Lee B

Why don't you have a discussion with your clients explaining to them that the situation is unclear due it being new tax law with numerous gaps in the rules and regulations. Give them clear explanations of the dollars involved and let them decide. Don't apologize or get too deep in the weeds. It's doubtful that you will find any more clarity by doing more reading.

As a former CPA for many years and now an Enrolled Agent, it's unclear to me what the issue is here. Unless your client is required to provide some third party Compiled, Reviewed or Audited Financial Statements, most small business tax returns are not prepared according to GAAP. In fact, most small business tax returns are prepared using "tax basis" accrual or "tax basis" cash methods of accounting or some hybrid method. My core practice for the last 27 years is based on providing 'internal use" monthly financial statements which are either accrual or cash "tax basis" statements, not GAAP The statements that I provide my clients do not have any supplemental notes or disclosures. My clients have been able to obtain bank loans based on these "internal use" statements. In fact, in 27 years I have never had a loan officer question or reject the statements that I provide my clients. As far as I am concerned, until the IRS affirmatively requires the capitalization of operating leases, this is a non issue.

Catherine, at first I thought you pulling our collective legs with this yarn, but you couldn't make up all of these stories

Once in awhile, about every other year I will see a weird message, but I haven't seen this one .

As long your use is moderate and doesn't require any intense use of computer resources, you should be OK. Your CPU is lower end speed wise etc, which is why you only paid $ 430.

There is no requirement for active involvement except in for the rental safe harbor rules.

Your post implies that your client's S Corp isn't an operating business, but instead is just a pass thru for these various investments ? I have attended seminars and done way more reading and thinking about this issue than any other tax issue, since I passed the EA Exam back in 1992 ! The real question is " Does the ownership of these investments by a passive S Corp deny your client the use of QBI deductions on their 1040 when if your client owned these investments directly the QBI deductions would be clearly allowable ? I don't have a cite for you, but I think the intent of the law and the subsequent rules and regulations would allow you to combine all of the QBI numbers from the various investments onto the S Corps K-1 s and let them flow to your client's 1040. It's what I would do if this was my client.

"Microsoft is warning Windows 10 users to update their operating system immediately because of two "critical" vulnerabilities. The company said the vulnerabilities are potentially "wormable," meaning affected computers could spread viruses and malware without any action on the user's part. There are "potentially hundreds of millions of vulnerable computers," Simon Pope, Microsoft's director of Incident Response, wrote in a blog post Tuesday. "It is important that affected systems are patched as quickly as possible because of the elevated risks associated with wormable vulnerabilities like these, and downloads for these can be found in the Microsoft Security Update Guide," Windows 10 users that have enabled automatic updates are already protected. For those who update manually, they can click the search button and type "Windows Update" to access the update tool. Other operating systems, such as Windows XP, are not affected."

I have been using the Medlin Payroll program for about 4 months now and really like it. I have looked at the Medlin Accounting Program several times, however I don't use it. I have not looked at the Medlin Receivables Program and i don't use it.

As I posted before, the only way is if the S Corp borrows the funds directly in it's own name.

Did you read my first post ? It is a big problem if you do it this way ! Unfortunately, there were several later posts that wandered off into the weeds and confused the issue.

I don't know how to either. What I have always done is have someone pull the hard drive for me and kept it or physically destroyed it. It only takes a minute or two and no one has every charged me to do it. Surely you have a client or a relative who knows how.

Copied from Tax Pro Today: The IRS has started issuing Letter 226J penalty notices for the 2017 tax year, along with other penalty assessments related to ACA enforcement. IRS staff is spending more time reviewing potential ACA violations, and putting the onus on employers to prove they have complied with the law. Here are some signs that the IRS is becoming more assertive in efforts to enforce the ACA: The IRS has started issuing Letter 226J penalty notices for ACA noncompliance under IRC Section 4980H for the 2017 tax year. The tax agency just completed sending its Letter 226J penalty notices in June to employers the agency believed failed to comply with the ACA in the 2016 tax year. This is the quickest we have seen the tax agency transition from issuing penalty notices from one tax year to the next, a sign that IRS ACA enforcement activities are escalating. The IRS has indicated it is now limiting extension requests to one 30-day extension for each IRS notice received in the penalty process, requiring employers to act with even more urgency in responding to a penalty notice. IRS staff is paying greater attention to the methodology and data used in employers’ determination of full-time employees in ACA filings for the 2017 tax year. This is a deeper level of review than undertaken for previous tax years. ACA penalties are often triggered by employers providing inaccurate information on the number of full-time workers they employ. The IRS is asking individual taxpayers to obtain documents from their employers to prove they were entitled to receive premium tax credits (PTCs) to offset health insurance purchased through government exchanges. Employers are being required to provide proof that they filed ACA information with the IRS. Over the past few years, many employers relied on do-it-yourself software and payroll companies to submit ACA information to the IRS on their behalf. In some cases, the software and payroll companies thought they submitted the information electronically to the IRS, not realizing the submissions were never accepted. Now, many employers are realizing the IRS never received their submissions and, as a result, are being issued ACA penalty notices. Expect IRS staff to insist that employers obtain submission acceptance notices to prove they filed with the IRS as part of their defense to have ACA penalty assessments dismissed. With the IRS becoming more aggressive in its enforcement activities and with ACA penalties potentially in the millions of dollars, accountants may want to advise clients they believe to be vulnerable to undertake an ACA Penalty Risk Assessment. This assessment can determine if employers are considered to be an Applicable Large Employer by the IRS, and if they are at risk of receiving IRS penalties under IRC Section 4980H. This assessment involves a review of IRS Forms 1094-C and 1095-C. Some outside experts may offer to undertake this assessment at no cost. It’s also a good time for accountants to check with their clients that have more than 50 full-time employees to determine if they have been filing ACA information with the IRS annually, as required by law. If they have not, they may be at risk of receiving significant ACA penalties under IRC Section 6721/6722. Accountants should work with these employers to file this information as soon as possible to avoid receiving an IRS Letter 5005A penalty notice. Now is the time for accountants to check-in with their business clients to discuss their ACA compliance process to determine if they may be at risk of paying significant financial penalties to the IRS because they have failed to comply with the ACA. I have been preparing and submitting by mail for the last 4 years the required forms for my largest client who is an ALA with more than 50 employess. "Expect IRS staff to insist that employers obtain submission acceptance notices to prove they filed with the IRS as part of their defense to have ACA penalty assessments dismissed." Last year my client ended up paying a $ 9,000 penalty for 2015 for not providing health insurance. Haven't received an assessment for 2016, which could be about $25,000. I have never heard of "submission acceptance notices". I guess I should find out what they are. Although, I don't think I will request one in fear of triggering a letter !

Do you have a significant amount of pdf attachments ?

Also, some insurance companies check your credit, which they might use to calculate a quote for car insurance for example.

Tax Pro Today has an article about 2019 Tax Software enhancements https://www.taxprotoday.com/news/the-2019-tax-prep-software-comparison-guide?feed=00000158-3f5d-dcbd-abf8-ff7f12270000 Curiously Wolters Kluwer does not have any mention of ATX ?

The only thing I can think of is a deceased employee's accruable wages paid in the same year as the employees's death.

Terry, I can't begin to imagine what you have went through and how time you must have spent wrestling with this. Have you reached a point where you have got this situation under control or does stuff keep happening ?

Some of you may have seen in the news recently the announcement of the Equifax Breach Settlement, which has its own website, https://www.equifaxbreachsettlement.com/ The website allows you to check whether your information was exposed and if it was to file a claim. It is important that everyone check because the Equifax site which was set up back in the fall of 2017 did not work well and was very inaccurate. I have checked my family members so far and I plan to check all of my long established clients. So far my wife and my information was not exposed. However all 3 of my daughter's and one of my son in law's information was exposed. At the very least you should send an email to all of your clients urging them to go to this website and check, because if your clients are like mine, many of them are not as security conscious as they should be !

If the loan documentation/ substantiation isn't done then two more potential basis problems may arise. 1. Additional loan basis will not be created potentially limiting future deduction of losses. 2. If then client dumps the HELOC proceeds directly into the S Corp(s) without documentation and makes the HELOC repayments from the S Corp(s) then the HELOC repayments will be considered distribution of profits which will further reduce basis potentially limiting future deduction of losses. The only way these S Corp(s) get a free and clear interest deduction is if the SCorp(s) are the borrowers.

Terry, I agree

What your client should do to comply and substantiate the S Corp(s) interest deductions and maintain basis: 1. Take out the HELOC with proceeds deposited in his personal checking account 2. Loan the HELOC proceeds to the S Corp(s) 3. Document the loans with the proper interest rates, repayment schedules etc. 4. Make sure that the S Corp(s) repay your client every month on schedule, issuing 1099INTs at the end of the year. 5. Your client should make all the HELOC repayments from his personal checking account. Clients usually want to create shortcuts i.e., make it up as they go along ,which in your clients situation is a recipe for lost deductions etc., etc ! I will leave it to others to mention cites, case law etc.

Actually, our health care system first began during and after the Civil War, when our government provided health care for Civil War Veterans, their families and their widows.

To go over all the pros and cons with a client would take at an absolute minimum 45 minutes. At this point in the discussion, you should making a list of the pros and cons to discuss with the client.

About 10 years ago Oregon had a tax amnesty. I prepared 11 years of regular corporate returns . My client filed the state returns and did not file the federal returns. My client paid Oregon the corporate tax due plus 1/2 of the interest. The state waived all penalties and 1/2 of the interest. The next year I prepared and my client filed both federal and state corporate returns, which we have done every year since then. To my surprise, my client has never received any letters from the IRS about the missing 11 years of Form 1120.