jainen

>>my 8949's do not rollover from 2011<< Why would you expect Form 8949 to carry forward? Absolutely nothing on it applies to the next year..

>>consider moving the funds to another bank<< Always close the account anyway. That's the only way to be sure you stop every caregiver that had used the debit card and every subscription set for automatic renewal, as well as lazy bankers. Meanwhile make a reasonable allocation in good faith so ALL the interest is reported somewhere, in case the IRS wants to know.

>>Ownership of the account was transferred late in the year<< The Instructions for Schedule B explain how to report nominee income. As you say, no problem. Simply issue a 1099-INT to the decedent and another one to the estate after getting an EIN so you can file Form 1041. Yep, that should do it!

>>You are extending the life of the building because with a leaky roof the building won't last too long.<< Same with a busted window! Would you capitalize a termite treatment? Refurbishing something that is worn out or damaged is a repair, not a capital asset. Of course, many a new roof is indeed an upgrade, but I wouldn't assume that on rental property. And I was serious about reducing basis for a roof that was removed prior to adding new basis. That much IS in the regs, but not that a new roof necessarily adds basis.

>>Does a new roof on a rental property ever get expensed??<< Sure, almost ALWAYS! Does it extend the life of the building? No, it just prevents deterioration. Does it make the building suitable for a new use? No, unless it is an upgrade like steel or something. Usually a new roof just means they repaired the old one. In order to capitalize it, you must first remove the undepreciated basis of the old roof. Would that make sense? No? Then you aren't really replacing the roof, are you?

>>That is just normal procedure.<< Yes, because those procedures are established under the code and regs. The difference here is what happens if you underpay in spite of a good faith estimate. Late payment penalty can be abated for reasonable cause, and IRS is saying the delay in certain forms constitutes reasonable cause. Most of those are business forms. Note that abatement is NOT automatic. You still need to request it citing the notice as authority..

>>the information flows to their personal return<< Sure--just type in the numbers and the computer will put 'em in all the right spots! That's exactly why this was not an elementary question. It's not about math, which the software takes care of (after the fact). It's a tax theory question, for tax planning. There are lots of ways to structure business income. For example, this taxpayer takes a salary in spite of her overall loss. None of us could explain all the tax implications of that off the top of our head. Even if we could, not in terms the client could readily understand. That's why IRS gives us tools like the worksheet. Because, hey--EIC has an AGI phaseout, and that's something a taxpayer needs to know about.

>>explain it in plain english<< IRS won't charge late payment penalty this year, IF your return has certain forms, mostly credits (including education and energy credits) or passive losses (rentals) AND you make a good faith estimate AND PAYMENT with a timely extension request. There used to be a similar rule for all returns, but IRS gave up enforcing the "good faith" part. Back then it meant you were within 10% of the final number.

>>such an elementry question<< It was a good question--nothing about pass-through entities is elementary (except spelling). Earned income means different things under different provisions of tax law, and with more IRS scrutiny of EIC it is prudent to ask for advice.

>>if I need to include the ordinary business loss, than she will be at a loss with no earned income<< Use the EIC worksheet in the Instructions for Form 1040 or 1040A. The pass-through loss will reduce AGI, but not earned income.

>>ATX calls the atty fees "non-business"<< What do you call them, and why?

>>Sr pastor does not like the results<< I can't resist a chance to play Devil's advocate in advocating for the Sr. pastor! The original post does not actually explain what might be wrong. "Housing allowance" is not a magic password. There are certain rules that a church might have failed or might not even want to meet, such as designating a specific dollar amount prior to payment. Church officials would be in a good position to know, so I wouldn't second guess the decision.

>>I want to make sure he is not getting two benefits.<< I would encourage taxpayer to not try to squeeze out every dollar on this unless he has excellent records. If he deducts mileage allowance for business use then 100% of the lease payment is a taxable fringe. If he only deducts actual (business percentage of non-reimbursed maintenance and operating costs), then personal percentage of the lease is a taxable fringe. In fact, that second part is true in any case so I would guess your client is better off not mentioning the car at all on his tax return.

>>is this not a very successful strategy?<< I expect it is. In my observation IRS is generally lenient about abating penalties, and this waiver is built right into the form and instructions. IRS doesn't want the bad publicity of punishing someone's grandmother for living frugally when the mean ol' bankers trick her into keeping her money. A good faith effort to comply is all they are looking for.

>>Client sold insurance agency.... Said it was just buying the commissions and they should be reported by seller<< There seems to be some disagreement on this important point, so find out what the contract actually says. I'm not much impressed with the credentials because taxation for a major corporation is just a tad bit different. Still, she's probably right--and residuals are almost certainly SE income.

>>he could sign a waiver form that exempted him from taking the distribution<< Close, but not close enough. The form undoubtedly only said he waived the distribution from THAT bank because he would satisfy the RMD requirement at ANOTHER bank. (He can take his RMD from any combination of IRA accounts, but the total still has to add up.) If you're a big jerk like me, add .a 50% penalty. Most preparers would probably let sleeping dogs lie. If you want to make sure IRS notices, tell the client to immediately withdraw the amount and request a genuine waiver (due to bank error). See the instructions for Form 5329 Line 52.

>>Client brought in broker statement from the Unless that statement looks a lot like Form 5498, the money was not rolled over into an IRA. In that case, you correct it with a private letter ruling citing error by the financial institution.

>>does a "Letter of Medical Necessity" (client's phrase) count?<< No, at least not on Schedule A. A letter of Medical Neccesity only works for the much broader limits of a flexible spending account. For itemized deductions, Pub 502 says "A prescribed drug is one that requires a prescription by a doctor for its use by an individual." The single exception is insulin. That definition is not an interpretation or policy. It is taken directly from the tax code itself, Section 213(d)(3). Revenue Ruling 2003-102 explains that the statutory exclusion for reimbursements of employee health expenses is broader than the itemized deduction for medical expenses (which does not apply to nonprescription drugs).

>>the US post office has the same policy they will refuse service if you are on your cell phone.<< Fight back! Refuse to accept delivery if the mailman is on a cell phone.

>>to correct a roll over that was reported incorrectly on the 1099-R<< What did it say and what should it have said?

>>But she still doesn't own the apt.<< What is "ownership"? In legal terms it is a specific bundle of rights, things you are allowed to do with property (but excludes other rights to do everything you might want). Her leasehold transfers some of those rights to herself, such as the right to live there and have privacy. Even in the form of month-to-month, she has held a lease for 15 years. Section 1241 explains that "Amounts received by a lessee for the cancellation of a lease" are treated as a sale of property. Although that makes sense to me, I'm not going to argue that it's logical. It just happens to be the law, that's all.

>>How can it be a capital gain if she never invested any of her capital.<< No investment just means zero basis. Lots of capital assets have zero basis.

>>just more opinions! Nothing definitive << I agree--quoting Section 1241 of the Internal Revenue Code is just an opinion. Nothing Congress writes is ever definitive!

>>we are talking about overstating depreciation expense for 2007, 2008, 2009, 2010, 2011. So I would think 1040X for each year is required<< Once again I make my standard challenge. Can you cite ANY authority for this treatment, amending returns for five years to correct depreciation? If not an actual reg or ruling, at least an IRS pub or even a standard tax guide. Anything at all?

>>The only legal way to correct a depreciation error is to file an You are not "changing an accounting(/depreciation) method<< This is why IRS thinks tax preparers should study tax preparation.