SunTaxMan

Taxpayer received and brought to me a "notice of deficiency," which advises only one option - taxpayer can "contest this determination in court before making any payment." This is my first time with a "notice of deficiency." Is there only one option available? Is there a potential of submitting documentation to the examiner involved to resolve withOUT court involvement? Taxpayer was denied exemption for son - divorced situation, with divorce decree specifying "odd" and "even" years applicable to each parent for claiming exemption. Spouse claimed exemption in wrong year and filed first. Taxpayer received notice of "no exemption." Thanks for your thoughts, etc.

Has anyone found, or designed a sensible worksheet for tracing Mortgage Interest?

Costco has a proven "track record" with us. No question about quality, "as advertised." I would have no problem making an online purchase of ANYTHING they sell.

I see this new regulation. I am wondering how you define "Uncertain Tax Position." I am also wondering how IRS would phrase the definition. Seems like an awfully vague focus; read that as wide, WIDE latitude in audit and enforcement potential. Comments?

I got to thinking again. Sometimes that leads me to problems. I have always assumed that the method of documenting the business use of any cell was minutes used - but I can't find anything to verify that. What I did find was that it is necessary to "document the business use" - but not anything specific as to HOW to do that - what method. As I look over a recent cell phone bill, I find that MINUTES USED is 33% of total for business purposes. But when I track the number of CALLS MADE during the month, I find that to be 55% of the total number of calls made (inbound and outbound) for business purposes. I realize consistency of method used is significant, but at January 1, this would seem a defining time to change the method. I suspect my CALLS MADE would be predominately business all year long, even if MINUTES USED was predominately personal (or at least other than business). Thoughts?

Perhaps I should re-phrase my question. Is there any advantage in maintaining a "Fixed Asset Manager" APART from the tax return and the reportable form, i.e., 2106, 4562, C, S-Corp, C-Corp, 1065, etc.? In what circumstance(s) would a "Fixed Asset" listing, as a report of owned assets (and the accompanying report of asset history, depreciation history, depreciation in future years) be needed or even useful? It would seem that the only function of these components of asset property would be their input and effect on the tax return. The only possibility that comes to my mind quickly would be "moving" the assets from one return to another, e.g., if/when the taxpayer would change from Sole Proprietorship to an S-Corp. Am I missing something? Or am I just "thinking about it more than necessary?" Thanks,

I have never thought about the "need" for Asset History, just miss it now that I don't have it. I am interested in why I would need a Fixed Asset Manager in addition to the calculations in the ATX program. Comments? Thanks,

I am working on my first 2009 return and lo, and behold, Asset History is gone, with a wonderful note from CCH, that I need to buy the Fixed Asset Manager. What an interesting way, read that as "back door approach" to increasing the cost of ATX this year. A $395 "increase" by "coaxing" us to buy an ancilliary product is still an increase in price for the same product we had last year. I wonder what other "surprises" CCH will have for us...... Comments? I saw one comment about CMI Fixed Asset Manager. Anyone use it?

I agree with PapaJoe - don't burn the bridges. My additional 2 cents': Whatever you tell this client, put it in writing. And "be nice." Just because a client is not courteous with you, is no reason to return the attitude. A "gentle" handling of the client's wrath (whether that wrath is frustration, or whatever) will ease the situation. Your reputation will last beyond this client.

I thought that was (or at least used to be) "Package X." I guess it you change the name you can charge for it???? Thanks,

I just got US Govt Printing office order form that shows publication 1132. IRS web site doesn't list a pub 1132. Anyone know what it is?

You said, "I'm still waiting to get my copy of Document Manager, and Trial Balance Software for 2009... " I am wondering if perhaps they are not part of the TRX subscription?????

At a recent DE/IRS seminar, IRS collection officer said IRS WILL be using telephone as initial contact with taxpayers, in SOME instances, so we should not be surprised to hear a client adivse us that they have received a call from IRS.

Old Jack I appreciate the caution regarding legal advice and don't consider user group posting as "law." But I do appreciate the advice and the counsel of those wiser than I am in such matters. After seeing this thread develop, I am convinced I need to examine the purchase and loan agreements much more closely that I have so far - to determine exactly who DOES own what and WHO is in HOCK for the loan. So far, I suspect that not separating the residence from the business real estate at the outset is the crux of the problem. Taxpayer has said the Preparer they were using, both at the time of purchase and in the unsuing 4 years, has not questioned the purchase agreement, loan agreement or the "spreadsheet" information taxpayer submitted for return preparation. I suspect the absence of "appropriate questions of investigation" in the return preparation has "complicated" the taxpayer's situation. Taxpayer has said their CPA has said, "I don't know how to handle your situation, so am simply not addressing the issue. I take what information you provide and do the returns." Doesn't sound like good "Tax Practice" to me.

OldJack You said, "If the LLC did not actually purchase (pay for) the property but received a deed for the same, then there is a legal problem that the stupid attorney needs to correct or the LLC should sue him for malpractice on the real estate closing." Are you speaking with the authority of an Attorney, or just retaliatory rhetoric?

KC, You are correct. Thus the reason for both "confusion" and my uncertainty as to how to handle the situation. There is NO "Mortgage" - no 1098 being issued. The "loan" is a "Commercial Loan" with land, buildings, business (goodwill) and contents (at purchase date) -- all specified in the purchase agreement -- serving as collateral for the loan. Payments (principal and interest) are being paid by the S-Corp. RE Taxes are being paid by the S-Corp. Utilities, insurance, etc, etc., are being paid by the S-Corp. Welcome to my world. Hope you had a great Thanksgiving.

KC, You said, "If there is a legitimate business reason for them to live on the property then it is neither income to them nor an issue for the corp." I don't see any "legitimate business reason" - they COULD live miles away and still operate the business.

Old Jack, You said, "I don't understand the Sch-C filing" -- my mistake, Schedule E. You said, "The commercial loan appears to just have personal assets for security." Security for the Commercial Loan is Real Estate (land and buildings, including the house/residence), inventory at time of purchase, personal property for business functioning (shelving, office, storefront particulars). You said, "I think you are just over analyzing the situation." Not an unusual reaction for me. I had a friend tell me once, "TR, you are the only person I know who, if I ask for the time, you will tell me how to build a clock!"

New client. Attorney drew up business purchase documents several years ago. The Shareholders' (husband and wife) live in a residence that is on the same property as, and included in, the deed of the real estate where the business is located. Real Estate is held by an LLC, reporting on Schedule C, separate from the business operation, reporting on 1120S. For several years they have done nothing about the residence aspect of this situation. I am thinking there is a problem in simply ignoring this. It would seem that they should either be paying rent to the LLC (owner of the real estate) or have "personal use" added to the W-2. To complicate things, there is no "mortgage" on the property. Real Estate and business purchase is included in a single "commercial loan" with payments being made by the S-Corp. Or am I fretting unecessarily? By the way, Happy Thanksgiving! We look forward to dinner with 3 of our 5 children and a number of grandchildren, cousins, etc., I hope your day is as wonderful as we anticipate ours to be.....

I am puzzled. Malwarebytes blocked access to taxalmanac.org as a malicious site! And this happened in MS IE, Firefox and Google Chrome - the browser change didn't affect it.

I have a client who is anticipating his first residence purchase. He is the sole shareholder in an S-Corp. (Age 32, single, no dependents, no divorce, no child support in the picture.) I have been doing his tax work, recordkeeping, etc, for several years, including years prior to this business. By the way, the business, in the six years since its inception has had no loss years, and is showing substantial, consistent growth. The balance sheet for 12-31-08 shows total liabilities that are 51% of assets - assets that equal just about double the amount of liabilities. He has made an application to a bank for a home loan. The loan officer has requested, and has received, 3 years of tax returns, business and personal, financial statements, including a part-year profit and loss statement, bank statements for ALL of the taxpayer's accounts (business and personal) and statements from his retirement account. The loan officer has now requested, "I need a letter from your accountant {that's me}, signed and on letterhead, stating that using your business funds for settlement will not negatively affect your business in any way." My first reaction is that this requires a "judgment call" that should be made by the loan officer, not by me. I am not an Underwriter and I don't feel qualified to make what appears to me to be an "underwriting" kind of conclusion. My second reaction is to wonder why they are concerned in the first place. By the way, settlement costs should be about $10,000. In the larger picture this seems to be a rather insignificant figure. Purchase price of the home is $120,000. As far as my "opinion" is concerned. I don't think using Company funds is even worth considering as a risk at all, but it just seems to me that expressing that as an "official" opinion is not within the scope of my "job description." And I am not thinking of "hiding" the use (distribution) of those funds as a Company expense. I see no problem in making them a W-2 payment - his wages are on the "low side" of reasonable this year anyway. What would you suggest I do? Or am I worrying about something about which I should not be concerned?

KC, Marvelously put!

Thanks for the link.

One further thought - that came to me during the night - you know, when you wake up with one of those "earth shaking" moments at 3 AM!!!!! 8594 applies to a "bulk purchase" (various items lumped into a single purchase). Correct? If this taxpayer sits and and makes a list (detailed list) of items purchased, and we allocate the purchase price to EVERY item on the list, we then will have a detailed "Detail" list in 4562 and NOT a "bulk purchase" (single item of F & F) to depreciate. Correct? I realize this makes a "mountainous" chore "upfront" for the 2006 purchase - but makes disposition of a microwave (e.g.) in 2008 a simple entry in Asset Dispositon and 4797 -- and a legitimate loss calcuation for a discarded asset. Thoughts?

A quick perusal of form 8594 and the instructions leads me to believe this form is not (1) necessary or (2) applicable to this situation. I do not see an agreement, or disagreement for that matter, between the buyer and seller over the value of assets purchased as a group - or any reason for the buyer to "change" the value specified by the seller. What I do see is the failure of the seller to provide the information, forcing the buyer to make the determination of value, i.e., an allocation of the purchase price between F & F and goodwill. I can also see the value of making as detailed a list as possible of assets purchased (that portion under the category of F & F), so that disposal of any of those assets could be more easily handled and reported (Form 4797) - much like the difference between an auto mechanic purchasing a "tool box full of tools" or that same person purchasing a "detailed list of tools," the kind of list that would be required for insurance coverage. Comments?