Terry D EA

I think we need more information to accurately reply. Is this trust involve partner's or is this an estate using form 1041. Knowing that will determine the form that should be used. Everything I read on the 754 election is referring to "partnerships" and adjusting partner's basis due to making a 754 election. Just confused and wondering.

I have nothing to add. Judy has given you the best guidance with your situation. Form 3115 and follow her steps.

Client picked up their tax return today. This return would not be the easiest return one could do and would never take a return like this to the tax mill companies. These folks have owed each year due to a spousal taxable grant situation that has no withholdings and due to the nature of the grant, it is taxable to Federal and NC State. For 2015, grant funds increased by 8,000.00. TP income also increase by 30K. They paid estimated tax payments based on 2014 and didn't notify me the grant funds nor the income by the TP had increased so we could adjust the estimated payments. Now, the spouse wants a second opinion because she just can't believe they owe what they owe and wants to take my return and get a second opinion. I assured the TP this wasn't a problem and that I was 100% confident in the return that I prepared from the docs they provided and that she was welcome to get a second opinion. I asked to be paid which they did. I also offered a full refund if my return was incorrect or that I missed something. Also, I stated that I would issue the refund after I was afforded the opportunity to review the second opinion. What would others have done in this situation? Opinions please. The return is on-hold until I hear from them.

>>>>>>The 5498 does not substantiate the date of the deposit<<<<<<< I respectfully disagree. The form 5498 that I am currently looking at indicates the time period the contribution was made which is the same time period the withdrawal occurred which is well within the 60 day window. The receipt of the contribution also reflects the same dates. So, I feel comfortable that I have this well covered. However, you and I both know anything can happen with the IRS. I do appreciate your input and it appears my client has all of the documents you mention. Thanks Jack

Jud, I was typing as you replied and as you can see we both agree. The software does indeed have the "rollover" and the amount in box 16A which I am assuming because of the 1099R the indication is a distribution from an annuity or some other retirement funds. I only input exactly what is on the 1099R.

My final take on this is, the client has form 5498 in his possession that shows the rollover contribution. I am going out on a limb here and assuming that form 5498 is reported to the IRS. If not, then it definitely can be used to substantiate the rollover if and when the CP2000 arrives. The software indicates rollover on form 1040 page 1. Form 5498 contribution amount reflects the exact amount indicated on form 1099R. I think I have this covered.

5329 is for early distributions. I don't see anywhere to report the rollover. However, you can report the exception to the early distribution penalty. Agree, if there is a difference between the amount rolled over and the actual distribution such as not using other funds to payback the taxes withheld then it is income. I am looking for somewhere in the software the 1099R is recorded and the election to rollover is also recorded so the IRS knows what took place to avoid the scenario Jack mentions.

KC I have not used ATX since the CCH takeover. However, I will tell you I had to install the 2007 year and I do miss the smoothness and all of the features of the old software. I have spoken with one the ATX representatives this year and am seriously thinking of going back. This year is seems as though folks aren't having as much difficulty as before. I always used MAX and wonder if it is still relatively the same.

Not sure where you are talking about. But thanks anyway. I guess I have been brooding over this return too long. Trying every trick I know to reduce the taxable amount due.

Okay never mind I found where the input was to adjust the 1099R amount that is not taxable. I am use OLT software and found the entry at the very bottom of the 1099R input. Entering the amount there removes the 5329 and additional penalty as well.

Client's employer went under. At the time, my client had the amount of his 401K issued to him as a check with the required taxes withheld. Well within the 60 day period, he put the entire amount including funds from another source to cover the taxes withheld into another IRA account. I know this is a tax free transaction and there is an exact situation in pub 590 that explains his situation word for word. He received a 1099R for the distribution and in box 2 the total distribution amount as taxable, coded 1 and showing the taxes withheld. So, far I think this was done right. He also received a receipt from Fidelity showing the total original distribution amount as added back in. When I enter the 1099R, the total amount becomes taxable and generates an early withdrawal penalty as well. How do I report this? I have looked everywhere for a form that will allow me to report this as a tax free transaction. I just can't leave the 1099R out of the return either. What to do?

Thanks Rita! Where on earth did you find this?

I am right with you JB. You have to have some comfort in know you did the right thing. It's not even worth mentioning the consequences you could face had to succumbed to the client's desires. Good Job!!! All I know is that for every client that I have lost for what ever reason, at least two or three takes their place. Go figure. I fired a client last summer that was almost at the top of my PITA list. They opened the door by asking me the tax consequences of selling a building and have the buyer pay them partial cash and the rest with a check to avoid paying capital gains on the sale and if they absolutely had to report it. This opportunity was a blessing to say nope and now you breached our agreement and I can no longer provide you service as I cannot be part of anything that suggests tax fraud. I was told to forget everything I had just heard. Nope no can do, engagement ended. Man am I glad and I have already gained another S-Corp to take their place. So, stand up for what is right, you can't go wrong.

You guys are making my day with this thread I did talk with the Post Master today and he did inform me that I really have no recourse and it was his problem to try and correct. Well, I said it hasn't been corrected for the last ten years but I do feel some obligation to let him try. I think my situation is like Catherine's one guy can read and the subs can't. Even the guy at the counter in the PO got an attitude when I told him what I needed and that I needed to pickup a certified envelope (large) that I never received a notice for. He insisted he had written me both the first and second notice with the second notice being written this morning and he guaranteed it. So, I said go ahead and write away on notices. That doesn't mean that your delivery guy can read or that I will ever get them. Then he went and got the Post Master. I know I am old school but what ever happened to people who would do their job, or better yet, what has happened to compassion and common decency and courtesy. I guess now I am living in a fantasy world. Looking real hard at the PO Box.

I am not sure out of what. Is it not the client's responsibility to determine the fair rental value? I have asked them to get me the average in their area. With that said, I want to look at the 20% issue and the fact it is rented to a family member. If I back into their figures, the daughter is paying 765.00 per mo. and if the FRV is 300.00 per month higher, then the rent is more than 20% discounted and the income should be reported on line 21. Maybe if I contact a realtor in the area they can give me the average FRV.

Thanks!

Yes, I have talked with the Post Master and will visit him again today. I am considering the PO Box and will discuss that as well. I have to have some sense of security and privacy when my client's are mailing me their documents.

Got that, thank you!

Catherine, that would be great except, and as far as I know at this time, the only thing they've done to this client is keep the notice from the Post Office regarding the certified mail. I have a secure online document service available but for some reason most folks won't use it.

I am all for the regulation and testing as well. That means for everyone and not just the signer of the tax return. Each and every HRB, JH, Liberty Tax and any other giant tax mill employee should be required to have the credentials as well and not just the office manager or signer. I too agree that CPA's and Attorney's should be regulated and tested as well. Just recently worked with a situation where an attorney was advising a client incorrectly regarding a specific situation. No one should get a free ride.

One of my clients has determined that the property they are renting to their daughter maybe under FRV for the area. From their research it appears they maybe 300 to 400 under FRV. Wouldn't the fair rental value be an average? I know the IRS says if the rent received for the property is not equal to fair rental value, then it is personal use property. I am leaning toward personal use property. If so, then the rent received is all income without any deductions. Correct?

This is a new area for me. A person who is authoring books for sale would seem to incur some expenses in doing so. Would this be a Sch C type business? What business code would be selected? I have a client who has some books they have written published. They use a dedicated room (space) in the home so could the office in home deduction be used? Sorry for all the questions but as I stated I have not worked with any authors before.

I am with you on the "person who keeps my mail is a jerk". While the letter was threatening it did get us a face to face with these folks. This has been going on for at least 10 years. We spoke very nicely to them, explained our concerns and parted ways on what I thought were good terms. We are not perfect, but I have always made sure I took their mail to them as soon as I get it. We are talking less than a quarter mile apart and they have to drive by my house to get in and out of the development. I realize it is really not their responsibility to deliver mail but geez. I can also tell you the UPS guy delivered bank check stock from Santa Barbara bank one year and the neighbor signed for them and the UPS guy insisted they signed my name but he conveniently erased the signature. So maybe a discussion with a lawyer might be in order here.

I know I have good friends here that may or may not have experienced this situation. I have a mailman that apparently cannot take the time to read the name and address on the mail. Now, in his defense, there are two addresses where I live that are the same. One is labeled Lane and the other is Court. The numbers are the same and the street name are the same just Court and Lane. I am at the 'Lane" address. Quite frequently my mail goes to the other address. We have spoken with the Post Master on several occasions and the situation doesn't get any better. Now to add, the neighbor just can't seem to be bothered to give me my mail or return it to the mailman for him to deliver it to me. Recently, we had credit cards and some other important mail not delivered. The companies cancelled the cards and reissued them. Out of frustration, we mailed a letter to the neighbor asking them to give us our mail or give it the mailman and did threaten with legal action for keeping credit cards. Well. that got some attention and the neighbor brings to my house a stack of credit card applications and other mail dated back to last June. Now, I am waiting for documents from one of my clients who fortunately has the smarts to send them to me certified mail. The client informed me the post office has left notices and I have not responded. This is not true and apparently the notice is at the neighbors. What in the world do I do with this? Isn't this mail tampering or in violation of some Federal postal regulations? If anyone has the time to respond I am grateful but if not then that is okay too. Just needed to vent. Seems like I'm doing that a lot lately.

Just a few notes on the 179 elected expense problem. Again, I discovered what the problem was when I was on the phone with Dan from support. Yes, he did finally call. The program did put up an error regarding the number of 4562 forms for the same business. I questioned this error and was first told it had nothing to do with the problem. In fact it did. Dan admitted that we both learned something and I did tell him that I had no idea how the second 4562 for the same activity got started. Anyway, I deleted the second form completely and that solved them problem. While I am grateful, it still should not have taken as long as it did to get help. I'm still investigation a different package and thanks for all the suggestions and input from my friends here on this board.