Margaret CPA in OH

Hello, New restaurant client, struggling (aren't they all) had a few family members and friends volunteer to serve customers. They received no wages but some tips and reported to owners. One received over $900! How is this reported for 941 purposes (if at all)? Since they weren't employees, they wouldn't receive W-2's, would they? They weren't 1099ers, I should think, either. Thanks for any insight. I will be calling the state for unemployment and worker's comp reporting. I don't see this issue addressed in their documentation, either.

The amount should be shown on Box 3, Other Income, and reported on line 21 as other income. In ATX, if you click on that box, it leads you to a list of items that would be shown there. I believe that if the child's age is input on the Filer's info tab, that may suffice to be not subject to SE. For the 6 or so years that my son was a paperboy, that's where I put it.

I am in, too. I just posted a reply to the glorified positive comments on the Tech blog (or whatever it is) and remembered a couple of years ago. So many of us felt so close to the Maine staff that a collection was taken up and we treated them to a big thank you of a barbeque feast. They all responded by posting a picture for all to see. How wonderful to put faces to the names with which we had come to know so well. I think we won't see many CCH faces or recurring names now. I do have to acknowledge, however, that my 2 tech support calls have been handled reasonably quickly and with graceful comments. I was never on hold for more than a few minutes. The second tech was unfamiliar with the issue (and likely the product) but was very sincere sounding in trying to get an answer - why I couldn't efile the 941 yet. Well, we shall see. I am just ever so grateful for this board. I've donated once and maybe it's time to chip in again. I don't want this one to disappear!

Hmmm, I sort of see this but not completely. If the corp distributed the auto to the shareholder, how can the corp be selling it and reporting it as a corp sale? Or is this just the way these things are reported? It's a first for me. Thanks so much for replying; it's appreciated.

So I just received an email from a client informing me that he, in December, traded in the company Audi for a Mercedes and registered it in his own name. The Audi was fully depreciated so had zero basis but must have had FMV for a trade-in. I'm thinking that is a capital gain to him. The Audi is a distribution to this S-corp SH, fully depreciated, right? Some time ago I suggested that he do this and get mileage reimbursement from the company for business usage. In the past all auto expenses were charged to the company and I suspect that this guy is somewhat challenged in record keeping. This seemed a better solution. Opinions? Thanks!

Thanks so very much! That is exactly what I needed to know. After reading through it, I believe that the client can self correct following the procedure described by making the contribution and adjusting for the lost earnings. That should be fairly easy to determine as each participant has an existing account so the rate should be available. This will, of course, be a hit to the client's bottom line now but must be done. Thanks again for your help and especially for the incredible turn around time!

Hello all and especially to William and the ATX crew, past and present. As I am #18154 (older ATX number), I remember several names and great help. The situation I have is pretty ugly. The client has a SARSEP and for the several years I have been working with them they have accrued the 3% company contribution and paid it out in January the following year. I am now looking at year end data to prepare the return and see that the contribution for 2006 was neither booked nor paid. Now what? I don't deal with payroll or deferred compensation or other retirement plans so am not sure where to look for next steps. My fear is that this will invalidate their entire plan. Whatever direction anyone can provide would be greatly appreciated. Thanks, Margaret

After a great 3 week dive trip to Palau, it's time to catch up here (what happened to KC's husband?) and get back to work. An LLC with a rental property is renting to member's son. Last year, market rate was received. For 2006, only 25% was received. On Sch E, this would be like a vacation home with personal use. What about this situation? If personal use, how is this input on the 8825? A few months ago I had a thread about a university buying a property of a legally blind employee for campus expansion. After much negotiation (he brought in his frat brother who is an ADA attorney), he finally accepted an offer of $575,000 and the university agreed to provide transporation to and from work at no cost (neither 1099 nor wages) if he purchases a home within a 5 mile radius. As there are a couple of really nice pedestrian, desirable neighborhoods within that space, he is comfortable with this arrangement and I am encouraging him to buy as much as he can within reason. These are areas that are close to downtown, desirable and will only increase in value. He has decided to continue working until 65 at least and defer as much income as possible to bulk up retirement, then sell his new home sometime after retirement and relocate to a smaller, less expensive area. Thanks to all here who gave input into this situation. It really helped him, and me, rethink some of the options presented originally.

An update: I met with the client this evening and, among other things, reviewed several comments posted here. He was very appreciative of the ideas discussed and has decided to fully engage the ADA attorney. He will call him this evening or tomorrow and ask him to come and meet with the university people face to face. The friend who accompanied him and has helped him along the way strongly sided with the idea that he should not have to be doing all the work with this. We all are of the opinion that the ADA attorney will put clearly on the table that this client cannot simply be treated the same as the other real estate owners they have bought out. She and the client agree that passing notes and emails back and forth is not productive; it is now time to bring in the big boy. So stay tuned; we are hoping for a meeting with a couple of weeks. And an early retirement proposal should be offered for consideration, too! Thanks again for all the input. I proudly presented my "colleagues" to my client and bragged about the collective expertise represented here.

Thanks, KC, and others for insight and commentary. All is taken into consideration and the client is receptive to these considerations. We are meeting next week to further discuss. I do believe, however, that I may have not been very clear in stating the situation and for that, I apologize. He has retained a local attorney who is the negotiator. He has on call, so to speak, the ADA attorney should the university not play nice. He really would rather not have the situation become contentious, but, as I mentioned in one post, he is seriously rethinking all options, including retirement. I will have more info after our meeting. Thanks again, so very much, for all the thoughtful comments posted here. I feel better prepared to assist this client with this, new to me, issue now that I have my "posse" prompting me! PS Thanks, KC, for adding me to your friends list and for your last response. I guess I had best reveal more about myself at the risk of, well, whatever! I confess to being mostly a lurker for several years on the ATX and other boards.

I, too, went to dual monitors this year and will never go back. It is absolutely wonderful and very efficient. One monitor began to fade out occasionnally so I have sent it back for repair and miss it terribly! I also have 17" screens and have made the resolution to 800 x 600 to be really easy on my old eyes. Also, the flat panel monitors are really worth the desktop real estate. Again, I'll never go back.

I'm a little confused in that you wrote both that the IRS did and did not audit the return. I think your question is whether this is a valid Sch. C. And the answer is laid out in the post about erc's donation. For this teenager, no money was received (you stated that he donated the software) so there is no income to report. With no money received, how could he have funded a Roth and paid SE tax (other than from other sources)? With no expenses other than time (which he cannot deduct), he could not have a deductible contribution or deduct business expenses.

Thanks to all of you for much food for thought. The client and I are trying to meet next week to discuss some of the great points many of you have made. He does have a local attorney; the ADA attorney provides some advice; I did forget about the nontaxable amount for transportation but really like the idea that the University actually provide it; the "negative basis" refers to the deferral of gain on his present home as I mentioned in following Pub. 544; I especially appreciate KC's suggestion of the U buying a house and exchanging it; he is expecting that the transportation income would be increased to cover the tax liability; I am not in the least offended by the suggestion to involve legal help as 2 are already involved; I'm not so sure how to take the "tax professional" comment, though, as I am a CPA with 20 years as a tax specialist and an MBA (coincidentally from this same university) with a tax specialty - this is one issue that I have not encountered in my career until now; some of the options presented were already "discussed and decided" between the client and his attorneys before I was approached to determine the tax/financial impact of those decisions or options; the client and the local attorney are not convinced that this is such a "slam dunk" to make out like a bandit; as mentioned earlier, he has not been eager to consider retirement although this evening it seems to sound more appealing if he could just figure out what to do with all that time - his Scottish work ethic, I believe; I came to the "watercooler" to sound out this great bunch of folks to raise issues perhaps not considered and you did just that! Thanks again so very much. It's quite likely there will be more to come...

Jainen and Lion, thanks for your replies. He does have a bulldog lawyer for ADA if needed (see my first post) but doesn't want this to get really ugly. He wants to continue working as long as possible and is concerned about a contentious resolution. The ramifications of that would surely shadow his daily worklife which, to date and for 21 years, has been a mostly pleasant experience. At age 55 with no good options to work anywhere else, he isn't ready psychologically to retire. Adding more money potentially creates issues down the road. At the current offer, including $100,000 in expenses to make the new home "blind friendly" to accommodate his disability, means that he must spend $245,000 for a new place now (doable) but the deferred gain after his $250,000 exclusion gives him a negative basis of $210,000 for the new home (using Table 1-3 in Pub 544). It may be a challenge to sell the new home for $460,000 to allow for another exclusion and owe no tax. He may just have to be prepared for that. Thanks again for any and all comments and suggestions.

Thanks for the reply. The mortgage was as much for current living expenses as current deductions. He is planning to maximize deferred comp to increase his retirement as much as possible in the short time remaining before retirement. But his gross salary next year would only be about $57,000. With $31,000 maxing out his deferrals, that didn't leave much to live on even including the $250,000 non taxable exclusion from the house sale with a conservative earnings of 4%. The real estate taxes where he expects to move plus about $1000 in mortgage interest would put him over his standard deduction easily even with the blind additional deduction. I want to meet with him to discuss how tweaking one aspect of this affects the others and show him that there probably is no perfect scenario. He will need to make some decisions. I do believe that his decision to maximize his retirement funding is correct, however, as he has fewer options than most folks. Thanks again!

I apologize if this is resent...I didn't see that it went anywhere the first time! A client and friend is being forced to sell his house to a university which is expanding. The situation is complicated because he is legally blind, works for the university, and bought this house 20 years ago to walk across the street to work. Most issues have been somewhat settled except for his transporation. Anywhere he moves will involve something more than walking across a low traffic street. The best place for him to move is about 8 miles away in a town where his brother lives. The university has offered to pay for his transportation. Cab fare will amount to about $11,000 annually plus some amount to account for the increase in tax. They propose to issue a 1099 for this. It isn't self-employment so would it just go on Line 21 as other? I'm trying some projections as he is considering maximizing his options for deferred comp which would leave precious little to live on. The house would be paid for but he wants to mortgage it for the tax deductions and invest what he doesn't need to live on. He is about 55 but the university does not want to offer an early retirement package. He thinks he might want to retire in 2-3 years anyway as the travel will be a strain as will the relocation and having to learn so much about new surroundings. This is making me a little crazy because every little change in one thing ripples through all the rest. Any suggestions or comments would be greatly appreciated! He and the university are both aware that if heavy pressure is applied, it will become a federal ADA case. A good friend of his is an ADA specialist who brought U of GA to its knees recently. However, since my friend is still employed there, he would like to settle as amicably as possible.

A client has POA for his grandmother with dementia. He would like to efile her returns. May he sign the 8879? 8453? Thanks.