Ranger

The kids spent more time with the father so he is entitled to claim them. I have not seen the divorce papers yet but client said there was a statement that ex must sign tax a " tax form". In my second post I made a reference to that as being form 8332. After a second thought, I went back and deleted that line but not before Mr. Pencil caught it. Your right, those two statements are not consistent. I have no idea what the lawyers came up with but will find out next week. Thank you for the advice Pacun.

Have you tried calling the ATX Taco Support line? They are probably overwhelmed right now but it will be worth the wait.

Thanks for your reply and clarification Izzet. My first attempt was to bring the 2012 data over to my new computer so I could start rolling over and using on the 2013 program. I had an ATX rep walk me through the process that was suppose to transfer the payer data as well. That did not happen and she conneted me with technical support. He had to unistall the 2013 software and client files from the new computer. That took him awhile. Then he started a new process to bring over the client data and the payer data. At that point it was three hours since I had placed the call and I had to leave, so he said he would call back the next morning at 7:30 my time. Instead he called back an hour early while I was out! At this point I am going to call ATX later in the day when I have nothing better to do for a couple of hours unless someone here can point me in the right direction. The objective is to transfer my client data and payer data to the new computer and get started on the 2013 program.

Thanks for your response Jack. I don't see any options to transfer payer data base in Rollover Manager for 2013. As suggested by Izzet, I tried a single return export/import and it only transferred the payer information for that particular taxpayer as in the past. Am I missing something?

Are you saying if you restore only one return it will transfer over "all" the payer information from the old computer? I don't think it works that way. In the past I have restored 1 or 2 returns at a time to my laptop without the entire payer data base transfering over. Tech support is supposed to call me back this morning. Hope they can figure it out. One reason I stayed with ATX was to keep the payer data. Thank you for your reply.

Is anyone aware of a way to transfer the "payer manager" data base from one computer to another? I am setting up a new computer. ATX support was walking me through the process and I ended with an Excell spreadsheet. The problem is that it appears each item has to be copied and pasted to the payer manager from the spreadsheet. That is not worth the time and trouble! Thanks for any comments you might have.

Now I see, you are talking about repairs before placing in service. They are treated as cost of placing the building in service and depreciated as such. Or as the new regs read “The amounts paid must be capitalized as amounts to acquire the building unit of property…”

I am not sure about that last sentence. For example I believe the “Small Taxpayer Exemption” comes out of the new regs and would not be available before 1/1/14. In many cases it looks like the new regs will result in capitalization where expense could have allowed before. I agree with you that with the information given in this case the results would likely be the same.

I don’t think I said it could be expensed. (?)

I was opening and printing organizers when it happened.

I have no idea why it would look there, but it did.

It’s much deeper than that. If the renovation took place before property was rented, then the only option is to capitalize. Note the new regs take effect for tax years beginning on or after January 1, 2014, so you follow the "old rules" in this situation.

Yes it really did happen! I don’t believe in Santa Claus or Little Fairies and I don’t believe I will leave my CD in the drive again. The 2012 program tried to update forms from the 2013 CD. By the time I got reconnected with ATX Support, they had developed a patch so I did not have to UNISTALL/REINSTALL as I was told at first. (Search for reference #14468 in the Knowledge Library and you will see the word NEW next to it.)

Do not leave your 2013 ATX in the CD drive on your computer! It corrupted some of my 2012 forms. Now I have the pleasure of doing an UNISTALL and REINSTALL for 2012. Support was starting to walk me through that process when I lost phone connection!

Got it, thanks!

Yeah that’s it. How do you set the DCN counter? Thanks!

Can some anyone point me in the right direction on how to e-file with two separate computers? I know it has something to do with setting a counter on each machine? Thanks for any assistance you can provide.

Thank you for your responses! The difference is significant.

He is not an employee of the farm. The trust gives him exclusive rights to farm the property during his lifetime. He is entitled to all the income from the farm and is responsible for all the expenses (which he reports on schedule F). He and two of his siblings serve as the trustee’s and the trust document gives them a great degree of liberty to keep the farm in the family. I don’t believe compensation is an issue since he is already entitled to all the income from the farm. The intent and result of the transaction was to transfer a portion of the land to him. The consideration was about 75% of FMV which included the payoff of a mortgage on the parcel of land that was transferred.

Farmer died leaving land in an irrevocable trust with 6 grown children as beneficiaries. Oldest son continued to operate farm according to trust document. To help oldest son out, the decision was made to sale part of the land to him at less than FMV. The question is how to handle this transaction. I have found limited results from my research but it appears the difference between the consideration and FMV is a gift from the beneficiaries. If so, then oldest son’s basis would be made up of the purchase price plus a portion of the stepped up basis to the trust on date of death. I appreciate any comments you might have.

Thank you for your comments. Looking back, the client would have saved a couple of thousand dollars by calling it a sale. It appears the prior tax preparer knew enough about the tenant /buyer that the additional two payments of $10,000 likely would not be made. If the transaction had been treated as a sale, the client would have a $4,000 tax liability if the contract was to be paid off as proposed in 2014. Otherwise, he will be looking at a minimal amount of tax on the $10,000 gain to be recognized on the reduced sale price of $64,000. The current value is $87,000.

New client has a rental. On June 1 2009 entered into a lease / option to buy with tenant. Tenant paid $10,000 for the option. The tenant was to make two more $10,000 payments, one June 1 2010 and one on June 1, 2011. The sale price was $105,000. Tenant was to pay rent in the amount of $1,175. Then on May 31 2012 the option could be exercised. At the point, the original $10,000 would be considered a down payment and $1,175 monthly payments would be applied as installment payments at 6% for 120 months. Tenant paid the original $10,000 and has paid all the monthly rental payments. However, since the two additional payments of $10,000 were not paid, the option was not exercised. Prior tax preparer has reported all the monthly payments as rent on Schedule E for years 2009-2012. Tenant has proposed to pay off the "balance" of the original sale price less the initial $10,000 paid and the monthly payments amortized at 6%. That would be about $64,000. The client wants to accept the offer just to get rid of the rental in a depressed market. My question is how to account for this. The original cost was $94,000 with about $40,000 in accumulated depreciation. That would leave a gain of $10,000 as it stands. I understand the IRS could reclassify it as a sale from the start. There are some factors in the clients favor since he continued to pay insurance, mortgage interest and property taxes. However the tenant paid for repairs and some improvements. My first step is to a take quick look back to see what the potential tax liability might be. In the meantime your comments are welcome. Thanks!

Preparer is still in business. The additional tax will be about $4,000 plus i & p. The write off was legit, MACRS with a life of 20 years or less using bonus depr. (farm building) My original thought was to elect out of bonus for 2010 but it appears to be too late. There were some missed deductions in 2010 that will far outweigh the extra tax in 2011. He was in a higher tax bracket in 2010 and also had amt.

I am amending 2010 and 2011 returns for some major deductions that were missed by previous preparer. Now I discover this. Taxpayer is a farmer. He slit off his personal residence in 2010 and sold the rest of the farm. Along with the house he kept a shop which was built in 2010. The preparer wrote off the entire shop in 2010 using bonus depreciation. In 2011, the house site was sold along with the shop. The sale was not reported on the 2011 tax return. It looks obvious that the sale of the shop should have been reported on form 4797, but I like to get a second opinion before I amend another preparers work.

Thank you for your responses and bringing to my attention the special rules for crop shares. Rev. Rul. 64-289 Crop shares or livestock received as rent by a decedent, who had employed the cash method of accounting, prior to his death, and owned by him at the time of his death, as well as crop shares or livestock which he had a right to receive as rent at the time of his death for economic activities occurring before his death, constitute income in respect of a decedent which is reportable in the year in which the crop shares or livestock are sold, or otherwise disposed of. Where the decedent dies during a rent period, only the net proceeds attributable to the portion of the rent period ending with his death are income in respect of a decedent. The proceeds attributable to the portion of the rent period which runs from the day after death to the end of the rent period are ordinary income to the estate.