Terry D EA

I have been using Drake software both tax and accounting since the 2012 debacle. While I feel Drake Accounting is still a work in progress, it is not bad and use it mostly for payroll. Drake Tax however, is the best in my opinion for the money. They offer many features with one add on called "Grunt Worx". At first glance I thought it too expensive and really did not have a need. With more clients with Robin Hood Securities, Crypto and day trading, my thoughts are now greatly changed. I have had several clients day trading, some moderate, some not so much and one that had over 750 transactions. Those transactions were of the grocery store variety that prevented using a summary page. I uploaded the pdf to "GruntWorx" and within an hour and a half, the file was back and in a format to be imported into form 8949. This service cost $112.00 (.15 per transaction). The file was validated by Grunt Worx but a brief final review of the totals by me and its done. I think the review and import was only 10 minutes. The $112.00 might seem a bit high but it is nothing compared to what the client would pay for me to enter all of those transactions. I'm not sure which programs GruntWorx will work with, but the converted file is in a csv format as well. What a life saver. https://www.gruntworx.com/ if you want to check it out.

Love it!

This statement is also from that TaxBook and I found this in an IRS Pub as well but can't remember the number. This statement also coincides with the first statement in my other post. Depreciation Recapture—Special Depreciation Allowance When a taxpayer disposes of property for which he or she claimed a special depreciation allowance, any gain on the disposition is recaptured as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. There is no recapture for residential rental and nonresidential real property unless that property is qualified property for which a "special depreciation" allowance was claimed.

It will be interesting to see the final outcome of this. Don't know about MA, but NC will immediately charge 10% of the tax due as an NSF fee and a few years ago they were going to charge a client $100.00 NSF fee when I was trying to get them to intercept or stop a draft that hadn't occurred yet. So good thing your client got the State issue resolved. If it means anything, I contacted the EFTPS folks last week for a client who gave the wrong bank account number. They were very cooperative and stopped the draft immediately. I found it odd, those folks are there around the clock but glad they were.

Below is from the Taxbook. To calculate the total gain on the sale you will use the adjusted basis that includes capital improvements and depreciation. However, it still appears that any of that gain that is attributable to straight line depreciation is taxed at 25% or depreciation recapture with the remaining gain taxed at 20% or maybe ordinary income. You might or may have already looked at Pub 544. The two bolded statements below seem to contradict themselves. I didn't find any information regarding rules on depreciation recapture pointing toward in-service dates. Could you share that please? Section 1250 Property(Real property**)Ordinary Income. All depreciation is recaptured as ordinary income, limited to gain on sale. Ordinary Income MACRS. Accelerated depreciation in excess of straight-line is recaptured as ordinary income. Applies to property on which bonus depreciation was claimed. ACRS. All depreciation is recaptured as ordinary income for property depreciated under accelerated methods. Certain exceptions apply. For disposition of property placed in service before 1987, see IRS Pub 544, Sales and Other Dispositions of Assets. Capital Gain Any gain remaining after subtracting depreciation recapture is subject to regular capital gain maximum rate of 20% Capital Gain1)25% maximum tax rate. Gain attributable to straight-line depreciation is capital gain sub-ject to a special 25% maximum rate Referred to as “unrecaptured section 1250 gain”2)20% maximum tax rate. Gain remaining after subtracting the 25% rate gain is capital gain subject to the regular capital gain maximum rate of 20%

Dang, ditto on the congrats to the long timers. I guess I'm just getting going good at 25 seasons. It has been a good one this year. I complicated matters by moving my home and office to another state (SC) and purchasing an RV as a mobile office to serve my existing clients in NC. Most of this occurred starting in October of 21 and bought the RV in December of 21. Granted the RV is 36ft and large enough and I was amazed at the reception from my clients. We made three trips with the longest stay being three weeks or so. Each trip takes 3 1/2 hours one way. We were blessed enough to have some friends that allowed me to setup on their property with all the connections except for sewer. They also allowed me to leave the camper for the season and not have to haul it back and forth. Had to make a few trips to dump tanks but that was a minor inconvenience. We even managed to pick up between 15 and 20 new clients. All in all I can't complain. I just finished with 15 extensions filed. Now its time to relax and find a new office building to work out of. My wife wants her home to be her home and not a business location. 20 years of that is enough and I agree totally. My new home is only 4 miles from Myrtle Beach so guess where we are headed??? Here's hoping everyone had a prosperous tax season. Thanks to all who have provided insight and help from this board. It just doesn't get any better than this. It's time for all to get serious R&R.

Thanks Catherine, my sentiments exactly.

I am running Windows 11 Pro on a new machine that I purchased in February. I'm also running Drake and have no issues. I don't like the fact that Windows 11 is like Chrome, it wants to know everything and control everything. I did not enable quite a few services for Microsoft to track. I don't like the fact that Windows 11 will automatically save everything to the One Drive without asking. There needs to be a way that we can know for sure Microsoft can't track our data or behavior on the computer. Because of the software platforms, we don't have many choices. Microsoft is and has created a monopoly which I thought is illegal. Open for suggestions maybe I need an IT guy.

Taxpayer passed away in 2020. Spouse receive a 1099 MISC for royalties from an oil well for tax year 2021. Also, some crop insurance payment received in 2021. Not my client and am asking for a colleague. Don't know if there was an estate setup or not. Don't know for sure if the payments received were earned prior to the taxpayer's death. It appears the earnings were for a time period in 2021. The 1099 MISC is in the deceased's name and SS# same for the crop insurance payment. Spouse is the fiduciary. I told my colleague there are too many unanswered questions. My friend thinks the spouse cashed the checks as an inheritance. At the very least, my friend needs to extend this and put it off until they have all the answers. Just wondering what other's opinions are. My thoughts are the funds should go to his estate and if an estate tax return was filed, then maybe an amendment is in order.

Mine starts with two zeros. I faxed a POA last week without the third zero so we shall see.

This from the NAEA ALERT: New IRS Policy for POAs! We want to make all EAs aware that there is a new policy at IRS for powers of attorney (POAs) requiring three zeroes ("0's") to be placed in front of the enrollment number (000XXXXX) on form 2848. If the three zeroes are not included with the enrollment number, POAs are getting returned. As a result, we are encouraging all EAs to proactively include three zeroes at the front of your enrollment number on form 2848 POAs to avoid any processing issues.

I get it. In your example the 4000.00 if used on non-qualified expenses, is taxable income is legitimate because you used the bursar’s statement. My take on the other conversation was folks were randomly making part of the scholarships taxable income to get the credit without using actual expenses. I always ask for the bursar’s statement and have always done the 8863 this way and have obtained the AOC many times. However without the bursar’s statement, and only 1098-T in hand, I still find it strange to make a portion taxable income to obtain the credit. I read the pub on the coordination and it does suggest making some of the scholarships taxable income. I just thought it strange to do this without substantiation. Another question is, is the pub the authority in an audit? A few years back, A couple of my clients received letters from the IRS asking for proof of the college expenses beyond the 1098-T.

Ok, so I stand totally corrected and learned something. Thank you for straightening me out. The whole process just didn’t sound legit.

I read from another discussion board which will remain nameless, a method they called "Advanced Education Credit Strategies". This involves making a portion of the scholarships taxable income, when scholarship amounts exceed the expenses to make the client qualify for the AOC. Personally, I think it is fraudulent reporting and unethical and won't do it. Has anyone ever done this? All the training, CEU studies and other things I have done on education credits have never mentioned anything like this. Three or our people on the other board chimed in that they do it all the time.

Okay, took the dive and called The TaxBook. I purchased the Web Library Plus subscription. Because I purchased it now, they gave me 2021 and 2022 for $269.00. That was with the Drake discount. Normal would have been $319.00. They walked me through several research methods, and it looks fairly straight forward.

I didn't think of googling it at all. I'm just at a point that I don't want to spend money on research materials when it can be found for free. Through Drake the discount on the weblibrary plus is pretty good. I do like how it is integrated in the software, but I want to be able to justify the cost.

Thanks so much Judy, that is exactly what I was looking for. How did you find that so fast? I need to learn that.

Looking at the taxbook weblibrary plus. Comments or suggestions please

Looking for the best tax code research software or platform. I have the CFR 26 book marked. Looked at the CFR26 from Cornell as well. I'm trying to find the code references for the exceptions to early withdrawals from any retirement account. I go the pubs and form 5329 instructions as references. I'm preparing an audit review request for a client and need this supporting information. Apparently, I haven't used the proper wording in the search. I can find a ton of stuff on distributions from Roths but not from other retirement accounts. Any help would be appreciated.

According to Drake, these forms aren't finalized yet. Working on an S-Corp that has no foreign income, accounts, transactions etc. I had them sign a letter stating their position and to not prepare Sch K2 & K3. Does this statement have to be attached to the return or is it for our records.

Could, should maybe!! I'm looking into that. The main thing is the client is totally disabled and confined to a wheelchair and cannot work. Hence the reason for the distributions. Just a little SS income.

The 1099 is coded code 1. The issuing company stated they no longer use code 2 or 3 and the taxpayer is directed to indicate the exception on the 5329.

All good responses. Thank you!

Client is totally disabled and confined to a wheelchair and cannot perform any normal functions to earn any type of income and is 58 years old. Only income is early distributions from an IRA. H&R prepared their 2019 return which is under examination. H&R put the gross distribution from the 1099R on line 7 of the 1040 labeled income from 1099R. I believe they did this to avoid the early withdrawal penalty instead of filing the 5329 with code 3 as the exception. To me that was crazy and they need to absorb any penalties and interest. Has anyone done this the way H & R did? I don't even think it is proper at all. The IRS has added the 1099R as additional taxable retirement income and sent the CP2000. Bad news, client got scared and ignored the letters and has recently refused delivery of a certified letter from the IRS which I am assuming is the 90 day letter. Now, I'm on board to help. My opinion is to amend the 2019 return to include the 5329 so the return is accurate. Client signed 2848 so I'll try to get a status of the account and inquire as to where the IRS is in the collection process. Because the client refused to accept and sign the certified letter, are their rights to petition tax court still available or is the clock still running on the 90 days? Wrong time of the year for this, but.....

That is exactly the way I'm going to do this one. Thanks everyone.