Pacun

Not at all. I just need clarification. It seems that previous rules forced you to recapture depreciation but current rules don't, but I am not 100% sure.

You have to enter taxable portion on 1099-R

If, (IF). Married client has a primary residence with a basis of 1million and rents 75% and lives in 25% of the property as his primary home. he makes in rental income $50K, but his taxable rental income is -1000 because of (75% depreciation, utilities, mortgage interest, real estate taxes and other rental deductible expenses) At the end of the 2 years they sell the house for $1.5 M. It is my understanding that they will not have to pay taxes on the gain, neither will they have to report the sales of their primary home or recapture depreciation. Is that right?

So and So, I have checked your posting and it seems your reasoning is good. I hope you checked with this client why he had so little income. I have rejected clients on this situation because I have felt that they are renting part of their house and they do not want to report rental income. I hope you questioned this client properly. I am not expert in CA taxes, but I cannot imagine that any state will allow you a NOL. You should call ATX and ask them to fix CA forms. 4 years ago, I called ATX to fix DC forms. My problem was that when I split[ed](on DC forms) the income for both spouses and the first spouses got deductions or more than $1 of his income, the program didn't calculated any taxes and refunded everything witheld to clients. So, when first spouse had 5K income and the other had $200K, all state withheld was refunded to clients.

No. The original question is legit... I think what's not legit is his income reporting practices.

This is my landlord who does not report what I pay him for rent.

I don't provide any verification service. Immigration laws says it is illegal to hire undocumented aliens. On the other hand, the government wants you to hire and then verify. So, you hire 100 employees, and put them on payroll, then you verify their social security number. After you get the results, 40 of them are using fake SS#s, you cannot fire them because "4) The employer cannot take any adverse action based solely on the results obtained from SSA. Doing so can subject the employer (and maybe the third party if I'm reading it right) to anti-discrimination or labor law sanctions." At this point, the employer has admitted (somehow) that he hired illegal aliens. It seems that this system will not work. Unless a law is enacted and signed with clear meaning, the current system is a waste. Let's see if I can give an example: Immigration came to a restaurant and arrested 11 illegal aliens and want to penalize the employer big time. The owners claim their innocence, but they never used the verification system. This is the first warning that they get from the U.S. Government that something is wrong with their hiring practices. Immigration came to another restaurant... exactly the same situation (11 illegal aliens arrested). The owners claim their innocence and they have used the verification system. This is NOT the first warning that they get from the U.S. Government that something is wrong with their hiring practices. To which restaurant owner do you think a judge will give a break?

You are right a 3 year old computer that doesn't give problems is better than a brand new computer. I am using a pentium III computer, but computer people don't practice what they preach. 1.- I always advise people to use UPS, I don't use them. 2.- I always advise people to buy new computers, I don't purchase new ones. 3.- I always tell people not to connect to other peoples wireless networks, and I do. (of course with my play laptop, NOT my tax prep PC). 4.- I always tell people not to open PCs and I always open them. 5.- I never get frustruated when PCs don't work, but I suggest people to get really frustated and call me when their computers don't work.

So he doesn't have to use other people to get money. Having money going through his brother is not an elegant solution. So if he can bring some money, no need for the brother to get involved.

Kea, Tell the student to bring in his pocket $9K. Come to the US and open a bank account and ask his parent to send more money to that account. No IRS reporting required. Also, the student can receive money directly wire to him by using Western Union. If father gifts $10K to big brother's account, no IRS reporting required. If big brother gives student $10K yearly, no IRS reporting required, but it is advisable to keep good records in case the IRS audits big brother. The only time that this becomes a problem is when old brother gets audited and there are not adequate records of where the money came from and under what category the money falls in. I strongly advise my clients to stay away from this type of transactions because most of the time there is no need to involve other people.

I fix computers for a living and this is my advice. Purchase a new monitor, if problem persists, purchase a new computer. Whoever has a computer that is 3 years old, should purchase a new computer if you start having problems with your equipment. Not only your 3+ years old computer runs slow but also you will get other issues down the raod. By the way, the company that I work for depreciates computers on a 3 year schedule. I was under the impression that computers are listed property 5y.

Monitor is the way to go because it is easier and less expensive. Even if you are wrong, you will have two monitors that your new computer (if you end up going that route) will be able to use.

I got my solution this way... I started at the top of the page and then rolled my mouse. My cousing was more creative and pressed page down.

Monitors are not expensive anymore, buy a 19" LCD. If the problem is your computer, them just order the CPU since you already have a new monitor in stock. Do not spend those $50 on used monitors.

He also included the cost of IRS audits since the code is so complicated.

Yes, I know I misled you but we learned a lot from that experience. I am sorry for misleading you and that's why I said, "don't take it personally, this is strictly business". We all learned something from my posting and we are better equiped if a similar situation knocks our office's door. In this case, two institutions made a mistake, the retirement office by sending the checks to the old address and the bank for allowing ATM deposits of third party checks. A lot of banks allow that though. You guys are good detectives and cornered me and forced me to tell you the truth.

I appreciate your replies and trust me, if the check was bigger and this lady decided to close the account and go back to her country, I would have a police report with all the information I said, including but not limited to, prior marriages, dates of divorce, next of kin, but no thief or the money. The IRS would have a 1099-R and rightly wanted its taxes on the money.

I agree with you AND I always suggest UPS to eveybody but it is more important to back up your data. As I said before, I have never used a UPS and I always hold down the power buton for a few seconds to power down problematic computers. I have never had problems with my FAT being reduced or taken away.

Don't take it personally, this is strictly business. When I said, these are the facts that I want to use to present my case, I meant to present my case here on this forum. ******************** ******************* ********************* ******************* **************** This is reality. Client requested retirement payments in August 2006. Checks were sent to the address of record and NOT the one we used to request the funds. Client thought that because he was still working no checks were sent, until he came in April to do his taxes without the 1099-R that I was expecting. 11 checks were sent to a very old address, he lived there 5 places ago and 11 years ago. 3 checks were cashed by the owner of the house 8 checks were stopped payment (no one tried to cash them) and were reissued last month. Retirement office sent copies of the cashed checks to client and I confronted the owner of the house who forged my client's signature and deposited the checks and I gave her 10 minutes to reimburse my client or else (meaning I was going to call the police, FBI, the bank, and the postal inspector and any other authority I deemed necessary at the moment). I got the money on the spot and took it to my client. My client was sent a 1099-R last year for more than 2K which he never receive; but, we have not filed taxes for 2006 yet (we requested and received a second 1099-R from retirement company). I am going to include the 1099-R on his taxes and everything should be in order. This is the same person that is about to loose his home and therefore all we wanted was the money back and quickly from the thief. My client has more home interest and points to cover any taxes owed and also he has $5K first time home buyer credit in DC that he will never be able to completely use. Now, for a moment I thought, what if instead of 2k, the check was for $200,000 and the thief has closed the account and start enjoying life in her native country? This board is to clear any doubts and that's how I wanted to present my case here on this forum.

By no means, I will think that you or your suggetions are argumentative. I know all of you have a genuine intent to help. Yes, those are the facts presented.

Well, On August 1, at 3:33PM I said "Thief was not related to my client." Yesterday at 9:34am, I said "By the way, have you seen those houses where there is a box next to the door where the mail person deposit the mail? No need to break anything in order to get the mail... that's the standard throw out the U.S., isn't it?" I do understand your concerns, but I am making my case based on these facts. I do understand your points and you are doing a good detective work. Thank you all for giving ideas.

Since there are no witnesses to the action... it is assumed that the thief got it from the mail box outside the door.

When a laptop freezes... (all the time) I hold the power buton for 35 seconds and when it wakes up, both FAT and I are FAT. New technologies are not like the old ones that you had to wait 1 minute before rebooting because even if the power was out, the hard drive and other peripherals were still spinning and rebooting right away could damage your FAT.

Yes, police has picture of the person who stole the money, signature, namem address, date of birth, social security number, dates of prior marriages, and dates of divorces, next of kin... there are two critical pieces missing on this case... once those two pieces are found, the case will crack open. The two things missing are: the thief and the money. Not the same name and not related to my client. I like the idea that NOL can be carry backward to the year in question... any other thoughts?

The police will let us know as soon as the catch the thief, they got my client's phone number, home, cell, day, night, etc. They also got my client's email address, they know where he lives and entertains himself. They also know his next of kin. As you can see, what the police said is almost irrelevant. The relevant part is that a police report was filed. Client will not benefit from NOL (whether passive or not) because of limited income, nor will he benefit from itemizing deductions. So, I am left with... going after the bank and its lawyers? Remember, client does not have money. Everybody agrees that the IRS is right and that my client has to pay more than $100,000 in federal and state taxes, interest and penalties. Any other thoughts or questions? Thank you for replying.