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    ATXaholics Anonymous

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  1. The paraagraph below sorta sinks the ship so to speak. The loss in question generated by the wife's business is effectively lost. Their standard deduction was greater than their agi so no income to apply it against. Well worth a try. NOL.pdf
  2. My reading is that since the business was disposed of in 2019 the client's wife having died in May and the business simply closed (no sale) the loss cannot be carried forward. But it never hurts to check yourself.
  3. A new client has come in whose wife passed on in 2019. She was a beautician and operated a small business. For 2019 the business shows a loss and , of course, was closed. The standard deduction eliminates any federal income tax for 2019. As the loss is not deductible can it be carried forward or is it simply dropped. If memory serves this matter has come up in here and the loss is simply lost.
  4. I will photocopy the exact words from the Taxbook on the HA.What is crystal clear is the salary is fully subject to SE tax and not placed on Schedule C. Fees, baptismals, funeral services are the items placed on Schedule C and are of course allowed deductions on that. The HA not exposed to regular income tax is indicated to be fully exposed to SE tax but I will photocopy it and place it into my next submission.
  5. P. S. I now have had time to look over what the client's former taxperson did in respect to her salary and HA. In prior years returns I noted Form 2106 showing mileage expense and a few other miscellaneous expenses incidental to being a minister such as uniform maintenance, telephone calls, etc. These expenses subject to the 2% limitation normally appear on Schdule A. A recapitilation sheet I found showed the following. An addition of the salary and HA into a single figure. The total reduced by unreimbursed employee expenses which ccomprised most of the amounts reported on Form 2106. This greatly reduced the HA exposed to SE tax although the salary remained fully taxed. In reading material in the large Taxbook I received with my ATX renewal it states that the entire HA is taxed for SE purposes and allows no deductions period. In asking how long her former taxperson had been preparing her taxes I was told twenty years. Unless I am greatly mistaken this was an egegious error but would like to hear what y'all think.
  6. Welcome Newbie I am the chief stumbler here as some of my fellow members will attest. Abby I am glad you mentioned turning off the form and program updates something I used to do from the first and simply forgot this year.
  7. In response to John. The church bookeeper evidently reviews the clients yearly expenses and comes up annually with a close approximation of what the church should pay. Any shortfall can be adjusted or so it would appear as the HA matches the FRV of the client's home for years. This has evidently been ok as it has not been questioned in prior years. I worked through the worksheets and now have a new client. Thanks to all for your assistance. This is a good example of the value of this forum.
  8. I too have been considering retiring. The business is slowly downsizing due to clients passing on and the fact I rarely take morning calls anymore. Basically I have shifted all appointments to the afternoon and this is well accepted. I likely will try to go on for five more years unless bad health intervenes. To that end I am getting back into exercising more. Around here taxpreparers just quit. I don't recall anyone selling out although I probably could.
  9. I ran the figures and her expenses were more than her allowance at least for 2019. Local real estate agent gave me a figure for the rent on her home.
  10. I want to thank each and everyone of you who responded to my sos call. The client brought me three years prior tax returns. My confusion stemmed from the Lacerte software her taxperson used. It like ATX has a worksheet although more abrieviated than the ATX one which is a carbon copy of the one in Pub 517. It referenced unreimbursed employee expenses from Form 2106. The 2018 copy I got had no Form 2106 to reference. I realized that Form 2106 had been changed in the last tax reform legislation. The earlier returns had the Form 2106 and the expenses referenced were mostly mileage at the standard rate and minor other pastorial expenses like dry cleaning etc. In looking at the ATX worksheets mileage is denoted on the second worksheet. On each prior return the FRV is simply the full amount of the HA. So now what it comes down to is precisely what John pointed out aways back namely fill out the worksheets and I feel sure I can handle that. Although the client did in fact provide actual bills for her home expenses I saw no evidence her taxperson added any of them up. She simply reported the full HA as the home's expense so needless to say I am going that route. And now dear forum buddies the sun has come out , the Wrens in my backyard box are going crazy over their soon to be gone brood, and I thank the Lord I am just about done with the 2020 tax season. Lion I very muchh appreciate the University of Illinois Tax School info. I looked for an IRS webinar on the HA but found nothing satifactory although their written material was helpful.
  11. I see exactly what you mean. I may simply pass on this one. I don't read that there are any expenses which reduce the full HA from SE tax. I think the former taxperson made significant errors in this regard. She somehow deducted unreimbursed employee expenses from the HA whereas these would apply only to income such as fees and other incidental income reportable on Schedule C. She is showing a leftover NOL from the income taxed on the SE with no Schedule C attached to the return. I am going to get the client to bring me her 2015 and 2016 returns to see if I can make sense of what she did but regretably I doubt I will succeed.
  12. Here is the operativve question involved here. What are the expenses on line 4f which can be used as deductible items against the HA ? This is what I should have ask early on. Suffice it to say it's been a long and trying tax season and is still not closed out. IMG_20200615_0001.pdf
  13. My confusion with regard to this stems in large degree from the info received from the client's former taxperson who did not provide all the info I needed and the fact she is ill with some form of cancer and really bad off. The client had no prior tax records which clearly indicated exactly how she handled this. I plan to use the Clergy 1040 form provided by ATX and go from there. I need time to look it over but it shows deductions allowabe against the HA which look to me will reduce the amount exposed to SE tax.
  14. Margaret has pretty much cleared the clouds on this one. I'm going to print the entire disussion and place it in the client file.The client provided utility bills for her home and this along with the FRV will likely just about exempt the HA from any tax. Many thanks to all as I was in the weeds on this one. ( I am sure there are some that feel I stay in the weeds.)
  15. I used the method my nephew's then CPA used and never had any problems. That being said the ATX worksheet approximates the one in Pub 517. By FRV of the house do you mean the Fair Resale Value ? This is a rare bird for me so it's incumbent on me to get it correct. The CPA simply put the HA on Schedule C showing him as a minister. He showed the full amount as profit which was carried to the Schedule SE but did not allow the profit to flow to the 1040 and thus avoided income tax on it. This client gets a cash payment each year annually approved by the Board of Deacons and as noted it is shown on the W-2 she receives as a church employee in Box 14.
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