jainen

>>will they be able to function in the stress-filled job.... Will their disability be a distraction to them and others.... this is going to stress out IRS management even more<< I'm sorry Wayne, but these are just like the arguments used against gender and ethnic minorities. Completely unfounded. Through established organizations (the Lions Club in this case), the blind community has already proven their abilities. IRS work is dominated by data management, which is primarily electronic with mechanical input and output, and personal contact, which is primarily verbal. Carefully structured, both should be something a blind person could handle well. In fact, this is not only a good idea for motivated disabled workers. It should give a positive boost to IRS productivity.

>>No way we can get the information for selling expenses. He did not buy another main home.<< The title company and the real estate agent should still have those records, as will the buyer and buyer's mortgage company. Otherwise, make a good faith estimate. Most likely there was not much besides the commission, which is typically 6%.

>>Do you have a guilty conscience jainen?<< You are missing my point. You can not possibly have an interview procedure that complies with both the old rules and the new. For example, let me restate my concern about the underpayment penalty. You are REQUIRED to advise your client about potential penalties, besides it being good client service. That means last year (if the issue applied to the client) you explained that adequate withholding or estimated payments would prevent an underpayment penalty. This year, there is a new penalty that might call for a different payment strategy. So you need to consider whether it could affect any particular client and what to do about it. The preparer penalties are part of what defines your obligations in the engagement. There is a whole NEW concept of "unreasonable position." Dja think your client just might care whether or not you know what constitutes an unreasonable position? Are you going to say, "Well, gee, I'm not really up to date on the current law. But I like the old rules better anyway!"? How can you say that dramatic changes in the law are not something you need to incorporate into your practice?

>>Dealing with blind IRS personnel is going to be a treat. What do you think?<< The quiet accountant with thick lenses is almost a cultural stereotype, so I don't think this deserves sarcasm. I have always found the blind to be among the most careful and conscientious of workers. They don't seem to have the kind of self-pity that disabilities sometimes generate, and are usually very sympathetic to other persons' troubles. They are enthusiastic about using new technology and other aids to support their successful functioning. I'm pleased to see the IRS committing to this in such a big way, and I'm glad the EEOC brought it to our attention.

One of my clients runs a successful business but can’t be bothered making estimated payments. This year I thought it might be different. “Wasn’t your wife upset about that big tax bill last time?” I asked him. “Upset! She was so mad she hardly spoke to me for months.” “Well then, I guess you learned your lesson and started paying those quarterlies.” “I sure did learn,” he grinned. “This year I’m filing an extension so I don’t have to bring the return home until after she’s past all that.”

>>some may already be conducting interviews or soliciting information and documentation that will protect them<< That may be. I guess. I don't know; it seems like a pretty weak statement to me. How can an interview not change when the legal environment under which it is conducted changes? It is not just what you say and the documents. Your relationship has changed. The basic definition of who is a tax preparer has changed. Do you ever get an inquiry that potentially touches on gift tax? Now you have new rules about that. Did you ever tell an extension client that they won't have an underpayment penalty if they don't owe any money? Well, that's not true any more. But if you've got it all covered, just go on doing it the way you always have. I'm sure Congress won't come up with anything you haven't already -- oh, never mind.

>>How did they bail out the bankers with cash?<< Well, they didn't call it cash, of course. Let's see -- what was that word? Oh yes: "liquidity." The way they did it was real subtle. The Fed just said, okay, here's the money you need. Now, you might wonder where exactly the money came from. But if you did, you would apparently be the only person in the whole world who asked that particular question.

>>With the interest rate cut?<< No. With CASH on the barrelhead. YOUR cash. >>I will admit I was in Germany<< Well, guess what? The Europeans kicked in even more than the Americans!

>>I don't worry about that. I don't make mistakes.<< The penalties are not for preparers who make mistakes. They are for positions that you knew (or should have known) were improper. The principal defense on that "should have known" tag is to show you DID make a mistake but acted in good faith. So if these new penalties aren't changing the way you conduct your interviews, then you are indeed making a mistake. Your original question was whether you were missing anything in not seeing much change. Apparently you have seen some changes, but you are still missing something if you don't recognize them as very important. At least something to store carefully in your mind if you don't currently have a client directly affected. Even those pending things are really important. The President himself is fretting over that mortgage relief--he promised it in a recent speech--and since the idea originally came from the Democrats there is a good chance that WILL happen by December, which probably means that it will have been ALREADY effective (back to January 07). The Supreme Court case will move more slowly, so if you ignore it you will lose the chance to file a protective claim for prior years. And if you think the domestic partner issue is going to slide under the radar, you guys in Lodi must not understand how the gay lobby works. As joanmcq pointed out, the Chief Body Builder is looking at that big thang right now.

>>I read an article yesterday ... << There is a polished propaganda machine moving to blame the world's financial problems on American homeowners. DON'T you believe it! Yes, many people made foolish, even greedy choices. But at least they covered their poor decisions with real, bricks-on-the-ground equity. It was the bankers and financiers that took those dreams and cynically "securitized" them, not once but down multiple levels. Often the new assets consisted of nothing more than the "income stream" with no equity whatsoever. Sometimes even the income streams were leveraged! They sold them to everyone's pension funds while absolutely LYING about the quality of these derivatives. So, yeah, we're going to read a bunch of these anecdotes while Congress diddles around about whether to tax us on the LOSS of home values. But did you notice last month that our central bank has ALREADY bailed out the bankers and financiers with a fifth of a TRILLION dollars?

>>I have seen all of this in previous material so I am not really surprised<< You haven't seen the new Circular 230 before, because it just came out today. You haven't seen the mortgage debt forgiveness relief before, because Congress hasn't even voted on it yet. You haven't seen the final word on that Davis case down in Kentucky, where non-state muni bonds are tax free, because the Supreme Court just picked it up. And you are NOT ready to file California domestic partners because not even the FTB knows how to figure AGI for Schedule A limits. I declare, don't skip the Spidell update class this year. There's bound to be something surprising there.

>>Nothing new or earth shaking, mostly just inflation adjustments<< Better look again, my friend. I guess you can say that subjecting non-dependent 23-year-olds to kiddie tax is next year's problem, but you just might want to mention it to your clients ahead of time. The Small Business & Work Opportunity Act has a ton of changes other than extensions and COLA's. How about putting spousal partnerships on Schedule C? That's a retroactive change so you can use it immediately. I'm not sure what you would consider earth shaking if such a complete restructuring of the way a business is taxed doesn't count. I hope we can just assume without any personal experience, but those new preparer penalties seem a tad more than simple inflation adjustments. They are so hot even the IRS chickened out on the subject in the new version of Circular 230 released today (September 26).

Two brothers I know introduced me to an investor who was helping them set up a new LLC. He wanted to be sure the tax records would be in order. I gave him my bona fides but cautioned that the quality of my work would always depend on the accuracy of the information provided to me. “Have no concerns on that point,” said the brother who handles the books. “I believe that honesty is the best policy. I always report all income, and I have a strict rule to never commingle personal expenses.” “That’s a highly admirable standard,” replied the money-man. “In fact, I wish I could say the same myself.” “Why don’t you say it then?” said the third partner dryly. “My brother did.”

>>While it's in my possession, it would be worth about $4.00 to me personally<< Unfortunately, that's not the question. The value of found property is the FMV (what it's worth on the open market) at the time he gained ownership. That particular moment, in my opinion, was somewhat before the home run had actually been scored and ruled by the umpire, and quite a bit before the artifact in question had been certified as authentic, so at that particular moment it had no monetary value except as a small souvenir. $4.00 is a reasonable estimate, and that is taxable as ordinary Line 21 income. When he sold it, he recognized $749,996 capital gain. Personally, I think he got bad tax advice.

This is a socially “liberal” town and we don’t see a lot of newlyweds, so I was pleased when one of my clients brought his new family to the tax interview. I routinely asked the spouse if she had notified Social Security of her name change. “”Well, no,” she objected. “I’m keeping my maiden name so I’ll continue to file my own taxes under that.” I told her that the name was no problem and it would still be best to use Married Filing Joint status. Now it was the gentleman’s turn to object. “We have already agreed that I am Head of Household.” I started to explain what that means for tax purposes, but he went right on. “It means I am responsible for all the major family decisions, while my wife takes care of the minor issues.” Marriage counseling is a little outside my job description so I didn’t want to appear to be endorsing one side or the other. I turned to his better half to ascertain if she had a similar understanding of the family dynamic. “Oh yes!” she purred sweetly. “It’s working perfectly, and so far we haven’t had any “major” issues….”

Two businessmen had an appointment with me to do their partnership return. They operate a small food stand with all cash receipts. Just as we got started one jumped up and blurted out, “Oh my gosh! I forgot to lock the safe back at the office!” “What does that matter?” assured the other. “We’re both here, ain’t we?”

>>Please advise me as to why I should log out.<< Logging out (or at least logging back in again) has several important advantages. ** It performs a healthy exercise for your clicking finger. ** It allows extra time to think of a clever answer. ** It acts as a test to be sure the website and your computer are working properly. ** It provides a comfortable feeling that you are in control of your Internet addiction. ** It reminds you of your privileged status as a registered member.

>>We just topped 300<< So far today, 3% participation.

>>both will be a party to any advice you give the other<< That's really the only way, and not just ethically. Remember that these two lovers are in litigation. The lawyers are looking for anything with a hint of trouble and a dollar sign -- and Exhibit #1 is the tax return you prepare. Do you really want Exhibits 1 & 2?

>>I won't discuss him with her or her with him.<< I don't think that's good enough. I mean, how can you even tell what is her information and what is his? That is one of the main reasons they need attorneys and a judge, neither of which are you. For example, if the divorce is not final by the end of the year, how can you advise her whether MFS or MFJ is better without considering the spouse's income? And generally how can you be sure that a position on one return won't have a negative impact on your other client's return? Pick one. Use any criteria you want, but just pick one.

>>your client would not be able to prove his payments if there is any questions<< Of course he can prove it. He has the canceled check. At least, if he followed the instructions to write his SSN on the check and not attach it in any way to the voucher. I'm sure IRS bankers are trained like any other banker, to post from the actual check instead of the deposit slip.

>>I go for George M's idea<< Me too. Hopefully they annotated the actual check with their SSN, so a copy of the canceled check front & back will get things posted correctly. If they paid too much, based on the voucher, they will get a refund. If they didn't pay enough, they should send in the balance due.

>>People need to be responsible for their own decisions<< Yes, I agree with that. I don't feel sorry for borrowers who thought they could buy obviously high-priced homes with little down payment, ignoring the actual monthly payment that would be required in a few years. And not much more sympathy for homeowners who risked their family's welfare by cashing out and spending short-term paper gains. They didn't lose much that they would have had anyway. But whatever their own blame or personal loss, they didn't create the crisis that has required hundreds of billions of new "liquidity" to keep the dollar afloat. That honor goes to the financiers who played consumers and investors for suckers.

>>beautiful monetary sand castles on the world's financial beaches<< Note that these sand castles are NOT the mortgages that homeowners might default on. Those are bad enough, but at least there is substantial equity to recover. The problem is the derivatives and hedge funds that used the expected stream of payments as security for vast investments backed by only pennies on the dollar. By pennies I mean that a two or three percent adjustment in property values can completely wipe out billions of dollars in pension fund assets. Trillions, actually. We are going to see lots of blame for homeowners who "buy homes beyond their means." It's a lie.

>>these payments were non-taxable<< Settlements received as a result of physical injury are non-taxable, but there was no injury to these particular recipients. Now, what about restitution? Can they deduct the repayment of such previously-taxed income? I say no, because the income was not received under a claim of right so Section 1341 doesn't apply.