Lee B

WASHINGTON -- The Federal Bureau of Investigation is asking everyone with a home router to do one small thing: Turn your router off and then back on again. The agency issued a warning on Friday asking home Internet users and small business owners to reboot their routers to ward off a pernicious piece of malware called VPN Filter. The malware infects routers during the first stage of an attack that eventually gives hackers great control over the devices connected to the Internet. The malware has been linked to a group believed to be connected to the Russian military Research from Cisco's Talos security group, published last week, estimates that 500,000 devices around the world may be affected by the malware, including routers made by major manufacturers such as TP-Link, Netgear and Linksys. While the FBI recently seized a critical part of the network that runs this attack, the agency still recommends that everyone reset their router, regardless of manufacturer, to cast a wider net. Simply unplugging your router may not seem like it could do much for your security. But resetting the router sets this complicated malware back to stage one, said Ashley Stephenson of Corero Network Security. In its first stage, VPN Filter establishes a in a router, but it needs to talk to another part of the network to download the second stage of the attack. Now that the FBI has control over part of the network, routers trying to enter that second stage will send information to the agency instead of hackers, Stephenson said. Simply hitting the power button without updating their router, would still put users at risk, software experts warned. As a next step, they should download the latest firmware for their devices and change their password to further guard themselves against infection

Authorities on the Big Island have advised residents, "Do not try to roast marshmallows over the lava !"

In addition under new tax law, employers can not deduct any of the prior law "Qualified Transportation Fringe Benefits."

Earlier this year, I remember 2 items that did not convert from ATX to Drake : 1. Charitable Contribution Carryforward 2. Investment Interest Carryforward.

6 GROUPS OF TAXPAYERS MOST AFFECTED BY TAX REFORM MICHAEL LAW, CPA - CANOPY ON MAY 20, 2018 Due to the tax reform passed in December, many taxpayers will be seeing tax changes in their 2018 tax return. Some changes are positive and some negative, and it is important to keep as updated as possible with the ever-changing tax environment, especially if your clients are among the groups affected. Let’s take a look at a few of the groups of taxpayers who will be affected the most. TAXPAYERS WHO WILL BENEFIT FROM TAX REFORM Most individual taxpayers will have less tax to pay next year, but there are a few groups in particular that will see significant tax savings. INFRASTRUCTURE/FIXED ASSETS For federal purposes, taxpayers who heavily invest in fixed-assets have almost full write off of depreciable assets they are purchasing. Before this law change, these taxpayers who bought equipment had to depreciate the cost over five or 10 years. Going forward, almost the only thing they have to depreciate for federal purposes is real property—the buildings they are buying. The changes to depreciation is one of the few changes that had an early effective date. The accelerated depreciation started for assets placed in service mid- September 2017. CORPORATIONS Corporations now pay lower marginal rates than most other taxpayers. The decreased corporate tax rate is significant enough that some business entities are considering switching their businesses from being taxed as partnerships to being taxed as corporations. Some are electing out of S-corp status to become C-corps. expect we will hear of more businesses doing this as the year progresses PASS-THROUGH ENTITIES To benefit taxpayers who are not corporations, Congress made a new “pass-through“ deduction. The name is a bit of a misnomer since a sole proprietor who files Schedule C could also take the deduction. The deduction is almost like getting 20 percent of the business’s income tax free. This new provision has specific limitations for accountants, engineers, and lawyers when their income exceeds certain thresholds. As with anything new, there ar a lot of questions about what does and does not qualify. The IRS expects to provide additional guidance in July. TAXPAYERS WHO WILL BE NEGATIVELY AFFECTED BY TAX REFORM PROFESSIONAL ATHLETES Professional athletes will be among the taxpayers hardest hit by tax reform. They used to be able to deduct training fees, out of town fees, equipment fees, etc. as two percent itemized deductions, but those deductions were eliminated as of January 1, 2018. Because they will still make high wages that place them in the top marginal tax brackets, they will pay even more in taxes next year. SMALL WAGE CONTRACTORS Contractors who work for wages instead of as independent contractors will be negatively affected by the new tax law. This situation often comes up in union trade jobs. Like the athletes mentioned previously, these contractors have lost the ability to deduct business production expenses like uniforms, tools, and safety clothin against their wage income with the loss of two percent itemized deductions. These tradesmen may include construction workers, electricians, iron workers, plumbers, etc. If these wage-earning taxpayers could switch to independent contractors, it might be beneficial in order to deduct the expenses, but switching could prove difficul California, for example, is trying to make it so more independent contractors will be considered employees. TAXPAYERS WHO ENTERTAIN Taxpayers who wine and dine or recruit clients and employees have lost many of their meal and entertainment deductions. Entertainment expenses such as renting box seats or rooms at stadiums are no longer tax deductible. There is some debate in CPA circles if a meal expense for working out of town is 50 percent deductible. Hopefully the IRS will provide more guidance on this deduction restriction before the end of the year. There are many other tax changes to be aware of outside of those mentioned in this post. One of the best ways to keep informed is to read a lot of different notices newsletters, updates, and publications. The Attorneys and Accountants Retirement Act revived one more time

Oregon has a new statewide transit tax effective July 1st. It's a .001 withholding tax on Employee ( Box 1 )Gross Wages i.e. $ 1.00 for each $ 1,000.00 remitted quarterly

Unfortunately, common sense does not always prevail.

These kind of lists are so arbitrary and biased, depending on selection parameters and weighting factors, that they tend to say more about the list maker than anything else.

I had a client about about 10 years ago who received a 1099 for $60,000, should have been $6,000. However, I knew it was in error since I did his bookkeeping.

Woah, I am thankful that I am not wrestling with this one.

Actually, I was very pleased with the ATX to Drake conversion. There were a few things that didn't come across. There were other things that Drake prompts your to confirm. Depreciation was my biggest concern, so I was satisfied that all the assets came across. However a number of depreciation parameters/categories didn't convert, so I had to go thru each asset to double check things and correct a number of selections/parameters, In my opinion, Drake's Depreciation is a noticeable improvement over the ATX Depreciation Module.

I switched about 3 months ago, cold turkey, after being with ATX for about 20 years. After two days, I was pulling my hair and cursing frequently. The layout and logic is very different. After 1 week, I was saying, OK I can survive this. After 1 month, I was happy that I made the change , although there are certain Drake functions that are more opaque than ATX. After playing with Drake's forms option, I quickly switched to learning where everything is with Drake's input approach. One thing I will say that Drake software for my state of Oregon is more in depth, significantly better than ATX. After I catch up with my CPE this month, I was planning to share my observations of Drake vs ATX.

I just double checked and both federal and state refunds are scheduled to be direct deposited next week.

Pleasantly surprised. I efiled these returns after lunch and they have been accepted. Now I can wait and see if the direct deposit instructions are followed ?

For the first time since 1992 when I started my current practice, I am preparing a tax return for a deceased client without a surviving spouse. There are refunds due totaling about $ 3,000. There is a will with one of 3 children named as personal representative. However there are no probate assets since everything was " Payable on Death" or jointly owned with the 3 children. In Oregon, if there are no probate assets, then there is no court appointed or certified personal representative. Reading thru Form 1310, you just answer the questions and the refund check is issued to the personal representative in their name ? The deceased's checking account is still open with all 3 children's names also on the account. Any way to have the refunds direct deposited into that account ?

I don't think there is any connection between the two ?

Can you do that ? Don't you have to file the 3115 with the current year return ?

Classic example of when to use a 3115 to correct the depreciation expense claimed. Since this will increase tax due,I believe you still get a 4 year spread forward to pay any additional tax.

According to a very large survey, the average Uber driver makes well under the federal minmum wage.

IRS, Security Summit Partners warn of new twist on phone scam; crooks direct taxpayers to IRS.gov to “verify” calls IR-2018-103, April 24, 2018 WASHINGTON — The Internal Revenue Service today warned of a new twist on an old phone scam as criminals use telephone numbers that mimic IRS Taxpayer Assistance Centers (TACs) to trick taxpayers into paying non-existent tax bills. The IRS and its Security Summit partners – the state tax agencies and the tax industry – urge taxpayers to remain alert to tax scams year-round, especially immediately after the tax filing season ends. Even after the April deadline passes, the tax scam season doesn’t end. In the latest version of the phone scam, criminals claim to be calling from a local IRS TAC office. Scam artists have programmed their computers to display the TAC telephone number, which appears on the taxpayer’s Caller ID when the call is made. If the taxpayer questions their demand for tax payment, they direct the taxpayer to IRS.gov to look up the local TAC office telephone number to verify the phone number. The crooks hang up, wait a short time and then call back a second time, and they are able to fake or “spoof” the Caller ID to appear to be the IRS office calling. After the taxpayer has “verified” the call number, the fraudsters resume their demands for money, generally demanding payment on a debit card. also have been similarly spoofing local sheriff’s offices, state Department of Motor Vehicles, federal agencies and others to convince taxpayers the call is legitimate. IRS employees at TAC offices do not make calls to taxpayers to demand payment of overdue tax bills. The IRS reminds taxpayers it typically initiates most contacts through regular mail delivered by the United States Postal Service. There are special, limited circumstances in which the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations. Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail. Scammers are endlessly creative aren't they ?

Clarifying Note: The linked version is much easier to read due to bullet points and indentations which do not display on the copied text. In fact in several places, the copied text version is confusing because of missing bullet points etc.

Here is a link to the Fact Sheet dated 4/20/18: https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act If you don't click on links, here is the text: New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act FS-2018-9, April 2018 The Tax Cuts and Jobs Act, signed Dec. 22, 2017, changed some laws regarding depreciation deductions. Businesses can immediately expense more under the new law A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. The new law also expands the definition of section 179 property to allow the taxpayer to elect to include the following improvements made to nonresidential real property after the date when the property was first placed in service: Qualified improvement property, which means any improvement to a building’s interior. Improvements do not qualify if they are attributable to: the enlargement of the building, any elevator or escalator or the internal structural framework of the building. Roofs, HVAC, fire protection systems, alarm systems and security systems. These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017. Temporary 100 percent expensing for certain business assets (firstyear bonus depreciation) The new law increases the bonus depreciation percentage from 50 percent to 100 percent for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. The bonus depreciation percentage for qualified property that a taxpayer acquired before Sept. 28, 2017, and placed in service before Jan. 1, 2018, remains at 50 percent. Special rules apply for longer production period property and certain aircraft. The definition of property eligible for 100 percent bonus depreciation was expanded to include used qualified property acquired and placed in service after Sept. 27, 2017, if all the following factors apply: The taxpayer didn’t use the property at any time before acquiring it. The taxpayer didn’t acquire the property from a related party. The taxpayer didn’t acquire the property from a component member of a controlled group of corporations. The taxpayer’s basis of the used property is not figured in whole or in part by reference to the adjusted basis of the property in the hands of the seller or transferor. The taxpayer’s basis of the used property is not figured under the provision for deciding basis of property acquired from a decedent. Also, the cost of the used qualified property eligible for bonus depreciation doesn’t include any carryover basis of the property, for example in a like-kind exchange or involuntary conversion. The new law added qualified film, television and live theatrical productions as types of qualified property that are eligible for 100 percent bonus depreciation. This provision applies to property acquired and placed in service after Sept. 27, 2017. Under the new law, certain types of property are not eligible for bonus depreciation. One such exclusion from qualified property is for property primarily used in the trade or business of the furnishing or sale of: Electrical energy, water or sewage disposal services, Gas or steam through a local distribution system or Transportation of gas or steam by pipeline. This exclusion applies if the rates for the furnishing or sale have to be approved by a federal, state or local government agency, a public service or public utility commission, or an electric cooperative. The new law also adds an exclusion for any property used in a trade or business that has floor-plan financing. Floor-plan financing is secured by motor vehicle inventory that a business sells or leases to retail customers. Changes to depreciation limitations on luxury automobiles and personal use property The new law changed depreciation limits for passenger vehicles placed in service after Dec. 31, 2017. If the taxpayer doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is: $10,000 for the first year, $16,000 for the second year, $9,600 for the third year, and $5,760 for each later taxable year in the recovery period. If a taxpayer claims 100 percent bonus depreciation, the greatest allowable depreciation deduction is: $18,000 for the first year, $16,000 for the second year, $9,600 for the third year, and $5,760 for each later taxable year in the recovery period. The new law also removes computer or peripheral equipment from the definition of listed property. This change applies to property placed in service after Dec. 31, 2017. Changes to treatment of certain farm property The new law shortens the recovery period for machinery and equipment used in a farming business from seven to five years. This excludes grain bins, cotton ginning assets, fences or other land improvements. The original use of the property must occur after Dec. 31, 2017. This recovery period is effective for property placed in service after Dec. 31, 2017. Also, property used in a farming business and placed in service after Dec. 31, 2017, is not required to use the 150 percent declining balance method. However, if the property is 15-year or 20-year property, the taxpayer should continue to use the 150 percent declining balance method. Applicable recovery period for real property The new law keeps the general recovery periods of 39 years for nonresidential real property and 27.5 years for residential rental property. But, the new law changes the alternative depreciation system recovery period for residential rental property from 40 years to 30 years. Qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property are no longer separately defined and given a special 15-year recovery period under the new law. These changes affect property placed in service after Dec. 31, 2017. Under the new law, a real property trade or business electing out of the interest deduction limit must use the alternative depreciation system to depreciate any of its nonresidential real property, residential rental property, and qualified improvement property. This change applies to taxable years beginning after Dec. 31, 2017. Use of alternative depreciation system for farming businesses Farming businesses that elect out of the interest deduction limit must use the alternative depreciation system to depreciate any property with a recovery period of 10 years or more, such as single purpose agricultural or horticultural structures, trees or vines bearing fruit or nuts, farm buildings and certain land improvements. This provision applies to taxable years beginning after Dec. 31, 2017. Page Last Reviewed or Updated: 20-Apr-2018

I may be suffering post tax season short term memory loss, but I don't seem to recall that apologizing is part of the ATX Playbook ?

I believe the current requirement is any preparer who files 11 or more returns from the 104x series.

Almost all of the detailed reports that I see, bill the next term's tuition at the end of the previous term. Then they post the payments ( Scholarships, loans etc ) when the term actually begins. So you have a timing problem, where you can't see the whole picture unless you can look at the detailed reports showing prior year, current year, & next year. It's a real mess and I suspect what is actually reported on most tax returns is usually not completely accurate.