jainen

>>Based on what information?<< As I clearly said, according to the IRS link jlewis gave us. http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision. Yes, it means "eligible" employer plans. That includes all plans established before 2010, so the article correctly states that most people are already covered. Considering the stiff penalties,we aren't going to see many employers ignoring the new rules. Anyway, where could they find coverage? The whole thing is an insurance lobbyist dream, so those Big Boys don't have to offer cheapo policies. I predict health costs will go down because the insurance companies will negotiate all the prices. Then public health will go up because everyone can afford it. That will increase productivity in the workplace, which will translate into higher earnings, and so of course greater tax revenues. That will solve all our other problems!

>>because she has completed four years of school she would not be entitled to the AOC<< That refers to the beginning of the tax year, so if she graduated in 2012 she might still be eligible.

>>This is in direct opposition to the information I received<< Let's not get stuck on the word "exempt." According to the link jlewis gave us, employer plans and Medicare are "minimum essential coverage." So there is nothing to do on those returns. I don't expect much trouble from this provision, but how are we ever going to reform the whole tax system? For one thing, it continues to be used for social engineering and political posturing. And the IRS and we the tax professionals have a terrible time implementing changes--this year we could barely manage when Congress said to just leave almost everything the same!

>>what if he doesn't itemize? Does he lose all of it?<< According to Reg. Section 1.170A-10(a)(2), Charitable contributions carryovers of individuals, "The carryover provisions apply with respect to contributions made during a taxable year in excess of the applicable percentage limitation even though the taxpayer elects under section 144 to take the standard deduction in that year instead of itemizing the deduction allowable in computing taxable income for that year." They even give some examples of the math, but it's what you would expect--just reduce the carryover by the amount that would have been deducted on Schedule A each year.

>>The delay in ACKs was the IRS's fault<< The IRS had a tough time this year, so I wouldn't play the blame game. For one thing, you don't even know if IRS will assess a penalty for late filing. If they do, you can request abatement for reasonable cause, since a minor typo should not negate a good faith attempt to comply. It would be a stronger argument if an estimated payment was mailed on the 15th, but I wouldn't worry about it.

>>a already containing information received from employers and banks<< This is a GOOD idea, folks! Make our life easier. Remember all the complaints about typing W-2's in the early days of e-file? Why should I have to tell the IRS what it already knows? Eventually they are going to match it all anyway, so why not at the beginning? Sure we will have to verify and maybe correct or interpret some stuff, but at least that won't also be our own typos! And we won't have to argue with the client so much, for example about needing to report the 1099-R code 1, even though "I already paid taxes on it." No more "My preparer must have lost the form" either. I hope they include 1099-Misc too.

>>I know this is gibberish.<< Yes, but I doubt that's what the promoter is actually saying, technically. The investor hears what he likes to hear. He might not hear what he doesn't like, so make it as simple as possible. Start with the mortgage. See Page 50 of Pub 590 for Prohibited Transactions, including using the property as security for a loan. Then see page 15 of Pub 598, Debt-Financed Property, which means the IRA custodian will have to file a tax return. They simply are not going to do that for $40 a year.

>>a program that will manage all our tax / clients from the time they come in the door to the time we try to find them all to include for extensions<< It sounds like you aren't getting past the first interview, so you don't actually need tax or payroll software. I recommend this simple intake sheet from IRS http://www.irs.gov/pub/irs-pdf/f13614c.pdf It helps determine what documents to ask for, and also meets your need for contact information!

>>the requirement for 1099 for service related to rental property WAS in effect, then was DELETED from the regulations<< In 2010 Congress defined rental property as a business for 1099's. The next year, they repealed that definition. Now nobody knows for sure, so AICPA wrote to IRS in January for guidance. Meanwhile, questions A & B remain on Schedule E, and the Instructions for Form 1099-misc still say, "You are engaged in a trade or business if you operate for gain or profit." Just file the dang thing! What's the big deal? It will help audit-proof the return, unless you want to argue that you aren't trying to make a profit.

>>Maybe you need an amended return.< There should indeed be an amendment, but only to tax the goodwill in 2011 since he elected out of installment treatment. According to Pub 537, "To make this election, do not report your sale on Form 6252. Instead, report it on Form 8949, Form 4797, or both....Once made, the election can be revoked only with IRS approval."

Not me! I love an audit that gets stuck on the stupid stuff. You fuss a bit, and the supervisor supports the examiner, and then you say, "Let's just read down Form 2106 itself line by line." When you get to Step 2 (Reimbursements) you point out the bold face in "not reported to you in box 1 of Form W-2." Meanwhile, you hope she is so embarassed she never gets back to the real question, actual receipts and log books.

The study looked at 100 Schedule C's that were assessed at least $10,000 more, and found that 26 had fraud indicators. I believe it, but I'm not sure it's bad. I think the IRS prefers an early win about numbers rather than a long fight about intent. Taxpayers, on the other hand, might accept a higher settlement instead of more legal costs.

>>Can you sell land only on land contract?<< Yes, but details vary according to state law. Please advise your client to get QUALIFIED legal help. It seems attractive to keep title until paid in full, but actually it may be impossible to get rid of buyers who refuse to pay. If she simply sells the property and carrys back a mortgage, she could at least foreclose on a default.

>>Can the partnership returns be amended to capitalize the improvement back in 2007 when everything started?<< I'd like to hear what you tell the other partners--"Please cancel the big deduction you took back in 2007. Even though it means more ordinary income with five years penalty and interest, you will have lower long term capital gain!" Anyway, no. That accounting change would require a Private Letter Ruling. And it wouldn't be approved, because there is no business purpose other than tax savings for one of the partners who wants to cover unrelated investments. I don't understand what "loss" you are referring to. If he couldn't take the original losses because they were passive, they are still available for the year of sale. If he couldn't take them because they exceeded his investment basis, he doesn't have much to complain about. It kind of sounds like he DID take them but just didn't benefit because he was already at zero. In that case, you might take a look at an NOL, but 2007 is pretty much off the table by now.

>>Penalty relief for those taxpayers who attached any of the forms that caused the delays.<< The press release sounds nicer than the actual notice cited. The taxpayer must make a good faith estimate and PAY it with a timely extension request, so penalty relief is only available for the small amount that you missed by. Even then you will still get an IRS letter assessing the penalty for Failure to Pay. You have to request abatement in the normal way, citing the delay on specific forms as reasonable cause. And pay the interest.

>>No matter what designation is behind your name, none of them mean you are ethical or a person of integrity. << Well, E.A. at least means that I file all my required tax returns!

>>a professional would indeed insist on the client preparing an accurate return<< I would advise the client to amend the prior year return reporting at least the gross revenue, which is my professional responsibility under Circular 230. But unless I were asked to prepare that year, I would not second-guess the professional who actually interviewed the client and treated the activity as not-for-profit. Yes, it should have been reported anyway, but the return may well have been accurate as to tax liability. I always ask why a new client isn't going back to the previous preparer. Many times the real reason is because the taxpayer learned the rules, and changed their story. This year I have noticed quite a bit of preparer-bashing. That surprises me in a forum that generally objected to IRS calls for education and testing.

>>Yikes!... US citizen living in Northern Ireland<< Relax! Their return isn't due until June 15 anyway.

>>I'm not aware of any way to take a loss on a property that has not been disposed of.<< Mark-to-market has been a legitimate accounting method under GAAP for a generation. It just doesn't work very well for real estate (which was a MAJOR cause of the banking industry collapse in 2008). Well, tax law doesn't follow Generally Accepted Accounting Principles anyway. Only securities are eligible.

>>She has decided to give 100% to her son (which is a 9y/o) for college.<< What an awesome gift! And you have just the tax savings for her--a 529 plan. She will get a decade or more of absolutely tax-free growth, which can be used not only for tuition but even living expenses when the student goes to college. A variation is to lock in today's costs with prepaid tuition credits. That is attractive since education costs seem to be rising faster than general investment yields. See Pub 970, and have her contact your local state university.

>>can that be reversed?<< According to Pub 536, page 7, "Once you choose to waive the carryback period, it generally is irrevocable." I understand that much in this forum depends on subjective choices, but the technical stuff--just look it up.

>>Big profit, so that is not the issue<< Yes it is, if you missed the box on Line A.

When Congress asks me to restructure the tax code next week (it was nice of them to wait until after the 15th) I'm going to start with a new category called General Deductions. They won't actually reduce the tax, but they will show on the return. That way I won't have to argue. I'll just say, "Personally I don't think it's deductible but I put it right there on Schedule A for you!"

>>bring the check to the attorney for the estate<< You are not muddled about that. Only the executor should handle the check. I would guess the IRS wrong answer resulted, as usual, from the wrong question. I would guess some heirs may not agree that the new honey gets the old money.

>>losses on the rental wiped out the cancelled debt<< Possibly this time the cancelled debt will wipe out the loss. Remember to reduce tax attributes on Form 982. They don't get a capital loss for money they never had to pay.