Max W

Answer - It is not his home; he does have a rented apartment; it is his only office; and IT IS 100% business. My question is - is the entire boat depreciable, or only the area used for business?

Client purchased a 62 foot boat this year to be used exclusively for his office (Sch C). Office and file storage occupy about 35% of boat. The way I am treating it as follows - 35% deprecialbe; 65 %non-depreciable just like if it were land. Any comments. Thanks.

The IRS look back period is six years, so that would mean only 2011 to 2016 would have to be filed. This is true even if prior years show that there was substantial taxable income. Every year at the end May, another year falls off, so next May, 2011 falls off.

Short of getting a formal appraisal, you can get real estate agents to make an informal appraisal. They use nearly the same methods as alicensed appraisers and know the local market better. The will do it for free in the hope of getting a listing. Zillow.com provides estimates, but I have found that they are often unreliable. There are a lot of things that appraisals might not detect, such as, cracked foundations, mold, dry rot, termites, violations of building codes, etc., so any appraisal you get could be overestimating the FMV.

It's a "facts and circumstances" thing. If they show that it was some form of installment sale, or that the cient was gaining equity, then there might be a case that the client began to acquire ownership in 2010. This is the kind of issue that ends up in tax court. Here is a link with more information. http://www.ccim.com/cire-magazine/articles/lease-option-or-installment-sale/

It all depends how the lease was structured. From Pub 544 "Some agreements that seem to be leases may really be conditional sales contracts. The intention of the parties to the agreement can help you distinguish between a sale and a lease. There is no test or group of tests to prove what the parties intended when they made the agreement. You should consider each agreement based on its own facts and circumstances." You will have to read the lease agreement. When the lease was signed, was there a high probability that the option to buy would be exercised.If the client was gaining equity in the house, it strengthens that argument. In other words, were part, or all of the lease payments being counted as acquiring equity.

These are the two camps that the client attended last year. http://successresourcesamerica.com/camps/ http://successresourcesamerica.com/camps/enlightened-warrior-training-camp

His business is hauling junk to the dumps. Sounds mundane but he grosses $150K/yr. He is trying to expand his business sales and hire employees. So, Sales & Marketing certainly fit, as well as networking. Having employees could encompass the use of leadership and motivational techniques. Beyond that, the some of the courses are motivational (for the attendee) and how to start new businesses, so these parts certainly do not fit. He spent $15K on this one year alone and I think the IRS will look at this as whether or not it is Ordinary and Necessary to spend this kind of money on this type of business.

I have a client whose audit is next Wednesday and he had claimed some education expenses that, of which some, I don't think are going to fly. One company is Salesdogs and I have no problem with that, but he has $15K in Peak Potentials, which also goes under Success Resources America. http://successresourcesamerica.com/ This one has a number of seminars and camps, most of which seem to be personal development courses, especially the two that the client attended - Wizrd Training Camp and Enlightened Warrior. I would like to hear some ideas on this, particularly from those who have had to deal with this.

There is no election. Just make sure you check "First Year". The software should take care of the rest.

All corps & LLC's pay a minimum of $800, whether there was income or not. Corps are exempted in their first year of business.In addition C-corps are subject a tax of 8.84%, or the $800, which ever is greater. The 8.84% is not waived. S-corps are subject to 1.5%, or $800, whichever is greater. The state taxable income is never the same as the federal as there are state credits and expenses that are unique to CA. State depreciation is usually different than the fed and no bonus dep. allowed.

The court can order the IRS to pay plaintiff's attorney fees. Let's hope so.

Sec 179 is limited by the business earnings. Partners earnings means earnings derived from business, not wages.

Lynn, that's awesome. Congrats!

Has anyone used Canopy to retrieve IRS transcripts? It looks like a real time saver, particularly when multiple years are involved. They say it is Free, Forever. https://www.canopytax.com/

Yes. Having an employee in this greatly overtaxed state, is defined as "Doing Business" when they exceed certain thresh holds shown in the link. The thresh holds increase each year. https://www.ftb.ca.gov/businesses/Doing-Business-in-California.shtml

The clock starts running from the last date of assessment (think audit). It doesn't matter who files the return. With IRS substitute for returns, the process may not start for 4 or 5 years, thus extending the statute. The collection extension (5 year waiver) you allude to has not existed for many years.

Terry, the debt does disappear after 10 years, not after the date of filing, but after the date of assessment. Ten years is the length of time after the last assessment for the CSED (Collection Statute Exp. Date) to run. This can be extended (tolled) for a number of reasons. The most common are bankruptcy filing, audit assessments, installment agreements and OIC's. In the last two, it is the time between application and acceptance that is extended. In the case where a particular year is ready to expire, there should be no reason pay on it, but other years can be paid. Specific instructions should be made with the payment to direct to the year you choose so that it is not paid on the expiring year.

Are you faxing them of mailing them? Yeh! At certain times of the year it may take a little longer, but I doubt if any took more than 10 days faxed, (have never mailed them).

You definitely will want to call the PPL and get copies of the Account Transcripts. Of course you will need form 2848, or 8821 and the number of transcripts are limited to 10 on any phone call. You can also get the transcripts on line once the 2848 has posted (about 5 days). PPL can provide the amount due for each year and the total amount due. If you need to know the expiration date for any year (CSED), PPL can provide that, too. BTW, if your 2848/8821 form is not on file when you call PPL, it can be faxed to them while they wait on the other end. I would then request that the form be forwarded to the CAF unit, so you don't have to fax it a second time.

I switched to Drake in 2014 and did find the that a number of things seemed awkward. However, once you get the hang of it, it goes very smoothly. Just can not say enough about their customer service. Not only is it the best in the tax industry, it is the best of any industry. No waits, no holds, the phone doesn't even ring. May be it is 5 seconds before the phone is picked up even on a day like today when you would expect the lines to be jammed. The employees are courteous, patient and knowledgeable. OUTSTANDING!!! As for the pricing, you can get in for $300 and that gives you 15 free returns. Then it is 20$/return until you hit around 75 returns. No need to shell out a large chunk unless you want to take advantage of their discount.

The audit shouldn't affect the the refund. The assessment will not be finalized until after the appeal process is exhausted and then it might take additional time before it goes into collections.

It is a cost of doing business.

I would want to see a cancelled check, or some paper trail substantiating the purchase. I would never let a client "set" their own basis on such a large amount.