Christian

For the life of me I cannot find the toggle to suppress printing zeroes in the two year comparison report. I have checked preferences and all over and cannot find it.

Resolved. Upon recreation of the efile with the corrected info the system deletes the rejected efile and you simply transmit the corrected one.

A client has provided an incorrect SSN for her newborn child which has caused a rejection by the Service Center. If memory serves I simply return to the original return and correct the number. I then recreate the efile and resend. However, do I delete the rejected efile before or after I send the replacement. I hardly ever receive an efile rejection and want to make certain I am handling this correctly without a foul up. 

Well I am going ahead and figure her return allowing both credits which I had thought rightly was correct. The manner in which the regs were written are less than clear. Much better to say a child born in a specific year who qualifies as a dependent qualifies for the respective credits regardless of their birthdate in that year.

I referenced this to the PPS and they came up with this from Pub 596 "Birth or death of child. A child who was born or died in 2023 is treated as having lived with you for more than half of 2023 if your home was the child's home for more than half the time the child was alive in 2023." The child was in mom's womb for nine months of 2023 but surely was living with her. Strangely they did not come out and say the child qualifies for the EIC advising I might consider filing a paper return. I am of the opinion I can enter 12 months in my ATX software in the dependent section and proceed from there. Their thought may have been that since entering 3 months in the software it would not allow the credit my solution was to have her file on paper which meant I could show him as 12 months of residence by penciling it in. 

A single mother client just had her second child on October 7, 2023. He is of course a qualifying dependent but not having lived in the home for over six months can she get the EIC  for him. If memory serves she gets both the EIC and the Child Credit for him but it never hurts to make certain. She already claims HOH as she has an earlier child already. 

An unmarried couple who reside in the same home now have two children. They would like to each claim one of their children and file as HOH. Since they both will be reporting the same physical address on their returns I am none to anxious to file their returns this way. I feel sure many of you are running into this issue and would appreciate what solution you came up with.

He is out of employment for some time and needs the money. I was a bit skittish about using the "Where's My Refund" function to obtain refund info on a client.

I rarely have need to check the status of a client's refund after efiling their return. However, a client has come in down on his luck and badly needing his refund. I do not bother with credit accounts for well known reasons. I told him he can predate one of his checks on his checking account for like ten days down the road and when his refund hits his bank account I would cash it. I could check "Where's Your Refund" but likely not a good idea. Does ATX have a system in place that advises practitioners when their client refund hits their account ?

Yep sure does and of course the IRS has sent a list evidently provided by Ebay of each item and what she got for it. Needless to say it will not be yours truly sorting all that out.  

A client's daughter sold a bunch of items on Ebay and now has received a listing which shows over $11,000 in items sold. In my tax education this year I read that the IRS had suspended tax on these earnings for 2023 much as was done in 2022 until congress could decide a more reasonable amount for these earnings to tax. Am I correct on this and does someone possess an article on this. I recall reading it in Kiplinger's and intended on saving that issue but health issues this year served to confound my usually good work habits.

The client called the Service at the number provided and advised the Service associate he had contacted the fiduciary and requested a change. I expect no change so will continue attaching the Form 5329.

His broker's back office advised his advisor that for legal liability reasons the code could not be changed. Go figure.

This very much parallels what a client of mine got as noted in my post today. they must be upgrading the system or something.  

A client who takes a uniform payout from his IRA account has for two years gotten a Form 1099-R from his fiduciary showing Code 1 in box 7 of the form. When he set up his plan I contacted the brokerage he deals with asking that the code be changed to code 2 which is the correct code for his situation. They refused so each year since he started taking his payment I have attached a Form 5329 indicating the correct code. About two weeks ago he received a notice from the Service stating he may need to file an amended return for 2022 in which they showed a copy of his Form 1099-R for that year. They had made no changes or adjustments to his return and advised he may choose not to file an amended return adding it may mean a possible penalty down the road. The notice further advised that if he wanted to effect a change to the code on his Form 1099-R he needed to contact his fiduciary and request it. He contacted his broker receiving the same negative response. I advised him to call the provided IRS response number and inform the associate that he had called them and told they could not change the code. They did advise that if he received a penalty notice they would handle it. In the meantime I will continue to include the Form 5329 with his annual filing. I find this really strange as a simple call to the broker sending my Form 1099-Rs would have changed it promptly.

Well they all mostly have come in now. With the Service delaying filling until the last week in January it has become a moot point.

I understood that I would need to submit a Form 3115 with the return. It looks a bit complicated but I'll need to do some reading for sure.

I cannot recall our state tax forms being so slow to become available but maybe I am mistaken.

Not having ever had to deal with this let me say this. An allowance for formerly unused depreciation going back fifteen or so years would be a deduction for 2023 right ? Of course, it would also reduce his basis and he would pay a resulting larger capital gain tax. And yes Danrvan a receipt with no date is essentially worthless as I have no date to assign for depreciation.

In a word "Good Grief". i will need to start on it now and hope it's done by April 15th.  

I took on a client some ten years back who had some four rental houses. Three had established schedules for depreciation set up by his former wife. One did not and on asking him "Where is the schedule for this one?" there was none or my wife did not set one up. Now he is selling the house and recalls he paid some $17,00 for it and added $60,000 in improvements over time. I thought we had settled on the house having been fully depreciated but no it apparently was not. I am having him go back and find when he bought it and will simply add his improvements to arrive at a cost as he kept no records of when he made the improvements. He realized no benefit from  the depreciation and would look to me to simply have lost it. My thought is to simply take the year of purchase using his $17,00 cost plus improvements and arrive at what would have been the depreciation over that time period arriving at a depreciated basis which I will deduct from the received amount he gets and he pays capital gains tax on that. Frankly I know of no other way to handle this as in point of fact I have never run into it in my years of practice. If he gets checked by the Service he will simply have to pay on the full amount which I will clearly explain to him. He has a check he paid for the house for years back and a number of receipts for cash payments he made on improvements with no darn date on them. I will make copies of it all. It is not a large sale so it likely will pass muster. He will pay tax on about 87% of the received price. 

Well I stand corrected. She will likely book before yearend anyway. 

A long time client now seventy years of age, single, and in my judgement weak of mind has taken in his unemployed  much younger girlfriend as a resident in his home. She has lived with him over six months this year so in picking up his extended return today asked if he could claim her on his 2023 return. I see no problem so long as she has no income which exceeds the dependent allowance which the last time i looked was around $4,700 or so but likely more now. 

He came to me some years back from an H&R Block office. The associate there  had set the rental up in 2011 using SL/GDS with a 27.5 year schedule. I will need to take some time to review the form I used and get back to you pointing out everything done. Well no I did not add the depreciation back. I used the second page of the Form 4797 lines 20 through 24. This took the original costs of his property and deducted his total depreciation which produced his adjusted basis which was then subtracted from what he got from the sale. Looking at this retrospectively it now looks to be correct after all. In a word he subtracted the depreciated basis of the house from what he got for it. I did not in fact recapture any of the depreciation which comports perfectly with my review I just finished. 

I am doing my annual client review and need to revisit a sale one of them made. He set up a former residence as a rental in 2011 using SL/GDS. After rereading any tax due on his gain I added back his prior depreciation to calculate it only to discover now this was likely a mistake and I need to provide him an amended return. After reviewing recapture rules I am reading that 1250 property set up after 1986 under SL is not subject to recapture so his tax was due on the difference between the depreciated value of the house and what he got for it. This being so I have some work to do to get this addressed.