jainen

>>he will qualify for HH if he provided more than 50% support for the child<< In my opinion, he can claim the child even if he provides no support whatsoever (assuming he meets the requirements). He can claim Head of Household without regard to his amount of support except housing costs (assuming he meets the requirements). But in my further opinion, there is not enough information in this thread to determine anything at all.

>>Why doesn't the January to November 2009 qualify the foster child?<< Because I misread the post and didn't notice that it covered two years, that's why! Just like with my own clients.

>>the rules... << Those would, I presume, be the rules this war hero agreed to in writing, before he decided he didn't have to follow no stinkin' rules. The rules that maintain the character of the neighborhood he thought would be nice to live in. Sorry, I'm a veteran too but I don't like it when someone says their service means they don't have to get along with their neighbors or honor their agreements. It's not what I fought for, and not why I display the American flag.

>>a foster child must be in the home all year<< My understanding is that an "eligible foster child" (placed by government agency or court decree and treated as the taxpayer's own child) qualifies with the same rules as a natural child. That could be either qualifying child (more than 6 months) or qualifying relative (any period, since she is deemed to be a relative). Otherwise, an unrelated person would have to live there the whole year. In your case, the child did not live in the home long enough to be a qualifying child. Frankly it sounds to me like an emergency protective placement, not treated as taxpayer's own child. I would guess the exemption is not available.

>>for the long term homeowner category they had to have the SAME residence<< Yes, it does say "Both spouses must have owned and used the same previous principal residence for five consecutive years out of the 8-year period ending on the date of purchase of the new principal residence to qualify for the credit." But in my REAL opinion, that may not be true. Remember that IRS pubs and instructions count as very little authority. But Code Section 36, with full authority, puts it this way. "In the case of an individual (and, if married, such individual's spouse) who has owned and used the same residence as such individual's principal residence for any 5-consecutive-year period... " Contrast that to the wording on the original credit, "The term first-time homebuyer means any individual if such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence during the 3-year period... " In my opinion, you could make an excellent argument that although the original (first-time) credit required that both spouses qualify, the new (long-term) credit requires only one of the spouses to qualify. I read it as, in the case of the spouse of an individual who qualifies, the spouse also qualifies. How would you feel about asking your client to be the test case?

>>it was an ex-irs agent<< I can understand why he no longer works for the IRS. In my opinion, his equation is not based on the current tax code.

>>She doesn't qualify for 1st time buyers, but may qualify for long-time resident.<< In my opinion, based on the IRS Q&A at My link, she could not be eligible for the credit regardless of her dates because she did not have the SAME residence as her new husband.

>>in theory will reduce the amount of time needed to attend college<< NOT TAX One of my kids went to college with a bunch of advance placement credits. It was great in the beginning--he skipped several general ed lecture hall courses. Then half way through his senior year they tried to cut off his financial aid, saying he should have already graduated and they weren't going to support a flakey permanent student! He had to prove that the high school work wasn't the right classes in the right order to meet degree requirements.

>>a sensible worksheet for tracing Mortgage Interest?<< No worksheet but the best explanation I know of for allocating interest is in Chapter 4 of Pub 535 at http://www.irs.gov/pub/irs-pdf/p535.pdf, starting with "TIP: The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds." In my opinion, that's pretty sensible. [And may I add, I always appreciate the rare occasions when the IRS gets sarcastic!]

>>I just wanted someone elses opinion<< Well, you got THREE opinions--and only one of them agreed with you. Now what?

>>I hate it<< Yeah, I know what you mean--I hate snow too. I always turn the channel when they show it on TV.

>>Taxpayer's AGI is higher than half of parents AGI on joint return<< In my opinion, based on the unpopular activity of reading the instructions, you are correct. In fact, Pub 596 at http://www.irs.gov/pub/irs-pdf/p596.pdf addresses your situation directly with Example 8 on page 18.

>>these odd cutoff dates are extremely difficult to keep track of<< Would you have advised the buyer to turn down this very highly motivated seller because maybe someday Congress would pass some tax credit? Would you say it cost him another $1500 in credit because he didn't install energy efficient windows? It seems to me the buyer got a great deal, exactly what he wanted when he wanted it. Tax credits were never a part of it anyway, according to the original post, so what in the world could be "too bad" about it?

>>It cost them $6500 in credit<< I don't agree with that conclusion. The potential credit did not and could not exist at the time of the actual purchase, and the actual purchase did not and could not exist at the time of the potential credit. In my opinion, major decisions like buying a house should not be based on tax effect, and looking back at what tax effects might have been if the laws had been different does not get you any useful conclusions.

>>the estate's executor, who was a child of the decedent<< I'm sorry. I did not understand the executor bought the property. As I read the original post, we were talking about a beneficiary. In other words, the related person rule is not about the decedent. It's the estate and ANY beneficiary.

>>Sweet<< Yeah, ain't America great!

>>it was a bad time for him to marry<< I don't know about that, but I wonder what SHE expects from a deadbeat. Anyway, to answer the original question, my opinion is that if he is excluding income on a joint return he would need to count all assets and liabilities of both spouses. On the other hand, if he is excluding income on a separate return, I think he would only count his separate assets, share of community assets, and any assets transferred to his wife.

>>I've been reading all morning<< What have you been reading? In my opinion, Section 36 is quite clear about the definition of related persons when it refers to Section 267, which says that an executor of an estate is a related person to a beneficiary of that estate. I suppose you could construct an argument that your client was not a beneficiary because he disclaimed all interest, but I wouldn't be comfortable with that unless you could support it with a court ruling or two.

>>Would you deduct motel, food and rental car as medical expense?<< In my opinion, these are probably not deductible as medical expenses. It does not seem to me that the patient's travel was for the purpose of obtaining medical care, even though she needed to change her schedule. Since the patient was already in the hospital before the lodging cost was incurred, I don't see how you can say such lodging was needed because the patient could not travel alone. But in my opinion other facts and circumstances MIGHT support the deduction for lodging, not to exceed $50 per day. As far as I know meals are non-deductible in any case, and I am not aware of any authority to deduct transportation costs of a spouse who is not getting medical care. In other words, the reason the pub did not fit the bill is that it does not fit the bill.

>>I just need some one elses opinion<< My apologies! I didn't understand your post to mean that you were looking for one particular opinion. The sarcasm I closed with followed the tone you yourself opened with. But I am serious concerning reasonable cause.

I admit this is a bit beyond my price range anyway, but if you were able to afford a pearl necklace costing $60,000, would you just order it online at costco.com? http://www.costco.com/Browse/Product.aspx?Prodid=11252771&search=pearl&Mo=28&cm_re=1_en-_-Top_Left_Nav-_-Top_search&lang=en-US&Nr=P_CatalogName:BC&Sp=S&N=4000047&whse=BC&Dx=mode+matchallpartial&Ntk=Text_Search&Dr=P_CatalogName:BC&Ne=4000000&D=pearl&Ntt=pearl&No=12&Ntx=mode+matchallpartial&s=1&topnav=&Nty=1&s=1

>>a straight forward business<< I'm not familiar with that concept; could you please elaborate? I would guess that FedEx offers quite a bit of help to their franchisees, including important matters such as documentation and complying with Homeland Security and local regulations. I recommend the Quickfinder Depreciation Handbook at www.quickfinder.com because you will likely have complicated problems like leased vehicles, intangibles, and Section 179. The IRS published MSSP audit guides for taxicabs and the trucking industry which probably have some relevance. In my opinion, all employee matters including accounting should be handled by a regular payroll service.

>>"Filed pursuant to Rev Proc 2003-43" And it will fly.<< In my opinion, that procedure requires more reasonable cause than "Why don't people just come to the accountants first?" The original post doesn't explain WHY the attorney didn't file the 2553. Anyway, I understand that New York needs a separate election, so (according to the instructions to the form on which to make the election) "To be effective for the tax year, file Form CT-6 at any time during the preceding tax year, or on or before the fifteenth day of the third month of the tax year to which the election will apply." Maybe people don't come to accountants first because accountants don't know the answer either.

>>The parents do not qualify for the credit<< Oh, sorry. I didn't notice the wording was changed a little bit when they edited it for 2009. Try Scenario S2 at My link

>>title insurance, attorney fees, appraisal fees, inspection fees, settlement fees and $3,000 mortgage insurance<< In my opinion, based on IRC Section 36, "The term 'purchase price' means the adjusted basis of the principal residence on the date such residence is purchased."