the data for the deduction. Details can be found in the IRS Publication 559, Survivors, Executors, and Administrators available free on the IRS web site, www.irs.gov.

U.S. Dept of State website with foreign per diem rates listed by country and effective dates. Some countries have multiple cities or regions listed: http://aoprals.state.gov/web920/per_diem_action.asp?CountryCode=0000 Same site, discussion of per diem and additional links: http://aoprals.state.gov/content.asp?content_id=184&menu_id=78 Clicking on the 2 links at the left under per diem brings up more information and other links including a search by country if you don't want to use the chart I linked to above. The chart seems easier though.

You could try the IRS Business & Specialty Tax phone number 800-829-4933. Her bank may also be able to provide the EIN if an account was opened in the LLC's name.

I have an external hard drive that backs up data files automatically. It is a Western Digital that came with WD SmartWare that is a total memory hog. It is using a very significant amount of physical memory that continues to tick upward and that is causing noticeable lag time in other programs. I never noticed how much memory it is using until fairly recently. I've read that the company had an update that fixed some of the memory usage and leak issue, but the program's design is such that it is continually trying to scan and categorize the files, and that is part of why it uses a lot of memory. I can erase the drive that will delete all of the data including the program and drive monitor. What program do you like for local backup? Also, the drive is about 3 years old. Is there an age when one should consider replacing a drive such as this?

IRS says we must keep the 8879s for a period of 3 years from the due date of the return or the date the return was received by the IRS, whichever is later. I am keeping the 8879 in electronic format with the return for that year. I haven't had any late filers recently, but when I was keeping a paper file of the signature forms, I kept copies of the signature forms with each of the returns and also copies of all the signed forms in one folder that was for all the returns filed during that year.

The worksheets aren't sent with the e-file. I'd create either a pdf of that worksheet or create another pdf document with the required information to be attached if you are planning to e-file the return. Otherwise, paper file the return with the documentation.

Does this help? From Pub 925: http://www.irs.gov/publications/p925/ar02.html#en_US_2013_publink1000104579 Passive Activity Income Passive activity income includes all income from passive activities and generally includes gain from disposition of an interest in a passive activity or property used in a passive activity. Passive activity income does not include the following items: Income from an activity that is not a passive activity. These activities are discussed under Activities That Are Not Passive Activities , earlier. Portfolio income. This includes interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business. It includes gain or loss from the disposition of property that produces these types of income or that is held for investment. The exclusion for portfolio income does not apply to self-charged interest treated as passive activity income. For more information on self-charged interest, see Self-charged interest , earlier. Personal service income. This includes salaries, wages, commissions, self-employment income from trade or business activities in which you materially participated, deferred compensation, taxable social security and other retirement benefits, and payments from partnerships to partners for personal services. Income from positive section 481 adjustments allocated to activities other than passive activities. (Section 481 adjustments are adjustments that must be made due to changes in your accounting method.) Income or gain from investments of working capital. Income from an oil or gas property if you treated any loss from a working interest in the property for any tax year beginning after 1986 as a nonpassive loss, as discussed in item (2) under Activities That Are Not Passive Activities , earlier. This also applies to income from other oil and gas property the basis of which is determined wholly or partly by the basis of the property in the preceding sentence. Any income from intangible property, such as a patent, copyright, or literary, musical, or artistic composition, if your personal efforts significantly contributed to the creation of the property. Any other income that must be treated as nonpassive income. See Recharacterization of Passive Income , later. Overall gain from any interest in a publicly traded partnership. See Publicly Traded Partnerships (PTPs) in the instructions for Form 8582. State, local, and foreign income tax refunds. Income from a covenant not to compete. Reimbursement of a casualty or theft loss included in gross income to recover all or part of a prior year loss deduction, if the loss deduction was not a passive activity deduction. Alaska Permanent Fund dividends. Cancellation of debt income, if at the time the debt is discharged the debt is not allocated to passive activities under the interest expense allocation rules. See chapter 4 of Publication 535, Business Expenses, for information about the rules for allocating interest.

Reconciling the bank accounts helps ensure that the client has recorded the payroll properly in the subsidiary records or journals, and also that the payments of liabilities have been recorded at the actual amounts paid. If you are doing the bookkeeping, that should be part of the process. If you aren't doing the bookkeeping, you should ask if the client is reconciling the bank accounts, otherwise, how do you know if the transactions are recorded in the proper period and at the proper amounts.

I signed up too. It's free and only an hour so there's not much to lose by listening. With that short a time, I think it will be mostly an overview though, but a good place to start as a refresher before I get into the more detailed seminars on the topic.

It looks like residency isn't the important test. There isn't a clear answer, but if those 10 returns don't constitute a significant business or significant contacts within MD, then you don't need to take the MD test. From the MD website: 3. Does registration apply only to tax professionals physically processing a Maryland state tax return in Maryland, or does it pertain to the personal residence of the employer? For example, if I am a tax professional who resides in Maryland, but I work and process tax returns in the state of Delaware, do I have to register with the state of Maryland? Maryland Registration is not dependent on the preparer’s personal residence, but whether the preparer’s business includes preparing Maryland returns - either in state or out of state. If an out of state preparer is preparing Maryland returns as a significant part of his/her business, then he or she must register. However, those out of state tax professionals who prepare an occasional Maryland return for a walk-in client may not be required to register with Maryland. The legal opinion from the Board’s Counsel states: "[T]he requirement for registration would depend on what professional contacts the individual has with Maryland that concern providing, attempting to provide, or offering to provide tax preparation services in Maryland. If preparing Maryland returns is a significant part of the individual’s business, and the individual has significant contacts with Maryland, then the Board would expect the individual to register with Maryland." Here's the link to the page where I got that from. That page was updated as on 7/1/14: http://www.dllr.state.md.us/license/taxprep/taxprepfaq.shtml

Generally, for a C corp return with no tax due the late filing penalty won't be assessed (minimum penalty is $135 or 100% of the unpaid tax) if the return is filed within 60-day of the due date or extended due date. If you get it done and filed in the next 60 days, there shouldn't be any late filing penalty. See 3rd paragraph "Late filing of return" that references the extra 60 days beyond the due date or extended due date: http://www.irs.gov/instructions/i1120/ch01.html#d0e721 Numbers 4 and 7 here also reference the 60 days : http://www.irs.gov/uac/Failure-to-File-or-Pay-Penalties:-Eight-Facts

The statement made at the seminar makes no sense. The regs were just finalized in Sept of last year and are applicable to tax years beginning on or after Jan 1, 2014, and optionally in their temporary form to tax years after 2011. Why would every return with depreciation be expected to need a 3115?