Terry D EA

JB,

I certainly am appreciative of your help and offer. I don't know what happened, (maybe tired and worn out), I updated my program and now the forms have the figures in the right places and the returns appear to be correct. Maybe, the little tax gremlins got into my computer and fixed things for me. Thanks again JB and I definitely owe you one.

Terry D.

Thanks for all of the replies. I do concur with Jainen and Bulldog Tom. I plan on giving them a friendly visit to give them a headsup and that is it. I do have solid ethical business practices and I am not really concerned at all about the effect this practicioner will have on my business. To address one of the other posts, yes people will fall for anything if it appeals to them. Like my wife said, people who are getting a refund for an amount that is well over and above their withholdings, really don't seem to care what it costs either. I have seen clients who will spend 250.00 to get a 900.00 refund. Makes no sense to me.

Terry D.

I am sorry but I have never heard of ATX offering any type of refund loans. They do, however, partner with some banks to offer the refund loan products. The biggest problem with what this company is doing is placing the words " Refunds in 24 hours", "Rapid Refunds" in three different places in their advertisment.

Terry D.

In my area, a new tax office opened up that several folks had mentioned to me. As usual, I took the attitude that they won't bother me and I had no knowledge of who they were or even if they were qualified. Quite frankly, if HRB and JH never hurt my business, and only sent me clients, then I wasn't concerned. I just stepped out of my office for cheeseburger and found their card at a local restaurant that advertises all of the gifts they are giving away ( the largest one being a flat screen TV), 20% discount on prep fees, and the words "RAPID REFUNDS IN 24 HOURS"

As we all know, this is a misrepresentation of the IRS refund policy, procedures, etc; and is exactly the same thing many of the big guys have been sued for. I see this is hispanic run, right next to a very popular hispanic restaurant, and I have been wondering where my hispanic crowd of the last 10 years are. I wonder if I found them. What would any of you do with this?

Well, I had to edit this post, I now do not think any of my clients will be going to that office. I called to get my MFJ return with the NC state prepared, no itemizing, etc; and it will cost me $198.00. They have got to be kidding?????? My fee for that type of return is still only $79.95. Shame on me for not raising my prices this year.

Terry D.

Thanks JB, I had the information entered just as you stated. The Massillion form shows a refund for the same amount withheld from N. Canton which I know isn't correct. Am I still missing something?

Thanks,

Terry D.

Hey Janitor Bob, I got a wierd Ohio local tax question. I transplanted from Ohio 13 years ago and have gone fuzzy on some of the local city returns. My daughter moved into Massillion in November and lived in Canton for the majority of 2008. She worked in North Canton and North Canton tax was withheld. When I complete the Massillion return, the program is giving her a full refund. Problem is, Massillion didn't get any tax payments to begin with and she didn't work in Massillion at all because she got layed off. I completed the North Canton return and was wondering if you could help with the Massillion return. I just can't see how Massillion would refund money they never collected. The instructions are as clear as mud.

Thanks in Advance

Terry D.

I have read all of the responses and now it seems your problem is the man is from the US and has married a woman from a foreign country who does not have any type of tax ID. First step is to fill out the W-7 form for her to apply for a ITIN. Once she has that number then you can file them MFJ. In 2008, if they determine they were indeed married, she will still need the ITIN. I have to go along with the person who said to advise them to seek legal advice so they can determine their marital status. If the IRS asks them to prove they are married, I would think a marriage certificate of some sort would be proof enough. However, I don't think they will ask.

Terry D.

I kinda despise all of the ads as they are misleading to say the least and make no suggestion of the real intent to rip people off and pray on their ignorance. I get really irritated at the file your taxes for free ads. Why would anyone want to mess with something like taxes and the IRS if they have no clue what they're doing? Do your return for free, screw it up and we'll penalize the crap out of you, intimidate you into paying amounts you may not owe and make your life a living hell for at least two years and will thank you for it from the new friendlier IRS. Sounds like a bargain to me. It's even a better deal for the IRS now cause they need the extra money to pay-off all of the bail outs.

Thanks to all who replied. Old Jack, as usual, I am following your advice. I have found some additional information. As Zeke pointed out, HRB filed the 1099 MISC using the EIN when the company was a Sole Proprietor and should have used the new EIN issued for the S-Corp. My understanding is this has been corrected by HRB. I have had no intentions on amending this return regarding officer salary.

Old Jack, can you site an IRS reg or pub that justifies your statement of an officer not being required to administer services to the S-Corp when providing professional services? I just love these rats nests I get right at the beginning of tax season.

Terry D.

I have just picked up a new client who is a Real Estate Broker who is the sole shareholder of the Brokerage S-Corp. HRB completed the 1120-S last year and I have been asked to review it. Here are some things I am questioning.

1. The agents are paid strictly commission and are issued 1099 MISC for which I have no problem with as they are clearly not employees.

2. Line 18 employee benefit programs has been used to deduct "multiple listing service" and Line 19 includes the same amount in the total of other deductions with the same description on the attaching statement. This appears to be a double dip to me. How can you have an employee benefit program and no employees????

3. HRB has the pass through income/loss listed on Schedule E pg 2 as non-passive income. The broker does materially participate and is more than a 5% shareholder. Is this the right way to handle this? If the broker materially participates would he/she be an employee subject to withholding?

4. To add to my confusion, there are two different EIN's the EIN on the 2007 1099MISC is different than the EIN on the 1120-S. The company name is identical on both forms.

I need to know if I am missing something here or not completly understanding the tax treatment for Real Estate Brokers. I guess this would make perfect sense if the broker did not materially participate but the two different EIN's doesn't make any sense to me at all. Can someone point me to a reg or any infomation on the tax treatment of a Real Estate Broker.

Here is my other concern. I have leased office space in the office this Broker operates out of. It is a sweet deal but I want to be 100% sure of any comments that I make. Thanks in advance to anyone who can help.

Terry D.

I am using a remote office this year and am working strictly off of my laptop. Doing this will prevent me from having to move offices all the time and I can keep the home office up and running during the season and off season. Here is my queston: I am considering installing the ATX program to an external harddrive so it can be used on both machines. I need to put the 2007 program on to rollover the returns and the ton of depreciation that exists. I called tech support and they told me to export and import the 2007 tax returns. Does anyone know of an easier way or is that it.

Any opinions on doing the same thing using a jump drive?

Just curious

Terry D. :scratch_head:

Go to the IRS website and put form 7216 in the search box in the upper right hand corner. All the information you need on consent forms is there including instructions on how to create the form. If you are using Santa Barbara bank this year, they are requiring that every return submitted for a bank product contain form 7216. I think this is what you are talking about.

Terry D.

Yes they will charge a penalty for late deposit and depositing the incorrect amount as well. My advice is to deposit the entire amount if possible by the 13th of January. I have been working with the IRS to resolve a payroll deposit issue the IRS created for three years now. I have involved the taxpayer advocate and hopefully the case is settled. This was an overpayment on my client's part and penalties from the IRS because someone inside the IRS lacked the ability to read any documentation we provided. Trust me, you don't want to go there.

Terry D.

You are correct with the client's confusing expenses with the balance sheet items. This is the case here. My statement may have been confusing. I have not adjusted any books, created an adjusted balance sheet; etc, and my client shows a loss within his company by deducting the total of the "draws" he took as an expense. I know this is not the way it is done at all.

I have come up with the following plan:

1. This whole thing is based on the information regarding the filing of form 2553 and the IRS records regarding the S-Corp status and tax payer year. I agree the client's idea this is a fiscal year really throws me off as well.

2. If my client misunderstood the S-Corp filing year, I plan of telling him we will file the return as a calender year tax payer which will probably eliminate any taxes he may have to pay. How? He started this company in July of 2007 and only shows two quarters of income and expenses which will result in a pretty good loss. His draws will be against his investments in the company and will leave him a small balance in the capital account. This way, no employment tax penalties, no employment tax dues with the only remaining possible penalty is failure to timely file. He will face this with the state as well.

Thanks for all who replied. If KC or Old Jack can site a source for the items you mentioned earlier in this thread, I would appreciate it.

Thanks,

Terry D.

Thanks to all who responded. Old Jack and KC, I can always count on you guys to give a good answer. The books show a loss for the first year. However, that loss is due to the shareholder deducting his "draws". He now shows that he withdrew 56,900 w/o any payroll taxes. I have asked for the documentation from the IRS regarding the S-election. Remember I stated an attorney filed the Articles of Incorporation and the S-election according to my client who says he wasn't told anything.

At this time, I estimated the payroll taxes he should have paid, told him I would find out how to correct the the last quarter 941. I know you can't file 941-C with a quarter this year to correct a previous year. So, any help here would be appreciated. I also told him, that I had to proceed in the correct manner and would not advise him any other way.

I don't think the $1.00 thing would fly to well considering his draws. He has invested 21K into the business at startup which was financially and some equipment. Take his draws out and the company is profitable. Subtract his investment from his draws, and remove the remainder and the company is still profitable.

Thanks again,

Terry D.

Single sharehold of a new S-Corp assumed it was okay to take "draws" without being an employee. He has asked me to prepare his 2007 tax return. The company is a June 30 fiscal year company. This will be the first tax return. I have advised him to become an employee of his own S-Corp because he does materially participate. How would any of you handle this? Just record his "draws" as officer salary? He has employees who have had the withholdings done correctly. I am concerned about the red flag this will throw up and don't want to be connected as guilty when it does because I have knowledge of what he has done. My thoughts are for him to pay the required taxes and make the withholding payments by correcting the June 30 941 and face the penalties. What would any of you do??

Thanks,

Terry D.

I just got off of the phone with tech support. I am working on a 2006 return that one of my very good clients got a CP2000 claiming items on his schedule D were left off of the return and they are proposing changes, etc. All of the information that the IRS is claiming as not being reported on the original return, were indeed on the return. Here's the problem, tech support says they cannot access any information about 2006 because they changed the server. I asked them for a report that shows the return and line items transmitted to the IRS. THEY DON'T HAVE IT!!!!! I asked the girl, that what she was saying was that they had no information available from the 2006 tax year and how in the $*&^ were we supposed to prove to the IRS that we did transmit the proper information and she said it was true they don't have the information and she was sorry.

What kind of crap is this? William provided this information to me a few years back without a problem. Isn't there some type of statute that CCH/ATX has to follow on maintaining information they transmit? How in the world are we supposed to prove what items were on the original return that the IRS received to dispute their claim??? Does anyone have any ideas as to what I need to do with this?

The IRS is proposing a change in the amount of 4,000+ due which is wrong. Maybe ATX/CCH would like to call my client and apologize to him and pay this for the client being they can't prove anything! Needless to say that I am extremely upset with this and I really feel ATX/CCH has to have some accountability here. Any ideas please!

Terry D.

What RCooper said makes some sense. The only different twist I can put on this is. The partnership ceased to exist when the one partner left. However, the final accounting and distribution of cash and fixed assets would all be part of "Winding Up of Business" and the previously return filed as "final" would need to be amended if it indeed 2006 wasn't the final year and the 2007 return would show the final transactions. I am curious to see others responses on this one as well.

Terry D.

I know most of you will think I have flipped by taking classes during tax season but here goes. If 500 shares of $2.00 par common stock is issued to an attorney for organizational fees and the value of the services provided is 7,500. Would the journal entries be debit 7,500 organizational expense, credit 1,000 common stock, credit Paid-In Capital 6,500 as excess in stated value?

Some of these stock transactions can drive you crazy and I probably have been looking at this too long. I know this isn't a tax related question or comment but any input is appreciated.

Thanks,

Terry D.

Thanks for your reply. I did find the answer and yes this partner would have a gain resulting from the liability assumed by the partnership which would equal 5,000 in this case which is the amount resulting from calculating the initial basis which still leaves his basis at zero.

Here is the calcualtion (5,000) = 45,000 - 75,000 x 1/3. The partnership assuming the liability reduces basis to zero and anything less than zero is taxable gain.

Thanks!!

Terry D.

The norm on this should be the taxpayer whose SS# is on the 1098 gets the deduction. However, the party who actually paid the mortage could take the interest deduction providing the taxpayer whose SS# on the 1098 doesn't take it.

Terry D.

When forming a partnership, partner a contributes property with a basis of 45,000 and subject to 75,000 liability for 1/3 interest in the partnership. Can the partner have a negative "initial basis" or do the rules regarding transactions reducing basis below zero come into play here?

Thanks

Terry D.

I have a client who came to me this year with rental property. The previous preparer's, either did not depreciate the rental property or depreciated it incorrectly. The preparer who did depreciate the property, apparently has depreciated the entire purchase price which includes the lot. I know if I ask this client what the value of the lot is, he probably won't know. I know it is not broken down on the HUD-1 either. What would be the simpliest way to find out what the value of the lot is to separate and correct the depreciation. Here's all I got, 75K for the rental property with an acquisition date of 12/1/2001. 02, 03, & 04 no depreciation but $2727 SL taken in 05 & 06 which is the correct amount on 75K. Any suggestions please.

Terry D.

Not using ATX Merchant Services. When I inquired about the services, I was directed to the website for information which is what I called sales for. Crappy attitude from sales = lost customer. If you are a NATP member, you can sign-up for thier merchant services through CoCard. It cost me 5.00 per month plus 1.99% + .25 authorization fee. Yes, there are liittle hooks it does cost more if you key in transactions and I think it would be a little cheaper for debit cards with a pin pad. If you don't want to pay for a terminal and pin pad, then they do have a PC based program that cost about the same as ATX. However, I think the support with CoCard would definitely be better. Hope this helps

Terry D.

Does an owner/operator get the same per diem rates as a driver who is employed by a trucking company? I have an owner/operator who is an over the road driver. If he is entitled to the same rates, where and on what form are the rates calculated? I am sorry for what may seem to be some pretty basic questions, but this is my first owner/operator and I want it to be right.

Also, I have read on another discussion board that all professional software programs will calculate this for you. Where in ATX (I am using Max) can this be done if any? I do see on the entertainment and meals expenses from Sch C the box to check for the DOT rates. Any help is appreciated.

Terry D.