Gail in Virginia

On 1/1/2022 at 11:34 AM, mcb39 said:

One of them is working with me now.  And, what a blessing she is.  She has amazing work ethics and this is her chance to really learn the ins and outs of this business.  She loves it, as do I.  Therefore, she is helping me in so many ways and I am teaching her.  She is half my age so someday she will probably be sitting in this chair.  She is absolutely in awe of how varied and complicated tax preparation can be.  I am very thankful.  Extra bonus:  my clients love her.

I would love to find someone like that!

I agree with Catherine and Yardley.  I will accept the information, but not discuss it, from their hairdresser or whoever.  However, if they want to have that same person come in to pick up the completed packet I will need a signed disclosure form for that.  i see a difference between them choosing to disclose and me disclosing.  And of course, if someone else is going to sign the return that is another kettle of fish entirely. 

I love the quote you used under these tax court opinions!

I thought one of the worst things about it when I took the exam was that you had no access to a calculator.  I was used to working on scratch paper so that was only so bad, but it did slow down the process and cause me to stress about finishing in time.  On the other hand,, there were a few questions that were identical to previous years' tests that I recognized and could answer without any work at all. 

My understanding at the time was that the curve existed so they could control the number of EA's admitted to practice in any given year.  Basically, they decided how many new EA's they wanted, and then set the passing score accordingly. And I think at that time you had to pass two of the four parts, and get within so many points of passing the other parts to avoid having to take it all over again.  And testing centers were at IRS offices, proctored by IRS employees. 

I don't know which way to take the exam is harder - just that it is different now.  Here's to your success, Terry D!

It is hard to argue with people who believe dis-information.  Not sure where he got his facts.

I don't think there is an "adjustment."  Withholding taxes are treated differently on the 2210 than estimated tax payments.  Estimated payments are counted in the quarter they are paid; withholding is treated as though it is paid evenly through out the year regardless of when the income was received or the tax was withheld.  I use my Christmas "bonus" this way so that the withholding on my December check will cover the extra payment for any other income during the year - profits, dividends,stock sales, etc.  Sounds like what you do, Margaret.  I think Christian is just saying that he can adjust what he has his client pay in estimated taxes by having a larger amount paid in from the RMD in December. 

I believe you are overthinking this.  I think the 2019 could be used in 2020, but has no bearing on 2021 even if it was used  to calculate the  2020 return.  I think.

A 709 is for gift tax returns.  Once the person is deceased, they can't make gifts- the property would transfer by inheritance. The basis  would have been reported on the 706 the previous year, even if it did not transfer until this year.  Not may area of expertise, so if someone knows different I am willing to learn something new. 

I would not touch this one with a ten foot pole, and that includes the spouse. However, the penalty for the withdrawal from retirement accounts will occur in the year in which the withdrawal occurs.  So if I were his spouse, I would not file a joint tax return with him in that year,  or ever again for that matter.

5 hours ago, JackieB said:

He does have full custody of this child. 

If he has legal custody of the child, I don't think this is even be a question. If he has court approved physical custody of the child,  I again don't think there is any question.  But in any event, Taxmann seems pretty certain that the step-child relationship is still in existence. 

I think (although could be wrong) that you can continue to use the same EIN but you have to file an 8822-B indicating a change in the responsible party if the shareholder who was the responsible party is no longer involved for whatever reason. 

13 hours ago, Sara EA said:

Prior to EIP3, you could go to irs.gov and look up your EIPs.  Years back you could also look up special credits with an IRS tool.  Wishful thinking here, but it would be great if IRS would make both payment amounts available online.

The difference is that before you could look up such information with only a minimal amount of identifying information. Now, you can still look it up but you have to do it through your IRS account and it requires a lot of shared information to be able to establish your identity OR you have to wait for something to be mailed to you to establish your access.  So that makes it less accessible and useful to us, but more secure for the taxpayer.  Life is just full of these little trade-offs. 

I am not sure  how  clear it was that the card was  from the IRS.  It is an actual bank card, although I forget the name of the bank.  I don't often see actual credit cards in the mail as a solicitation to open a new credit card account, but I used to and I suspect other people  did as well.  I always shredded those, so I could  see myself shredding this also. 

Is there any way to round or truncate basis on something so that $1 of income is carried to the front  of the return?  I  think that would allow you to e-file without making a tremendous difference in carry forwards. 

Thank you.  It appears we are still waiting on guidance for that part of the law.   And apparently it is income to me since i deducted it.  First time it has ever been more than a couple of dollars for me.

I received a refund check from the health insurance company that serves almost everyone in this region because the premiums collected were more than the benefits paid by more than the allowable amount.  This is not income to me, but I assume that it does reduce the amount that I can claim as an itemized deduction or SEHI on my taxes. My question, really, is for those who pay no premiums because ACA  completely covers their insurance.  Is this a taxable event for them when they get back money they never paid in the first place? 

I have had at least one client who swears she did not get the second stimulus payment, and actually looked at the bank accounts to check,  but got the letter from the IRS saying that she did.  When we checked, they had issued the payment as a debit card.  Once they have done that, the only recourse is to contact the "bank" that actually issues the debit cards for the IRS.  She did that, and they reissued the card, but after she activated the card, it showed a zero balance.  And apparently it is impossible to talk to an actual person to get anything cleared up.  This is a huge waste of my time holding their hand through all of this. 

I am sure that will help in catching up on the paper backlog they currently have. /S

20 hours ago, G2R said:

Thank you for the reply @Lion EA  & @Gail in Virginia -- Originally I was told the LLC was a C-Corp and I'd never seen an S-corp own a C-corp so I was curious how reporting that information would work. I finally got a copy of the actual K-1, and it's an LLC taxed as a partnership, NOT a C-Corp like they said.    

But for future reference, if the S-Corp DID own a portion of a C-Corp, I assume the dividends would simply be reported through the 1120S K-1 right?

If an S-Corp owns a C-Corp, and the C-corp pays dividends out of retained earnings, then the C-Corp would issue a 1099-Div to the S-Corp, which would in turn issue a K-1 to the S-corp shareholders reflecting those dividends.  I think that is what you were saying.

I find the question a little confusing.  If I am following, the sub-s owns the LLC.  The LLC has elected to be taxed as a corporation.  I am assuming it  is taxed as an s-corporation since a k1 was issued.  In my experience, most owners of entities taxed as s-corps pay taxes on the amount reported on the k-1, and any amounts received are usually distributions rather than dividends.  If they are dividends, they should be reported on a 1099-DIV and taxed as dividends.  If they are distributions, they may not be taxable at all since tax on the profits earned was paid based on the k-1 at the time the profit was earned by  the LLC. 

I filed a final return for a client last year (2019.)  However, in the rush of tax season 2020, I filed for an extension for this client's S-corp even though the corporation had been closed the preceding year. Will this cause a problem?  Do i need to file return with no information marked final again?  I would like to just forget it but also don't want this to be an issue for this client in the future.

Wow.  And for how many years have we been hearing that IRS is looking for sole shareholders to take reasonable compensation, telling our clients that,  and yet never seeing any evidence that  they are auditing for that?  I guess they weren't really - just trying to scare more honest/frightened  people into paying up voluntarily while those willing to take their chances  continued to get by. 

13 hours ago, Corduroy Frog said:

 I need to know whether I'm going crazy and need to quit.

I don't think that in this business being crazy is a reason to quit - I thought it was a requirement?

I have one that just surface yesterday that she swore she did not get the second stimulus payment for anyone in her family.  IRS finally issued her refund for the amount calculated less the stimulus we claimed. She finally admitted she GOT A LETTER saying they sent her a debit card, but still says she did not get the debit card.  Maybe she did, maybe she didn't -mail has been a little iffy especially last December and January.  But if she had told me she had the letter to start with, it would have been a whole different procedure to try to get the money for the stimulus.  Some days my head hurts.