Max W

Client purchased a restaurant franchise late in 2016. Restaurant did not start operating until April 2017. The question - is the franchise fee a startup cost, which would be amortized over 15 years, starting in 2016; or does amortization (also 15 yrs) begin in April when operations started?

Wait a minute! Everyone is jumping to conclusions without considering two things. 1. If a lien had been recorded on Naveen's home, the misfiling could have occurred at the county recorder's office. 2. Tax liens do not not attach to a specific property, but to All properties in the county of filing, And to any future properties. A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien. Liens on business also attach to accounts receivables. The lien notice went to Naveen's address, because that was the last address of record. If the address were a PO Box it would not mean that the PO Building had a lien on it. Naveen should check with her county recorder just to be sure under whose name the lien was filed.

Never! After purchasing the boat, he found out it was not seaworthy. The previous owner had made some modifications that made it top-heavy. He had had the boat appraised prior to purchasing it and bought it at a discounted price thinking he had a deal, but when he found out that it was not seaworthy, if were to sell it now, he would lose $100K. I wonder if there was some collusion between the appraiser and the seller. Hmmm!

Well, that's what I had in mind.

FDNY - it is not a 2nd home. It is strictly used regularly and exclusively for business which is putting together financial deals for which he receives a hefty commission. Your point about being a second home is well taken and may be the safest way to go.

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).