Margaret CPA in OH

I ask, include the question on the organizer questionnaire and now, for electronic filing, send the pdf of the disclosure statement from Ohio that the client has read the 'not our fault' provision regarding refunds (OH Dept of Taxation is not responsible for misapplication of a direct deposit refund...)and the OH Electronic Filing Information where "Under penalties of perjury, I declare that to the best of my knowledge and belief, the Ohio income tax return .... true, correct and complete... Recently I also have been sending the input sheet for the Use Tax asking the client to sign if the answer is No to out of state, etc. purchases. I apologize for all the CYA but I really don't want anyone audited to come back and say I didn't tell them. By the way, for Ohio it is internet, mail order, telephone or out of state purchases on which sales tax was not paid. Really annoying...

I have had significant issues, too. See my unanswered post somewhere down the line. I finally spent about 90 unsatisfactory minutes on the line (mostly on hold) with tech support who was not able to resolve the issue. I have 2 partners in a personal return with identical K-1 input. The loss flowed perfectly for one, not the other, to Sch E. I even printed out the worksheets to see if I could determine the error which I must surely have made. Having found 0 differences, I overrode a field (I know, a sin). The worksheets have been redone this year and I think a couple of links have been missed. I did see on the K-1 entry places to enter UPE near the bottom but maybe you have to check the box at the top to calculate basis limitation and/or at-risk limitation to input on the appropriate worksheet. Or...override. Just don't tell anyone I told you.

Anyone else having this problem? I could override, but really prefer to utilize the capabilities of the software and really don't want to be on hold for ages with tech support. Thanks!

So the data entry this year is different with 6198, Basis Wkst and the K-1 sheets and I am about to cry. On the 6198 Input tab, for the life of me I cannot figure out how to get the Prior Loss (middle column, line 1, Ordinary income (loss) from the activity) to appear. My bunny doesn't hop from there and I simply cannot figure it out. I have an issue with the 1065 input, too. The loss is allowed for one but not the other partner although I swear the data is entered exactly the same for both. Honest! For the S-corp, the unallowable loss of nearly $100,000 (no basis any more!) is coming through on Sch E, page 2, despite my best efforts. I think it's time for some cheese with this w(h)ine but I could use some guidance. Thanks!

Hmmmm, is that all? Really, where DO you find these things? I don't believe you go looking for them but time and again you show us the most amazing feats of, well, time consumption. And I, for one, always spend time marveling at the creativity of folks. Thanks, Catherine!

Yes, happening to me as well.

That has happened to me twice and I could not determine any common factors other than memory issues as noted. I waited a while, closed the return and reran with no (geez, I hope!) apparent subsequent problems. It is/was a worry, though, as I have never before even seen that message until this year.

Wow! I have Aon through AICPA and pay $451 for $100,000/$250,000. To increase to $250k/$500k would cost $636. How is it, I wonder, that your premium is so much less?

I had a handful of these last year and was extremely careful in gathering all the documentation. After tax season last year my son mentioned that his new sister-in-law and her live-in boyfriend and baby daddy had gotten the $8000 credit because she 'bought' the house they were living in from her honey. Her honey's parents had bought the house for them because they were thrilled to become grandparents despite the circumstances. Since it was seller-financed (no proof of income required) and purchased from an 'unrelated' party, the sister qualified for the credit and promptly spent it on a huge television. They have since split for good, she is attending school on Pell grants, he works as a bartender, etc. My son shakes his head as does his wife. She loves her sister and nephew but is so dismayed at her life choices and, frankly, the ripoff to other taxpayers, including her and my son and their parents, etc. by her sister and baby daddy. I just don't understand the mentality that drives people to be so selfish. Then again, when our illustrious lawmakers enact such things to win votes and bring home the bacon to constituents, I guess an example of 'me first' is set for all to see. So sad when the country and a people as a whole are not the beneficiaries.

Bitte sehr (the only foreign language "You're welcome" that I know)

Wouldn't the federal tax be due in tax years 2011 paid in 2012 and 2012 paid in 2013? I think unless one elects to pay it all IN 2011 for the conversion in tax year 2010, the tax is deferred. I just completed one this week with both converting all and the 8606 (I had a query the other day) calculating just fine and the carryover page as part of the tax summary clearly spelled out the amount of income to be included and taxed for the next 2 years, not for 2010. My clients are also Ohio residents and subject to SD tax and nothing was included in AGI on federal so not on state and SD. I don't understand how it is working for your client.

So how likely is it that this government employee has, for multiple years yet, Golden Parachute Payments? Do government employees have golden parachutes? I thought those were creations of the corporate world and not a recurring item when still employed. None of my clients were ever so blessed with such payments so I really have no experience with that. Ask the client how s/he likes that parachute?

Well, JB, then I wonder if the preparer of the W-2 has erred. I do find it unlikely that the codes for Boxes 12 and 14 would be identical. I also thought that Box 14 was for information and special purposes only. The instructions for W-2's state that the two items that you mention are to be reported in Box 12 with the codes that you state. Just sayin'

Thanks, OldJack, for a good explanation but I think JB needs to first be sure that it is in Box 12 or Box 14. I think that is a Box 12 code, not a Box 14 code.

JB, you may have made the same mistake that I did when entering some client data from the W-2. I clicked on the drop down box for Box 12, not Box 14. When I asked him about the NSO, he was puzzled and said it was supposed to be pretax health benefits. I blushed.

But it is sooooo cute!

As it happens in this case, the client emailed earlier today that the loan was not from his 401(k). He said that the amount in it was only used to help determine his creditworthiness. That explains why the note states that the loan was unsecured. So we all got more education than we might have actually needed, at least for the moment. Thanks to all for contributing!

Thanks, Gail. I think what you wrote is more along the lines of my original thought process and I was just looking for some outside confirmation. In any event, I will still confirm from the client how the bank is involved and why the document is checked as unsecured.

I am in awe of the photographic skills of you folks! These are wonderful. JohnH, I was in India in 1976 - doesn't look like much has changed in some areas. Great shots!

Thanks again, Pacun. I am glad you brought up "bank", however. The form the client provided is from a local bank and the client wrote on it that it was a loan against his 401(k) savings. My question to him (not yet answered) was whether that bank has his 401(k) funds. Guess I need a bit more info from him. I do appreciate the pocket example. That's why I originally asked the question. It didn't seem right, in one sense, to deduct interest paid to one's self. However, we do know that is the case when s-corp shareholders lend money to their company. The interest is deductible to the company and income to the s/h - legitimately, left and right pockets notwithstanding. More research needed for me on this one. Thanks again.

In general, I thought along the lines that you state. However, the IRS site states: "Benefits must not be assigned or alienated. The plan must provide that its benefits cannot be assigned or alienated. A loan from the plan to a participant or beneficiary is not treated as an assignment or alienation if the loan is secured by the participant's account balance and is exempt from the tax on prohibited transactions under IRC 4975(d)(1) or would be exempt if the participant were a disqualified person. See Publication 560 for additional information on prohibited transactions. A loan is exempt from the tax on prohibited transactions under IRC section 4975(d)(i) if it: Is available to all such participants or beneficiaries on a reasonably equivalent basis, Is not made available to highly compensated employees (within the meaning of IRC section 414(q)) in an amount greater than the amount made available to other employees, Is made in accordance with specific provisions regarding such loans set forth in the plan, Bears a reasonable rate of interest, and Is adequately secured." So it says that there can be a loan to a participant secured by the participant's account balance. If the money is used in the rental property, though, why wouldn't the interest paid be deductible for the rental property purposes? If the money was borrowed from a bank and used for the rental, it would be deductible, right?

Client took out $18,000 home improvement loan secured by 401(k). He says it was to remodel kitchen in house which is now a rental. I'm checking the timing of the loan and when he moved. Meanwhile, what happens with the interest paid on the loan? Is it paid into the plan and not deductible (whether for rental or home improvement or whatever purposes)? This is a first for me and I sort of thought that borrowing from your retirement wasn't a great idea except that it would possibly earn money at the interest level in place. Thanks for guidance. I checked the IRS site on retirement plans, proceeds, etc. but couldn't find what I think I am looking for.

Just in case we get too caught up in looking at our numbers and the inside walls, take a break and enjoy these amazing photographs. http://my.nature.org/photography/2010-photo-contest.html?autologin=true

I love the scratching and bumping phone - will immediately add to my tool set!

Good idea, RitaB, for strengthening abs. More laughter!