Terry D EA

Normally, the tuition deduction follows the exemption so the parents can take the deduction. They may not have paid the tuition but they definitely provided the housing, meals;etc as the daughter lived at home.

i think you answered your own question. As Jainen stated, the CPA did all of the work for you. Income minus the expenses should go on line 21 other income of each beneficiaries individual tax return.

I think that would go under the furniture & fixtures as 7 year property.

I gotta agree. That was awesome. Too bad we couldn't see him come back down.

I found this from the Smart Pros Accounting and News Insight. While I know HRB cannot control the nature or character of the people they hire, you would certainly think something like this would definitely impact their business, especially in the area this occurred. I know it would deter me from ever going to their office(s) again. My link

Don, I took the plunge and purchase the TRX product this year which is Tax Works. At the beginning I questioned whether this was a good move or not. The price was attractive and naturally there was a learning curve. The program is input driven and not forms driven like ATX. Overall, I have had a good experience. The depreciation calculations threw me a little because the input screens don't show the current depreciation which is something I was told they were working on to correct. One other problem I had was finding the input to override a unallowed loss from the previous year that was allowed. The program picked the loss up from the K-1 line 1 which I was told they are also going to be working on. Other than that, no significant problems. The time it took to learn the program took a little while but did come fairly easy. One of the major pluses over ATX for me is the client profile screen. You can synchronize with the e-file center and the status of the return is displayed. Numerous reports from the e-filing center can be printed that allows you to verify the progression of the return including bank information. This is something I personally asked ATX for the last 3 to 4 years. One more thing, the returns print in order from the cover (slip) sheet right thru the end. The only sorting is separating the Fed client letter from the State which can be avoided by combining the letters. It is worth a try and as a new customer, you will get an offer that is hard to refuse.

I'm going to go out on a limb here. I think it would be to your best interest to try to obtain the documentation surrounding the trust. Those documents may very well outline the taxation of the trust as well as what happens upon death. I agree with the previous response, the executor is the one who can initiate this and it ultimately responsible for filing any and all tax and legal documents on behalf of the estate. You might consider filing an extension of the deceased's final return to allow for some additonal time to obtain the documents and research this. Good Luck!

KC, I like the two by four explanation. Some of them take a bigger board. I have a single S-corp shareholder that recently was smacked with the two by four for not filing his TY 2006 individual tax return. You guessed it, hasn't called me yet and even better, I have completed the S-corp return each year after filing extensions cause he is never timely, now they want the individual returns as I am assuming they have the withholding records (worked for another company in 06), the K-1 and whatever else they have and probably are claiming he owes them. It will probably take the four by four on the forehead to get his attention.

The question is, was/is your client insolvent? I handled one of these a few years back. It would be in your client's best interest to obtain all of the bankruptcy documents from the court. That will show the discharge of this debt even though the box isn't checked on the 1099C. IF it is included in the documents, then file it as non-taxable based on the bankruptcy filing. Your client might get a notice and have to produce proof. My client got a notice plus a proposed adjustment to his tax liability of that year. We presented the court docs and it was resolved and to my surprise, it was done very timely by the IRS

I am a little confused here. Why is the rental condiminium reported on form 1041? Is this part of the deceased's estate? Your question seems to suggest the person hasn't died yet. The step up in basis would occur to the one who inherits this property at the time the inheritance takes place. Also, the basis at that time would be the FMV and an apprasial would definitely be in order as that should reflect the FMV and is used to validate the step-up in basis. Now for the other part, if the one who inherits the property continues it as rental, then the depreciation would begin again at the time of the inheritance with the FMV as the starting point for determining the depreciable basis.

I think you need to refer back to KC's response. Even though the land has increased in value, the balance sheet amounts don't change again until there is a disposition of the asset. The step-up in basis occurs at the time of the inheritance.

Yep, a Sub-S corp can be in a partnership along with an individual.

Agree totally, education expenses follow the exemption.

Yeah, I thought about that after I made the post and realized that I goofed. Under normal circumstances (whatever normal may be), claiming a credit in a year that the event that triggered the credit took place in another year wasn't possible. Thanks for keeping me straight on this.

Maybe I am missing something here but why wouldn't the credit just be taken on the client's 2010 tax return? We are filing for the 2009 tax year and the home wasn't purchased in 2009 but in 2010. Why would you amend something that hasn't occurred yet? Or better yet, how can you claim a credit for something in one year when the event that triggers the credit doesn't occur until the following year? :wacko:

Usually the last day to e-file is October 31 of the tax year in question.

I think I would do a correct W-2 with an explanation of the changes. This not only affects the gross income but all of the withholdings as well.

:bday:

I think filing the return electronically is fine. I would attach a copy of the POA to the 8879 for my records. Remember the 8879 is the digital signature form that via the PIN states the client has signed the return. Kinda a hard for the IRS to tell who actually signed the return. But again, be sure to keep a copy of the POA on file and advise your client to do the same.

Yep she will be 17 on Nov 2010. Easy mistake to make though but good that you are cautious

>>>a boiler-plate confidentiality agreement<<< Exactly what is this agreement? You can e-mail me a copy of it to [email protected]. Thanks so much for your input.

Just to add, wouldn't the partnership be required to have an accountable plan for reimbursements as well? If so, then I think the employee reimbursement method is all you have as Jainen has given you a good answer.

My computer that I use for all of my tax and accounting business decided to go out to lunch on me the other day. Yes, I have a couple different methods of backup. I took the computer to the local computer store and the guy was great! However, here are my concerns: 1. All of the data on the hard drive was recovered and placed on a computer in his shop. This was done to be able to clone a new hard drive if we needed one. 2. The exisiting hard drive was able to be repaired somehow and all of the data was intact. Don't ask how cause I am clueless to how. 3. Now that everthing is back to normal, the computer is working better than ever andthe computer guy told me he would keep my data for a short time to be sure all is well. Now that doesn't help when working forward for a month if it craps again. I did ask him about privacy issues and he stated the data was encryptyed (for his eyes only)and he would permanently delete it once we determined we do not need it. I think my computer guy is 100% honest and is a person of integrity, should I take any additional steps to protect my clients and if so, what are they? Would you go to the computer shop and tell the guy to delete the information and watch him to be sure it is done? Fortunately, I have never been in this situation before so I am not sure as to any extra steps for privacy that should be done. Thanks for your help during this busy time. :)

old Jack hit this one right on the head. Find out who was the Fiduciary for the Estate.

It will all depend on how the estate was settled. You need to find out if the rental property legally transfered to the Spouse or if the Spouse was the beneficiary or if the rental property was jointly owned. Also, was the joint return filed as the final return of the deceased? I think you need to get alot more information here. Depending on the state the spouse may not just take over and there very well may have been a requirement for an estate return.