TheFinanceWriter

Ladies, please, don't pull each others hair. It distracts the rest of us from discovering useful information in these forums.

Back to the original post requesting advice, the statement was made that he wants to file separately. Okay, my advice is to prepare his MFS return. You are not a party to their divorce petition and have no obligation to advise them about the terms therein, such as suggesting filing status or division of the refund. Your obligation is to follow the tax laws. Give the wife written termination of your engagement with her. That removes conflict of interest in proceding with the husband. She doesn't seem to want an engagement with you anyway because she demands MFJ, to which the husband will not consent. You have no alternative other than ignoring the husband's request for an engagement and thus avoid work with both of them.

The situation for mcb39 seems to me like her practice is providing extensive services to a client that is a partnership comprising her husband and sons. The office in home is for her business, not the partnership.

Thanks for adding to my point. You mention many more uses of your space than "merely working at a computer" -- such as meeting with clients, file storage, copying, and binding. Hence, your office seems to deliver the extra utility that demands plenty of space beyond a common operation with fewer elements. I'm more interested in the concepts posted by others that imply your "one non-accounting picture on the wall and a dog sleeping on the floor" could disallow business use of your home. That seems preposterous to me, but of course many features of the tax rules are somewhat preposterous. I'm interested in knowing if you believe that you're ignoring tax law by keeping the picture and the dog.

I understand the part about violation of the exclusivity provision for an area that grants access to another area of non-business use. But, the idea of dividing a room to account for a section of exclusive business use is still possible. For this reason, I find that exclusive business use of more than about 300 square feet by a single self-employed individual is dubious. Anyone with a square office comprising 400 feet has a 20' x 20' space. That is enormous for one individual who is merely working at a computer. Regarding, "the IRS does not allow any personal touches in an OIH for the SE." I am unable to place my finger on the section of the Tax Code that expresses this fact. Perhaps a Tax Court case supports this contention. I would be most grateful for further enlightenment. Thanks.

The insurance exchanges can determine the amount of premium reduction when provided with the taxpayer modified adjusted gross income. Otherwise, the taxpayer may pay the full premium and claim the allowed reduction as a tax credit. I found a good course on this subject at Interestingly, MAGI for 2012 is used to determine the premium reduction for 2014.

Just to clarify, my comment about assessment of a self-prepared return related to the original post, which was restricted to giving "advice about the treatment of a single item." Therefore, no Circular 230 violation exists because a single item is not "substantially all" of a return. Assessing a self-prepared return certainly should not entail "giving a stamp of approval" for the "entire thing." I'm not even sure how approving preparation of everything on the return is possible without actually preparing it using source data, which Jainen correctly points out is an engagement.

Looks like the home office situation is fairly clear from the earlier posts. No deduction unless the home qualifies as the principal place of business for administrative and management activities, which is doubtful for a restaurant operation. As for deducting other expenses, I have this difficulty with many S corp officer/shareholders. The expenses are deductible just like unreimbursed amounts paid by any other employee – on Form 2106. That is, of course, entirely different from unreimbursed expenses of a partner in a partnership. This is an opportunity to prove your value as a tax adviser. The S corp should pay the expenses directly... even if the shareholders must loan the funds to the business.

Further adding to the complexity is asking the taxpayer if there are any suspended losses on the rental property from prior years due to passive loss limitations. By the way, Bob, a good business practice is collecting a small fixed fee from any taxpayer asking for assessment of a self-prepared return. If you find errors, simply report that mistakes exist, without detailing their nature. The taxpayer should then engage you to prepare the return correctly. The assessment simply achieves your opinion of whether the return is accurate.

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I’m very curious about how this matter is resolved. Following a long thread like this one is confusing and I still wonder how the IRS assessment was determined. Is that additional tax owed on the 2011 distribution from the IRA? Or, is it entirely penalty and interest? If the taxpayer received a 1099-R for 2011, then he must have received a distribution that year. The financial institution would issue the form for the year of constructive distribution, not the year that an RMD was required but undistributed. So…if the taxpayer received the RMD, no 50% penalty is assessed for the beneficiary failing to follow inherited IRA rules. Rather, the penalty is for underpayment of tax on the 2011 distribution. Moreover, no 50% penalty is imposed on beneficiaries for simply failing to take the annual RMD from an inherited IRA... if the entire balance is distributed within 5 years. So, this taxpayer can still meet that deadline if no annual amounts have been taken from the account. (Of course, RMD apparently was taken – if the 1099-R is accurate.) I think Kea would benefit from what I discovered in my tax career by studying for the Enrolled Agent exam at [advertising link deleted]. The extra tax knowledge possessed by Enrolled Agents permits them to better conquer complicated situations. Plus, an EA can represent taxpayers with IRS Appeals, which seems like the appropriate channel for resolving this mess. Again, please post how it eventually sorts out with the IRS.