Pacun

Yes, current appraisals or cost, whichever is lower, correct?

1-800-TAX-1040 is a start.

Choice B was my original answer and it was wrong. There is no $100 (now is $500) minimum for bad dedt and income producing property on form 4684. Everything transfers to sch A.

73. Thomas loaned friend Susan $10,000 for a down payment on a home. Thomas and Susan signed a note in which Susan agreed to pay $100 a month with an interest rate of 4% until the loan was completely paid. Susan lost both her job and her home in 2003. Susan filed bankruptcy and went to live with her mother. Thomas sued Susan in court for non-payment in August 2004,but the court dissolved her debt to Thomas based upon the bankruptcy. When Susan defaulted, the outstanding balance due on the note was $7,000. If Thomas had only wage income reportable during the year, how much would his deductible bad debt be in 2004? A. $7,000 B. $6,900 C. $3,000 D. $10,000 This was a question on the enrolled agent exam in 2005. The IRS accepted answers are A or C, which means that you can use either Sch D or form 4684 with schedule A (provided you have other items to itemized). Is there a rule when to use Schedule D or form 4684 for similar situations? Is the income producing property the determinant factor?

From 2005 Enrolled agent exam: 56. John is a furniture maker and carpenter. John makes half of his income as an employee of Concept Designs, Inc., a fine furniture manufacturing corporation. John makes the other half of his income from a personal business where he purchases, renovates and then resells houses. In January of 2004 John purchases a house that is not his residence for $50,000. He spends $10,000 in materials renovating the house, which he sells in November of 2004 for $90,000. What is the amount and character of Johns gain from this transaction? A. $20,000 ordinary gain B. $30,000 short-term capital gain C. $30,000 ordinary gain D. $20,000 short-term capital gain Answer is C. I know this gives both Jainen and Oldjack equal ammunition. The key on this question is that "John makes the other half of his income from a personal business where he purchases, renovates and then resells houses." That's not the case with the taxpayer on this posting. From a logical point of view, Let's imagine that I buy a buiding for $600K, then spend $100K in materials and I remodel the building, meaning that I work doing this type of construction work. It takes me 13 months to remodel the building and then I sell it for $900K. Somehow, I should pay SE taxes on a good portion of the $200K profit, if not all. I don't think that reporting this on Sch D long term gain is correct. I agree that we don't know what kind of work the TP does in a construction but a hole digger will not have much expense for materials. I would not amend 2008, wait a minute, maybe I should amend because materials should be added to the basis of the house and the benefits of such expenses should be in 2009 taxes when the house was sold, NOT in 2008.

Since the IRS will require examination, I am planning to attend the National Association of Enrolled Agent conference in Las Vegas. Will I be able to deduct travel, logding, and conference fee on my sole propriatorship Schedule C? The main purpose of the trip is to attend 3 days of training to pass the EA exams.

Could the law also say that for child care expenses you are not considered married and you can use your income to qualify? Is that the route you are trying Sarah?

Title should read "Child and dependent care credit" Father leaves work because of illness in November 2008. Continues to receive paycheck until he dies in January 2009. His W-2 for 2009 shows $1500 income and wife 70K. They will file jointly in 2009 and will claim their two children ages 3 and 5, for whom she paid 7K in child care. Since he received a W-2 for $1500, form 2441 "Child and dependent care expenses" calculates the credit using the lower of the 6K and the lowest income from one of the parents (which is $1,500). Keep in mind that father could not care for children because he was dying. To make matters more interesting, wife participated on a pre-tax child care deduction at work. She put $5000 pre-tax and later collected those $5000 when she showed employer her child care expenses. ATX correctly is doing two things: Calculating 2441 using the fathers income $1500 and adding mother $3,500 to her income. Can they/she get some help since father was not able to take care of children?

It is interesting, isn't it?

IRS to Match Return Preparation With Testing Under Preparer Regime By Diane Freda Publication date: 05/24/2010 The Internal Revenue Service will eventually check on whether the returns that tax preparers do fall into the category for which they have been tested, Full report at: http://www.bnasoftware.com/News_Articles/News/IRS_to_Match_Return_Preparation_With_Testing_Under_Preparer_Regime.asp

All returns I efiled yesterday and today are labeled as "Transmitted to EFC". I called helpdesk and the machine says that there are no records on some of my returns.

A Professional LLC should be treated as a disregarded entity and file schedule C or 1065.

File MFJ on Federal and file married filing Separate for the state and according to the dates they resided on each state. Another choice could be that you file one of the States as MFJ and the other as MFS.

Thank you both for your answers.

Thank you.

Executor (wife) was active participating on rental before death and continued after death. I am filing 1041 and my question is: Can the estate check "active participation"? The Estate only existed for 10 months within the same year. If I don't click on active participation, the loss is reported ONLY on the K1 line 14. If I click on active participation, I get a loss on 1041 line 5 (rental, sch E) and K-1 reports a loss distribution on line 11 with code D.

Can you print page by page?

Everything is for services provided by the partners. The problem is that they pay themselves too much and therefore the partnership ends up with a loss.

K1 reads ordinary income -5000 (loss) guaranteed payment to partner 8000 In what amount does the partner need to pay SE taxes?

I would itemize deductions and file as MFS without the social security number. Do not efile this return (lol)

Make sure that your client has the right to claim child as dependent and file normally. Form 8332 is needed by the non-custodian parent only when both parents claim the same child.

I found the problem mia culpa. My friend sold stock for 200 and the basis was 423. Since I was doing just a sample return, I click override and enter -223 on line line 13 where schedule D goes. That drove ATX bananas and instead of using that tax table, it used alternative minimum tax. Lesson I learned: If you need to override something, prepare the return and print it before the override and then compare. In this case, even if I lowered the W-2 from 206K to 79K, the program was giving me the wrong results. When using 79K, the error was very obvious.

I will post the figures later on, but are we on agreement that if the ATX uses AMT it is because under the regular tax system the TP is getting away with too much? Which means that AMT will result in a bigger tax liability.

ATX is using Alternative Minimum tax. I thought AMT was only used to increase your taxes in case you were deducting too much.