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Pacun

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Everything posted by Pacun

  1. Mining bitcoin is schedule C income per definition since so far no one has a hobby of mining bitcoin. The reason for the exercise is to help at least one of our colleagues. Also, since we are the professionals helping people to report their earnings/loses, we need to practice crypto because later on we won't have time to read about this subject. The exercise seems to be easy because it doesn't include harder/divided subjects such as NFTs, staking, hard forks, liquid pools, wrapped coins/tokens, validators rewards, P2E, and many other ways of making money from Crypto.
  2. Since hobby expenses are not currently allowed, it makes sense that the taxpayer insists on Schedule C. As his preparer, I would be inclined to report it as a hobby.
  3. How will this single tax payer report these transactions that happened in 2022: 1.- Client had his computer mining bitcoin and sold one bit coin for $16,000 at the very moment he had dominion and control of his 6.25 coins he mined in 2022. He is not going to get more coins this year for our example. For his mining operation he has utilities cost of $10k and depreciation expenses for $2k. 2.- at the beginning of 2022, he purchased 4 ETH coins at $3,500 each for a grand total of $14,000. In November 2022 he sold his 4 coins at $1,200 each for a grand total of $4,800. 3.- in 2020, he purchased 10 Yfi coins at $10,000 each for a grand total of $100,000 and sold them in 2022 at $25,000 each for a grand total of $250,000. 4.- In January 2022, he opened a crypto debit card and funded it with 100 Solana coins he purchased at $10 each for a total of $1,000. In March 2022, he used his crypto debit card to purchase a computer for his in-laws and paid $2,000 using all his Solana coins which had doubled in price. 5.- For using his crypto debit card to purchase the computer he was rewarded $200 in fiat which he pocketed. Could you please let me know the net income on Sch C, amount Short term gain/loses and any carry over and Long Term Gains? Thank you.
  4. I wish I could enlighten you but I am asking questions, hence my ? (question mark) at the end of each sentence.
  5. If he insists that he is in business, it is because his schedule C has a bunch of deductions, correct? Wil an audit read "no changes" if audited? Is he getting earned income credit by using his winnings on schedule C?
  6. Let's say you have .5 million in bank accounts and a house and you want a to set up a living trust, how much does it cost? Will you use a local lawyer or someone on line?
  7. You don't need to send anything to the IRS, just the forms needed for a regular case. If she has a final divorce dated in November 2022, you will need to know if she maintained the home, which was the main home of her child for at least 6 months in 2022. It will be nice if age of the child was provided and if he was full time student. Assuming he is 18, no need for full time student status. So you need to concentrate on who maintained the home from Jan to Sept and is she maintained it for 4 months (plus nov and dec), and it was the main home for child, she can claim Head of Household even if the other parent claims the child.
  8. Pacun

    ATX 2022

    Let's say that you have 3 computers but each one is a stand alone computer. Your password is checked by each computer independently. In most cases, you only need to have the computer you are using on and everything will work. On a domain, there is a server, and the other computers are workstations. When you log on to the workstation, the server verifies your user name and password. In the case of ATX, you install the server software for ATX on the server and most likely that server holds the clients' data. If the server is down, you don't have access to your clients data. The advantage is that everybody in the office uses the same data repository and everybody has access to all the clients (if needed). You don't need a domain to run ATX server but the computers need to be connected to each other and be using the same IP subnet, but having a domain is better when you a few computers. Technically, you can install the server portion on laptop running windows 10/11 and that becomes, NOT the server for the domain, but the server for ATX. Then you can connect other desktops, laptops or servers to that laptop and they are the subordinates of the laptop running the ATX server software. Keep in mind that the laptop still reports to the domain server (controller). Please ignore this last paragraph if needed.
  9. yes, there were two distributions.... one for 45K and another for 99K. Client paid taxes and penalty on the 45K. the 99K was divided in 3 years and for 2020, 33K were re-invested (rolled over). IRS is wrong and I have seen the signed 8915-E form and sent a copy to the "auditor".
  10. client withdraw 99K due to covid in 2020. Wife (filing jointly) had her workplace shutdown in 2020. On March 26, 2021, client deposited back 33K to his plan as a rollover for year 2020. IRS letter states that $144K were distributed and only $45K were reported as income. As you know, those $99K could be divided 3 ways and reported 1/3 in 2020, 1/3 in 2021, 1/3 in 2022 AND the whole or portion amount could have been rolled over before April 15, 2023. (1040Xs might be needed if taxes paid and monies were rolled over) I have seen people on this forum citing the sessions of the code when replying to posts. If you have a letter or cites please share them since I am preparing a letter for the IRS. Client efiled and form 8915-E was added as pdf.
  11. I would efile as soon as possible and pay from my pocket any penalty. It happened to me once and by paying the penalty from my pocket, I never forget to efile anymore. After that event, every April fools day, I click on each return on return manager to see if efile was accepted. If I don't see the efile transmission, I check my paperwork. I also make a note on return manager if client picked up her/his papers and didn't file with us. I also make a note such as "2021 by mail" if forms were sent by mail. As you know, checking 1000 returns on return manager might take you an hour but it is a good investment. I think I use the field named "client #" to make my notes. Since this field is rolled over each year, I make sure I use the year that was paper filed so that I don't get confused in subsequent years. "Paper filed" will not cut it for me.
  12. Transportation is ordinary and necessary for that job. So, I would ask him how many miles he ran his car last year and then ask him to calculate what percentage was business vs personal and enter that information against schedule C. Most of the time, I prepare returns, I don't audit my clients. Since he is under EIC, he didn't make a lot of money. He might know how many houses he painted and how many days he works on each house (on average), he might know the distance to the house and then you can help him to recreate. Again, ordinary and necessary is key.
  13. The same way you do it when you prepare a regular return... by clicking on the form that needs to be added. If you are paper filing, you need to attach new forms that were not originally filed AND forms that have changed. If the customer efiled, you should be able to efile the amended return and as long as you fill out the new forms, they will be included in the efile file.
  14. So, if I want to partner with the owner of ABC, LLC and I invest $10K from my 21 month interest free credit card, ABC, LLC will get a 1099-K?
  15. Debt forgives from that law will not be taxable nor reportable.
  16. Pacun

    EIP3 Question

    Follow the dependent rules and file accordingly. Don't worry about the $1,400 because that's based on years and/or issues that don't have anything to do with the parents' return. Identity theft will not change the facts on 2021 parents' return either.
  17. Pacun

    1095A

    Maybe spouse got it the previous year and was renewed semi automatically. Was her marital status changed in the last couple of years?
  18. MD and DC have reciprocal agreements so filing as a resident or non-resident will have the same effect. Just for fun, did the wife die a few weeks before him and lived in the house in MD? That could make him a MD resident, right?
  19. If the original 1040 was efiled, you are allowed to efile 1040X. I would create 1040 exactly as it was filed. Then I would select amend return, make the changes and create the efile file. Then efile.
  20. If you are a payroll processor, I think the client doesn't instruct you to NOT file a W2 if you processed paychecks for an individual. I think it is your responsibility to file those forms with the amounts you have on records.
  21. How much is the K-1 for? I would wait for the bill to come if not a lot.
  22. I think the new company needs to amend the first quarter. They are lucky to have access to January payroll information but they don't know if paychecks were issued because they didn't issue them. The old company correctly filed when they had records and shouldn't be bothered. Also, who will be more inclined to help? The payroll company that was fired or the payroll company that is still receiving payments from the employer?
  23. I think we should encourage our clients to register with the SSA and make sure they have the correct information for each year. I check mine every year and it seems to be correct.
  24. If I am not mistaken, it clears the nanosecond you click submit. That's the beauty of "the new banking system".
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