Patrick Michael

They would be a 501(c)(7) so there would be no deduction for dues paid. I'm trying to convince them they should pony up the money to get the determination letter but they are a bunch of tightwads and can't see the benefit. Maybe when I tell them it will $1,000 every year to file to an 1120 as opposed to nothing to file the 990N they will come around. Thanks Max.

A friend who is the treasurer of a social organization (retired law enforcement personnel) asked me about getting tax exempt status. I have never dealt with this I am wondering if they need it. They are a not for profit corporation in NY and their income consists of about $20k a year in membership dues and about $25 a year in interest on a savings account. They host 4 lunches a year and most of the dues go towards the lunches and placing memorial plaques for fallen officers. From my research it looks like they would qualify as a 501c-7 organization and would have to file a form 1024 to get TE status. The board is balking at the $850 fee for the initial determination letter and was wondering what would the consequences be if they did not file for tax exempt status. Would they have to file an 1120 every year if they did not get TE status and (since I do not do 1120's) would there be any tax due if there net income for the year was under $2,000? Thanks in advance for any input.

When I took the test several years ago there was a guy next to me, not sure what exam he was taking, and every question was followed by a heavy sigh and pencil tapping. I finished, took the survey, said a prayer to the test gods, and pressed the key to grade the test. After what seemed like an eternity (but was probably about 20 seconds, it popped up that I had passed. I whispered "YES" and the sighing guy looked at me and muttered "A Hole".

I also took Part 2 first. I had a lot of personal tax experience and almost zero business experience so I wanted it out of the way. I took part 1 next and it was a breeze. Part 3 was not bad either as long as you know the basics of Circular 230. Good luck to you.

Would they be eligible for the $20,000 pension exclusion in NY?

What they really should do is do away with EITC totally. The article does not mention the millions (maybe billions) of EITC fraud that does not involve identity theft. I'm sure I'm not the only one who has had the client who wants to use his brother, sister, grandchild, or other relative to claim EITC because the parent already has enough qualifying children to claim the maximum EITC. Or the bogus Schedule C income or "lets not claim that expense" to increase the EITC. I throw these people out of my office but I'm sure they just keep on shopping until they find someone who will do it or learn how answer the questions "correctly". If the government wants to help these working poor, find a way to do it that does not involve the tax system and is easier to verify.

If the products are for resale the seller should make sure he has a resale certificate from the buyer. The resale certificate can be accepted at face value by the seller and shifts the burden of proof to the buyer in case of an audit.

Bought a new snow blower and in large, bold type there was a warning "WARNING. DO NOT OPERATE SNOW BLOWER ON THE ROOF". After reading it, all I could see is some idiot hauling his snow blower onto the roof and then falling off. Must have happened for them to put the warning in the instructions.

First time I have had to file a 1045 and it can't be a straight forward one. Client was single in 2015, the year of the NOL, but MFJ in 2013, the carryback year. In the carryback year client had wages, a pension and a Sch C that showed a loss. His wife's only income was from a Sch C business that had a small profit. A small dividend and small LT capital loss was their only other income and they have two children. So if I'm understanding it correctly first I have to figure out their respective tax as if they filed separately to determine how much of the MFJ tax after applying the NOL belongs to my client. Am I correct in giving each one of the children and splitting the itemized deductions, dividend, and capital loss 50/50 when doing the MFS computations? Doing this the wife ends up with no taxable income so I assume 100% MFJ tax after applying the NOL belongs to my client. I am also a little confused about the "Before carryback" and "After carryback" columns. Do I use the numbers from the original MFJ return in the "Before" column and the MFJ numbers after deducting the NOL in the "After" column or should I use the client's MFS numbers? One last question (hopefully). Since all of the SE tax belongs to the wife do I include that amount on line 25 (SE tax) of the "After" column? Thanks.

Client received a 1099 from Draftkings with an amount in box 3 (other income). The amount was equal to his winnings for the year less his entry fees. Now that several states (including NY, where client lives) consider fantasy sports a form of gambling, can other gambling losses be claimed on schedule A, up to the amount of fantasy winnings. From what I found during a Google search there seems to be disagreement as to whether or not gambling losses can be deducted in this case. Just wondering what others think and if anyone else has run into this and how they handled it.

Thanks Judy and Terry.

When carrying back a NOL do you have to go back two years or can you can go back to the last year only. For instance, TP has a NOL for 2015. Can you apply the NOL to 2014 (which will use up the entire NOL) or do you have to go back to 2013? Thanks.

Thanks to everyone.

They were never married, just lived together. Does the portability election still come into play?

I do not normally prepare estate returns but am trying to help out a friend whose significant other passed suddenly in October of 2015 leaving him in a little bit of a financial mess. The attorney handling probate opened an estate and obtained an EIN and my friend has been named executor. A letter from the IRS indicates that a 1041 must be filed by 04/15/16 but from what I read the first year can be any period one year or less. So my first question, does the 1041 need to be filed by 04/15/16? To date there has been no IRD and he does not expect any to be received. Second question, should a zero 1041 return be filed even though the filing threshold of $600 gross income has not been met. Lastly, the only assets in her estate is a small bank account, motor home and residence, total value about $250,000. Does a form 706 need to be filed even though the gross estate is less than the exclusion amount? Thanks for the help

The pension did start to make payments, but the judge ruled the payments were wrong. Client had to write a check to make up the difference on the past pension payments and future pension payments will be increased the new amount.

Thanks for the replies, it was pretty much what I was thinking.

Client was divorced in 2013 and as part of the settlement spouse received part of his pension under a QDRO. In 2014 spouse went back to court and the had the percentage of the pension subject to the QDRO increased and the judge ordered my client to pay about $5,000 for the pension payment spouse should have received in 2013 and 2014. Client wrote a check for this in 2015. Client believes he should be able to deduct this because if the distribution came directly from his pension payment it would have been reported as his wife's income and not his. I can not find any authority that allows this to be deducted. Has anyone else come across this.

Just figured it out. You have to enter "ND" for property type.

Client sold residential real estate. It's my understanding that the land potion of the sale should be reported in Part 1 of form 4797 and the building portion of sale should be reported in Part 3. I can get the building to Part 3 but can not figure out how to get the land to flow to Part 1. Sure it's probably something easy but can not figure it out. Thanks for the help.

I read the contract and it's definitely a land contract, not a rent to own. And I also believe they will owe since they were depreciating the property. Thanks for the replies. As a one man show it's nice to have so many knowledgeable people to bounce things off of.

New client sold a home using a land contract in 2010. Client still has a mortgage on the property and has been making the mortgage payments. Former preparer had been using Schedule E listing the payments from the buyer as rental income and then deducting the mortgage interest, property taxes and homeowners insurance payments (all payments made by the client, the seller) along with depreciation. Never dealt with a land contract before and my research leads me to believe this should have been handled as an installment sale on form 6252 with the interest received being reported on Schedule B and the interest paid on the mortgage deducted on Schedule A as investment interest expense. But I can not find anything on how to handle the real estate taxes and homeowners insurance. My feeling is, since the sellers are still the legal owners of the house and obligated to make the tax payments, they should be able to deduct them as real estate taxes on Schedule A and the homeowners insurance is a personal expense and not deductible. Am I missing anything? And should amended returns be filed back to 2010 even though the statute of limitations has past for 2010 and 2011? Are the returns considered to be a "false or fraudulent return" even if the tax payer had no idea they were wrong? Thanks.

As long as the educational institution is eligible to participate in a student aid program administered by the U.S. Department of Education I don't see why not From Pub 970 Maximum credit Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $130,000 if married filling jointly; $65,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable Nonrefundable—credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available for an unlimited number of tax years Type of program required Student doesn't need to be pursuing a program leading to a degree or other recognized education credential Number of courses Available for one or more courses Felony drug conviction Felony drug convictions don't make the student ineligible Qualified expenses Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2015 for academic periods beginning in 2015 or beginning in the first 3 months of 2016

Can't file separately as he would loss the education credit which is more than the shared responsibility payment. He would not have had any shared responsibility payment if he could use his income only for the affordability calculation during the time period he was single. I was hoping for some type of alternative calculations in this case. I couldn't find any while researching it and was hoping someone here might have something. Oh well, guess it's time to give them the bad news.

Client was working part time while going to school, had no insurance from January to October. He was married in October and went on his new wife's health insurance as of 11/1 (wife had insurance for the whole year). Client would have been eligible for exemption based on affordability based on his income only, but when combined with his new wife's income he losses the exemption. Is there any exceptions to deal with this situation or are they stuck with paying the shared responsibility payment. Thanks.