Terry D EA

Hey I'm with the grand kids. I thought doughnuts, honey buns, little Debbie snacks... were just that, a meal. Now fifty + pounds lighter with lower risks of heart failure and clogged arteries I see it differently. Sad though, it only took me 40+ years to figure that out. Some find it odd that at 55 I can run 5 miles every other night and scale flights of steps without even breathing hard. I decided to dump the fat when I was snickering at the, let's say, large folks for laying on the railings of the steps panting like a wore out dog when I realized I was only three steps ahead of them and laying on the same rail.

Hey I am one of those accountant types. It was a joke but that is usually the excuse and blame it on the bean counters.

You will have to open two 8889 forms. On worksheet 1 on the first form make sure the box at the top is checked for the taxpayer. On the second form, make sure the spouse box is checked. Doing so will populate the form with the spouse's information. Also, the form with the taxpayer checked will populate the form with the tax payer's information. BTW the instructions refer to Part I Good Luck!

I love it!! However, a call like that advising them their return was being pulled for review should do the trick. I am wondering about the phone number 1-800-break-a-knee. Too many letters unless of course there is an extension number associated with nee. :spaz:

Wow Eli, that is terrible. Stay safe and keep your head low. Better yet, buy a Kevlar vest and a helmet for you and Ivan. Take care and be careful.

KC, I did speak with the step son and he is fine with the arrangements. I asked him several times after explaining the situation if he clearly understood and he said he was okay with it. So, there you have it. He is going to continue to work for his step dad so maybe there is some agreement that I don't know about that makes this all okay. Anyway, I am done with the back and forth stuff and feel I have done my part.

Hey Eli, how is everything in Texas? I agree the IRS does want these listed. You can use the various date option. I could be wrong but I think for numerous transactions JRS is correct except for I think you should attach the broker's 1099B to the 8453 and mail it in. If I'm wrong, someone will correct me. I hope you are doing well. Terry D.

KC I couldn't agree with you more. It is just that, the step son is getting the screws put to him and I feel terrible about it. The step son has been my friend and loyal client for the last 10 years and I have left him a message to call me. After some thought, he was involved in alot of the discussions and nothing was to be withheld from him so I will let him know what he is facing. I have recently realized that every conversation with the step dad always leans toward what someone else has told him, that contradicts what I have advised him. I advised him his step son was an employee from my perspective as well as the IRS regs. Someone else, probably a barber shop accountant or tax preparer, told him he wasn't. After I speak with the step son, I will probably terminate my engagement. Thanks for your help and suggestions and as always they are greatly appreciated.

Sounds wierd enough but maybe she was required to breakdown each item included in the total cost. McDonalds does it this way on all of their value meals. One would think that if you purchased a meal that included a combination of items for one price then one price would suffice. Probably an accountant came up with this. Itemize that deli sandwich and God forgid, don't miss a pickle. :lol:

I might be missing something here but shouldn't this be included on the deceased's individual income tax return? I beleive the 1041 is asking for income the "Estate" earned after death. Any income earned after death is income to the estate and not the individual. Sounds like this disability was awarded to him while he was alive. I gues one way to settle it, who was the check written to? Was it written to the individual or to the estate of? I think this would be treated the same as if the deceased was working and his pay check for wages earned while living was issued after death. This would be included on the deceased's final 1040 and not income to the estate.

I think you probably should have given the tax payer the phone numbers to call in an attempt to verify the amount they received before you filed the return. I have handled a couple that way and once the adjustment was made, the return was accepted. I am not sure the IRS will refigure the credit. I hope they do for your client's sake. JIMHO

Wow, KC covered this one so well that my two cents worth may not be worth bringing up. Is there an accountable reimbursement plan? I know it doesn't matter in this scenario but was just wondering.

Thanks for all of the help and suggestions with this topic. Here is my final take and I am wondering how any of you would proceed. 1. I did as the Step dad asked and adjusted the financials and removed his step son (my orignal client and friend) as a partner and issued him a 1099 MISC. I then gave the step dad a link to the IRS pages regarding determining if a person is an employee or a sub contractor. My professional opinion is the step son is an employee and his income is subject to withholdings and the required payroll tax should be paid. Step dad of course disagrees. I advised him that I disagree and that it is his call and that he will utlimately be the one to face the IRS and I will not help him either. I will keep my notes to CMA. 2. I am not sure the step son knows what has happened here. He will now have income of 25,000.00+ that he will have to pay the self-employment tax plus penalties for not paying estimated taxes. I feel obligated to speak with him as he was my client first. Had he remained a partner, then he would have shared in a loss. Granted, the self-employment tax he had to pay either way, his wife works and there is withholdings from her income,Plus, they may have been counting on a refund based on the intended loss because this was discussed with me in the step dad's office. I am still concerned about putting myself in a position of revealing information that is privileged. What is the best way to handle this? Finally, I will fulfill my end of the engagement by completing the company tax return and then fire this guy. He doesn't even know this is now a disregarded entity and goes on a schedule C. No doubt I will tick him off when I charge him for the partnership return I have completed that now is trash. Maybe after that, he'll quietly drop me instead.

You have received very good responses here. I would have asked the same questions and Lion's suggestion is the best with the possiblity of an accountable reimbursement plan. Question is, is this guy an employee of his own S-Corp? Good luck with this.

I agree here also and I have requested documentation to support the changes. I want to be able to see if any transactions were accidently entered into the wrong period that may have caused the difference. The books were not audited but I did do a pretty thorough review. I guess this set me off a little because there is always some question from this guy every time something is done. I setup the chart of accounts according to GAAP and then he adds accounts and changes things continually and tells me what should be expensed and what should be capitalized all while he has no idea of what depreciation or amortization is. He has created a large amount of miscelleanous expenses from personal fishing trips. I warned him about co-mingling of funds so he calls them miscelleanous. I told him I would have to make an amendment to the notes as to why the financials were amended and he told me that wasn't necessary because no one had seen the financials. The list goes on and on. I am prepared to pull my engagement and if it causes me to lose the step son's business as well, then that may be a risk I have to take. Thanks for your input.

I like this and thanks for posting. I have a client that owes me and maybe this will work for me. Terry D.

Thanks for all the replies. I agree, this is an interesting one to say the least. I have now found that a formal partnership was never established. No agreement and the LLC is still listed as a single member LLC with the Secretary of State. Yes, the NC Secretary of State is real promt with it's filings. With that said, this becomes a little less complicated. I did advise the step dad that additional billings would occur due to his requests and ignorance. I am glad that I have not filed the form 1065 yet even though I waisted my time preparing it. Don't have to worry about that can of worms now. Still the question remains, should I change the financial statements to reflect step dad's desired figures? I say desired because I took every precaution possible to ensure my adjustements, closings' etc were accurate. My only guess is some transactions were entered in 2009 after I prepared the financials. I let this guy know that by my review and reference to the date and time stamp on the reports, they were accurate as of that time. My concern is not being able to verify the changes. If I am going to sign off on this, then it had better be right. Jainen, I always like your responses as they usually cause me to look at the situation from a different perspective. A hugh thanks for that. I agree with KC, that I may need to fire this guy. Any further suggestions are appreciated.

I need some guidance and other opinions regarding this situation. A long time individual tax client joined in with his step father and formed a used car dealership as a single member LLC with the Step Dad making all the investment for startup in June of 09. Because of my previous relationship, with the step son, I was retained as the company accountant. An engagement of services was signed. Step Dad couuld not understand how to compensate his step son. I advised him his step son was an employee... October 09, Step dad wanted to gift step son a percentage of the LLC making it a partnership. I told him what needed to be done and to the best of knowledge it was and I was advised to include the step son as a 50% partner. As of yesterday, this guy calls and does not want the step son as a partner and wants the money the step son received listed on a 1099-MISC. Step dad did not mail any of the 1099's that I gave him for other vendors so he feels this should be an easy change. The 1065 is completed and the step dad now claims I have overstated the income for the year. If I had, this places the company in a loss instead of a profit. Changing the step son to a sub contractor places the company at a greater loss. Also, this places the step son in a position to have to pay income and self-employmen taxes and step daddy gets all the glory. I smell a huge rotting rat here. Here are my questions: 1. The step son is my original client and dear friend and he is getting the screws from his step dad. How do I advise him to avoid breaking any client confidentiality? 2. Am I required to change the financial statements to reflect what this guy says they should be. All of the bank statements and other income and expense accounts reconciled at the date and hour I completed them. 3. Would you remove yourself from this engagement? Good revenue will be lost and I realize that no amount is worth getting involved with questionable acts. Thanks,

I have the same question as KC? Your clients are married and have two choices either MFS or MFJ even if she is in Mexico, they are still married with either status. MFS has the ugliest tax consequences. File the return MFJ. By the way, the program is right when it says you cannot use the SSN in both places.

Pacun that makes perfect sense to me when both tax payers are living under the same roof. The same applies that she (lower AGI) cannot claim HOH either. I have had a few clients try this and they get mad when I tell them they cannot. The next scenario is when more than one taxpayer with dependent children live together and each have dependent children. The kids meet all the tests for EIC but, here is the question. Would each tax payer be able to claim HOH? I say yes if they can each prove they paid 1/2 of the upkeep of the home. One pays 1/2 and the other pays the other half. What do you think?

I see from another post that you are a NC preparer. I am in the central part of the state between Greensboro and Durham and fed up with the weather. I agree it is killing business so far. Where are you located? Terry D.

PLLC - Professional Limited Liabilty Company. More info is need for analysis. Terry D.

It always pays to review these things carefully. I agree no credit under the circumstances you presented. Terry D.

Good one Wendy! I live in the South but have the status of a transplanted yankee. I really needed this one. Terry D.

I too have used the TP Advocate office. Had a case I had been working on for 3 years with numerous IRS employees (agents or whatever you call them) who apparantly have a different 10 key than I do. Or at the very least one that adds and subtracts differently. Anyway, the TA got it straight in two months and admitted that each change should be presented one at a time and slowly as to not confuse the folks at the IRS. I quit writing letters to the IRS as it appears some can't read or they don't read them at all. Glad you had great success JB :)