Burke
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Posts posted by Burke
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Damn, I just tried to go in, and hell if I can't remember my password. I have three different ones I use alot, and can't remember which one it was. Iknow better now than to click 'I forgot my password' because it will reset with my installation code; but its not the code on your paperwork from ATX. Which necessitates a phone call. Oh good! I found it!!!
I think it said you could use any previous year's installation code too. I think this was one of the things I did. Also I got an email from them today saying my password was reset on Sunday, and if I didn't do it to contact them. This does not sound like the "automatic" thing it was supposed to be. And what is the point of it? The only thing you cannot get into is them! I can still use the program, download updates, etc. etc. I just cannot contact Tech support. What a way to run a business.
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still locked out of MYATX since Sunday. Faxed for help 3 times all on different days no reply. Anyone know how to get tech support to answer. Call and wait 45 min. still no answer 2 days. and now still on hold going 33 minutes.
I got locked out too, I think over the weekend. Took me forever to get back in, but finally did by keying in NEW client ID, correct User Name (which I had forgotten - finally found), and new password. When we got software it said you would have to change password every 45 days. I guess mine was up, but there was no "prompt" to change it. Just got frozen out. Sometime with all the input I was trying I think I tried to reset my password. Don't know if this did anything or not. When I put in the correct info, it worked.
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Finding out more; the strategy is that the life insurance grows tax free, and then you take loans against the life insurance. When you die, the insurance pays off the loan. Sec 264(a)(3) states you cannot deduct
"any amount paid or accrued on indebtedness incurred or continued to purchase or carry a life insurance, endowment, or annuity contract (other than a single premium contract or a contract treated as a single premium contract) pursuant to a plan of purchase which contemplates the systematic direct or indirect borrowing of part or all of the increases in the cash value of such contract (either from the insurer or otherwise)."
So this strategy appears to run afoul of this code section. or this section appears to contradict the rules regarding the $100,000 of equity deduction. In any case, it appears to make no sense.
I worked in the life insurance industry for 32 years. IMO, this code section is referring to the practice of using cash value within the policy (i.e, as a loan) to pay premiums on that policy (or another one.) The interest is not deductible. This can be set up automatically (called Automatic Premium Loan feature) so that it is essentially using its own cash value to pay the premiums. Of course, annual interest is charged and can eat up the cash value if not paid, terminating the contract. At the owners death or when it is cash surrendered, the proceeds are paid out and any outstanding loans are deducted and repaid to the company. It was common practice in the 1980's when bank interest rates were sky high, to borrow all the cash value at a small 5-6% guaranteed rate and invest in CD's that were paying 15-17%. This also is non-deductible personal interest. HOWEVER, in the case you state above, the home equity rules apply and the interest WOULD BE deductible under those rules, regardless what it is used for.
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You can form an LLC or a Sub-S corp for these properties which simply removes them to another tax return, and the income flows through to the TP via K-1's. It is still passive income (Form 8835) but whether this would make any difference on the FAFSA or not, I cannot tell you. It would just go on Page 2 of Sche E instead of Page 1. But it would only be one figure and not a rental schedule.Mid to Low Income SE clients have 5 Rental properties as well as a Taxidermy Business and a Laser Business. They have been denied FASFA Student Loans for their daughter based on the Rental Properties being considered as Assets. FASFA contact tells them that if the Rentals were on a Schedule C as a business, they would not be counted against them to qualify for Financial Aid. How do we create a business out of these Rentals before same issue arises next year.? Is it necessary to create an LLC to contain the Rentals; file a 1065 and thereby move all of the Rental Activity to Partnership Income.; or is there an easier way? -
I tend to agree with you that this is exactly what the seller is talking about from what I can discern. So, what you are saying is, the IDC expense is completely separate from his basis, and deductible regardless of his basis? This was never a producing oil well. The walls caved in, and it was shut down. Therefore, the K-1 is a final and should be treated as a disposition. What is confusing me is that Sect 1254 states that deducted IDCs are recaptured as oridinary income on disposition of the oil or gas well.I think what you are confusing is that there are two different 16Ks here, his initial investment, and this year's IDC. I believe the seller is talking about this year's IDC not the 'investment'. As I see , he has a basis of 16000 - 12000 - 1620 plus a deduction of this years IDC.KC
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I tried this on a return I have. It didn't work. I originally used 2555-EZ and had to override the wages on Line 18.On the W-2 form input page at the top there is a drop down list called "Special Type (Wages)". Click on that and you can then find the "To Form 2555" that Jake told us about. -
Client bought interest in oil well partnerhip Dec 2005 investing $16,000. K-1 for 2005 showed $12,000 IDC. No problem. Elected to write off in one year. After 3 months, well turned into pumping mud, and interest terminated about March 2006, client got distribution of $1,620. K-1 for 2006 shows IDC of $16,000. Seller of investment is telling client he can write off entire $16,000 investment this year. Is there a special treatment of a "dry hole?" Where is this written? I have an old RIA Master Fed Tax Manual which says "deducted IDCs are recaptured as ordinary income on disposition of the oil or gas well," and refers to IRC 1254, which is titled "Gain from Disposition of Interest in Oil, Gas....etc." This will obviously be a loss. Does that make any difference? My view is that he has a basis of $16,000 - $12,000 - $1,620 = $2,380.
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You are absolutely right. He can deduct ONLY his out-of-pocket actual expenses which have not already been deducted as "supplies" or other expense on his business return. And those go on Sche A, not on Sche C, and that's only if he can itemize. He cannot deduct as a bad debt anything he never received. It is lost income, but not for tax purposes as he never reported it or paid tax on it.
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She has probably been doing the returns correctly. Usually, both trusts will terminate at her death, although there may be wording in each trust document that will tell you otherwise. You really need both trust documents (or the will from which they emanated if that is all there is) to tell for sure. Each trust probably has its own assets. One may be paying the income taxes, and the other's income may be flowing thru to the bene. Or not. Again, you need the trust documents to tell the details.A new client just handed me a stack of tax papers relating to her decendent trust. Her husband died 10 years ago and she has been filing 1041's for Trust 1 (decedent/residual) and her Trust 2 in her name for the past 10 years. No wheres does it say QTIP trust so I assume (maybe incorrectly) that this is a marital (A/B) trust. If so, shouldn't this have been dissolved years ago? At least the A portion? That s just her income- why would it be considered a trust? Is this a legal situation and should I refer her to an attorney? You thoughts would really be appreciated. I'm not sure about the proper way to file her returns.Steve M
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I already did that. Two days later. When it went down 3 hours after I had been on it, I attributed it to systems problems and possibly the fact there was severe weather in the Northeast. After 2 days, I emailed tech support. My responder said they had no warning either. It was a "corporate decision." He suggested the suggestion box. I gave them an earful including that I wasn't buying their story/reasoning due to the manner in which it was handled, and that I would reassess whether I wanted to continue the software next year. I have already been pitched the early discount sign-up. Ha! I think I will give them another suggestion. I found the forum to be immensely informative for the most part. I will grant you that some persons seem to love to hear themselves talk, and could wander all over the place and off the subject. I usually did not read jokes, or responses that started off the track and seemed to remain there -- especially arguments. There could have been improvements or some other controls. But they were a small percentage and I miss it. Perhaps this is the answer, and will be better! A colleague recently sent me the site so I just found it. I would like to see it utilized between professionals. Is there somewhere that explains all these things on here? Like UPLOAD, BB code help, etc.
VA Low Income Credit return problem
in General Chat
Posted
I like to start at the top in these cases. CEO of CCH. Try googling company for name of President, then google his name. Write to company.