Terry D EA

:bday: Eli, Have a happy B-day and here is wishing you many many more! Terry D.

I am a NC preparer and the unemployment credit of 2400 from the Feds does not get added back in. As others have said, NC begins to calculate tax liability from the Fed income minus the std/itemized and personal exemption adjustments. The normal add back is either the difference between the Fed standard filing deduction and the NC standard deduction plus a personal exemption adjustment that depends on the number of dependents. When some one itemizes. then NC add the withholdings plus the NC exemption adjustments back in. As for taking phone advice from the NCDOR.... that is extremly scary even if they do agree with us. Terry D.

After a second look, it does appear the person who got paid for the dirt provided the land. If that's the case, the I agree with OldJack and the others that this should be put in Box 3 and on line 21 on the 1040. Sometimes we read things too fast

It seems to me this guy got a huge benefit of a house for free and no taxes to pay. Is he greedy or what? Geez! Even if he sells it 10 years from now, he still gets a benefit of the basis at time of death. Win win. He still gets free money reduced by taxes on the gain that he didn't have in the first place.

One more thing, there are two different credits covered on the Sch M. The work to pay credit and the government retiree's credit. I was wrong in my statement above about social security benefits. The person must be a government retiree as identified in the instructions. Sorry

I'm going to have to disagree here. If this person received a pension or an annuity and social security benefits, then they are eligible for the credit based on the Sch M instructions. Being that she did not receive the credit while she was alive, then she is entitled to it via the tax return. There is no mention of a deceased tax payer in the instructions. If she was entitled to the credit, then the refund should go to her estate. I would think the same forms to claim the credit (1310 I think) should be filed with the return and the header on the return must be marked deceased. As I see it, the only that can happen is it could be denied.

I would not file a final return this year because there maybe some unforseen business that could evolve. In my opinion, this should be the year for the S-Corp to "wind up" business. The bankruptcy is in the hands of a trustee for both the S-Corp and her personally and you might not have all the information about the proceedings. Can you be sure there are no assets in the hands of the trustee? The fact that the S-Corp will have a significant loss will only affect her personally and is still deductible per the IRS rules. If she gets a refund because of the loss, then the trustee will take that as well to settle any debts. It will be interesting to see others responses

If I'm understanding this correctly, your client who digs swimming pools paid an individual to deliver the dirt he dug to "his" (The pool digger) property? Sounds like this is a personal expense and not business related. Now if I missed it and during the normal course of pool digging, your client pays to have the dirt removed from the work site, and this is a normal expense that occurs during pool digging, then where it was delivered to is irrelevent and the private party provided a service who is a sub contractor, then he would put this income on line 7.

I hope posting this here is okay. I am not trying to push the TRX software and am just trying to give some information. I have used ATX/MAX for twelve years and toyed with the idea of changing in the past but I have been completely satisfied. I changed to TRX-PRO this year to save money. Usually, you get what you pay for. I knew there would be a learning curve but that curve has not been much. So far, no problems. I do have to admit the statements, reports,cover pages, etc are much better than ATX. I especially like the e-file transmission status report. This is a feature I have suggested to ATX for the last three years. TRX doesn't have a fixed asset manager either. That doesn't really bother me as I use a different fixed asset management program any way. Just thought some of you would like to know. Terry D.

Thanks KC for the reply. I have done exactly as you stated. I have inquired as to the nature of the grant and what it was for. Hopefully I will get that information tomorrow. If taxable then line 5 it is. Terry D.

Okay, found the answer for the fire and the 4684 is used and the loss or gain reported on form 4797. Still don't know what to do with the grant money. IMHO it is a separate account and not related to any normal operating activities. Terry D.

S-Corp client, recycler, reported in other income 9k grant from NC Dept of Environmental Services. This is a below the line item and is it reported on the 1120S? If so, where? There are expenses for items involving the grant. Same client had a loss due to a fire. All insurance deposits were entered in the other income account with expenses for the same were debited. Should the casulty thefts and loss form be filled out? If so, should the loss (if any) be reported with the line 19 items on the 1120S? Thanks for help with this. Terry D.

Eli, I like Old Jack's approach. However, there is another thing to consider. If he transfers the 1099 MISC to the Partnership, then you still have the problems of who gets what percentage when you complete the 1065. Pacun's reply is interesting but I would think the paper trail regarding the 1099 MISC is covered.

Thanks to all of you and I enjoyed reading each response. I do apologize that I did not get all of the correct information from the client. My client kept telling me that he loaned the company money but did not tell me where the money he loaned came from. Apparently, I over thought this whole situation. Member A took a home equity loan to start the company. The company is repaying the loan to the bank and not Member A. Member A basically did gift 50% to his son. As it turns out, neither invested any personal funds in the company and both are simply performing services for the company and all payments received are taxable, which as KC mentioned, may be offset by the loss that will pass thru this year. This company is a used car dealership. For the gift tax return comment. Under the new information, I don't see the need or possibility of a gift tax return requirement as nothing of any monetary value has been gifted. All assets have been purchased with company funds. Simply put, this is a two member LLC taxed as a partnership. Thanks! Terry D.

KC, Thanks for the reply. For Member A it is a loan and re-payment is expected. So, the repayments can be guaranteed payments and not taxable. Your reply on Member B is exactly what I thought. This is family but listed as an LLC with NC and not a family partnership. I am trying to find a good way to explain this to the client so it makes sense to them. Member A wants his son to be a 50% partner with him but he has made no investment. As we sure that the draws to this member would be subject to SE tax? Seems to me it would be which would make him the same as a W-2 employee. Does this help? Thanks, Terry D.

A two member LLC. Member A (50% member) loans the LLC 150,000.00. Member A takes monthly draws of 3K per month. This is not a guaranteed payment and the amount is flexible. Is member A taxed on the draws or is this a reduction in equity? Member B is (50% Member) and has not made a significant or any investment in the LLC per se. Draws taken by member B are taxed as a distribution of profit correct? I know the distribution of profits is not expensed on the LLC's books. Here is the question, the LLC is showing a loss and I assume the draws by member B are still taxable and not subject to employment tax and the loss that passes thru very well may offset any taxable income from the LLC. Am I correct here? I need to clear the mud from the water here. Any help is appreciated. Thanks, Terry D.

Thanks KC, this will be helpful information for me. I am one who paper files a few 1099 MISC because of clients who have employess with bogus SS numbers. Can't e-file them. Terry D.

Client is a used car dealer. When purchasing, receiving, or returning cars from an auction. Are the mileage or actual expenses deductible or are they added to the cost of the vehicle for sale. If so, would the mileage be added to the cost of the vehicle at the Federal rate? My thinking is actual expenses only. Car dealerships are new to me and any help is appreciated. Just to add, I don't know the entity structure at this time. Thanks, Terry D.

Can anyone lead me to some tax information for Bermuda? I have a couple that the husband has dual residency status with the US and Bermuda. Both want to live here and do currently own a home locally and a home in Bermuda as well. I need US tax requirements for income earned from renting the home in Bermuda. To complicate things a little further, the spouse owns the home in Bermuda and a small business as well. She would be a non US citizen and is applying for citizenship. I have told them this is not my area of expertise but they want me to try. Any help will be appreciated. Terry D.

I must say that regardless of what the letters say and or what we feel will or should happen is only an assumption at best. I had another client that received a CP2000 followed by an assessment with assurance from an IRS rep that the refund would indeed be snatched. You guessed it, the client got the full refund. I do agree with Jainen on both issues but the experience that I have with the IRS tells me to always CYA, notes of phone coversations, etc as the situation will get handled any number of ways. My step son's refund was adjusted by the IRS and they claimed the EIC was calculated incorrectly. It was not and I have come to believe the IRS has different programing in their calcualtors than mine have. No matter what, you can't trust them and always get an extension of time to prepare. Terry D.

The easiest way is to just override the cells and remove your information. Terry D.

Hey Eli, good to hear from you. All went well this year and I am glad it is over. There is still plently to do though. As I see it, if TRX is selling the same ATX Max product minus the books, at a substantial savings, then why not? Support is an issue for some but I only called them once this year with a minor problem that was irritating but did not affect program operation. I have only contacted them a few times within the last 4 years. So, same product at seriouly lower prices, I'll probably change. I'll call you when I get a call from them. Have a great day! Terry D.

I have read most of the posts regarding TRX. I would like to know more about this but no one has called me. I have used ATX for 10 years now and certainly don't mind saving some money. Actually, I wish I would have known about this sooner. TRX call me (919) 304-6981 Terry D.

Thanks Margaret. I did get through the returns just fine. I guess the manipulation of the information to get it onto the forms wasn't too bad. Although, I would like to see some changes. Terry D.

Just off the cuff, but it would appear your client would have a tax due once the sale is reported. With that said, the IRS can collect a tax liability back to seven years prior to the return filing date. I think the main question here is would the IRS accept the installment sale. You are right that this would be alot of work when you are uncertain of the outcome. For what ever it is worth, a phone call to the IRS to try to speak with someone who would be able to give you a good answer might be in order. Problem is, finding that person. Maybe Ibbwest or Jainen will chime in as they maybe able to give you the best insight. Terry D.