Cyclone

Has anyone caught wind if the president intends to sign it and when? I would like to think he wouldn't dare veto it. I bet the truck dealerships will be busy this weekend now that business owners aren't limited to a $25,000 Section 179.

So just curious, are we allowed to hold off efiling a 2013 return until the IRS re-opens it in January. I forgot about this shut down and just had a client sign a Form 8879 for a 2013 return. I received an error when I tried to efile it and that triggered me to search this forum. Do I need to have them come back in to sign the 1040 page 2 or can I just attach the Form 8879 with their signatures to the 1040 if I decide to mail in the return. They are getting a refund but it will be garnished so the client's are not in a huge hurry.

This is a weird one I have not come across before. I have a client who brought their parents over from Jordan in Feb 2013. The parents are US Green Card Holders (permanent residents). The only income the parents had for 2013 was from the husband's Social Security in Jordan. Jordan did not withhold any Jordan taxes on the income. The total social security income received (after converted to US dollars) amounts to about $27,500. The parents do not have a house in Jordan and will be living in the US going forward. I did some research and attached what I found. It says that Foreign Social Security payments are generally taxable by the country making the payments (which would be Jordan). The US does NOT have a tax treaty with Jordan. It appears that if I file a US 1040, the income is reported on Line 16a (Pensions) with a code FEP next to it. This results in them owing about $ 800 since no Jordan taxes were withheld and therefore I do not believe they qualify for any Foreign tax credits to offset that. I am thinking that a Jordan tax return needs to be filed to report the income and a US tax return is not required. If a Jordan tax return is not filed then I am concerned Jordan could come after them wanting their revenue. I would request the parents contact someone in Jordan to complete that return if one needs prepared. Has anyone had any experience with Foreign social security? Taxation of Foreign Pensions.pdf

I know the IRS is obviously fund deprived but I think it is unacceptable that when a taxpayer calls the main IRS line 1-800-829-1040 that they are told "We will not answer tax questions after April 15th. Please try to find your answer on our website". How can they expect people to file accurate returns when they can not get their questions answered, granted they may not have gotten the correct answer from the IRS staffer to begin with but at least they got to talk to someone. There are obviously plenty of situations out of the ordinary that are not covered on the IRS website and still plenty of people that do not have access to computers.

Thank you for the help Tom and KC!!!

The majority of the Corp returns I do are S-Corps and I am working on a 2013 C-Corp return which I am not as fluent with. The C-Corporation owed income taxes for 2012 and paid them in 2013 from the business bank account. No estimates were paid by the C-Corp for 2013.. The client had entered the C-Corp prior year income tax payments into Quickbooks as a deduction. The Corp made over $250,000 so I have to complete the Sch L, M-1, and M-2. Since I do not believe the Federal and State tax payments for the previous year are deductible by the C-Corp should I enter it in as a non-deductible expense on the Sch M-1 so the balance sheet items will tie with Quickbooks? Just to confirm, prior year C-Corp state tax payments are NOT deductible on the Federal C-Corp return like they are for individuals are they?

That is a very good point. My client is trying to track down the old tax returns so I can determine how much depreciation was actually taken on the properties and get the other numbers I need. I really appreciate your reply. Thank you.

I have a client that recently lost their spouse. They had a property they owned jointly together. The property was a house but not their main home. They had acquired it back in 1997 using a 1031 exchange and had rented it out for a few years but then decided to make it their vacation home (2nd home). Both the state where the property is located and the client's state of residence are common law states (Not community property states). They have about a $50,000 capital gain that was deferred with the 1031 exchange. The property has appreciated an additional $20,000 since the time of the 1031. I have done some research and it sounds like the living spouse receives a stepped up basis in the property on the date of death of the other spouse but it is a "partial step up" of half of the FMV step up amount on the date of death since it was jointly owned. If the property had just been in the deceased spouse's name then the living spouse would receive a 100% step up. Here is an example: Original purchase price of rental property in 1986: $90,000 Improvements: $10,000 Value of new property acquired in 1031 exchange in 1997: $150,000 Value of property on date of death of 1 spouse in 2014: $170,000 Sale price in 2014: $170,000 Realtor commissions: $ 15,000 Depreciation taken during years as a rental: $ 35,000 Here is how I calculated the taxable gain: Cost basis of jointly owned property (prior to death): $ 65,000 ($90,000 + $10,000 - $35,000) Cost basis of Surviving spouse (after others death): $117,500 ($65,000 + $170,000) divided by 2 Add Realtor commissions paid to sell property: $ 15,000 Adjusted basis of Surviving spouse: $132,500 ($117,500 + $15,000) Realized gain: $ 37,500 ($170,000 - $132,500) To determine taxable amount: Depreciation recaptured at 25% rate: $35,000 Difference (taxed as Long term capital gain): $ 2,500 ($37,500 - $35,000) Does anyone see any flaws with my logic? I am not positive how the depreciation recapture is handled with a 1031 exchange. I also am not sure if it matters how the property was owned (Joint Tenants in common, Joint tenants with Right of Survivorship,) with regard to the partial stepped up basis. I really appreciate your time to review my long post.

I have always filed extensions for everyone that I had in my office that will not get filed by the deadline. I have several clients that are traveling or for other reasons can't get into sign by the deadline. I have their returns done and they are getting refunds. Just curious do you guys file extensions for people even if they are getting refunds? I plan to but they are at the bottom of the extension pile. I sure hope the ATX and IRS servers stay up till the end but don't want to plan to have to efile anything on the 15th from experience.

I had one where the client's cat had puked up a hairball on the documents. Several that smelled of Pot....I am located close to the University of Iowa (rated the #1 party school in the nation) I had a construction client that said they had several more receipts but they had them on their truck's dashboard and they blew out the window. I think I will deduct latex gloves and Febreeze as a "Necesssary" expense for handling some of these documents. Thankfully I have an office admin that opens the envelopes and assembles the paperwork for me.

Thank you for your reply. The receipts actually total $6,553 and they have 3 kids and wear nice stuff and have lots of toys so I don't doubt they paid over $9,000 or so for them new and the items are probably only a couple years old. ATX is automatically taking it to page 2 of the 8283 (Section B since it is over $5,000). I think I am going to advise they just use $4,999....I agree don't want anyone getting slaughtered. She owns a business and I doubt she wants to risk the goodwill deductions causing the IRS to look at other things.

I have a client that moved and in the process cleaned out a lot of stuff. They are saying the amount they gave to Goodwill amounts to about $6,500. They have the Goodwill receipts with values listed, no pictures of the items donated or anything. On Form 8283 it says that anything over $5,000 requires an appraisal which should be mailed to the IRS with Form 8453. Does anyone know if it applies to Goodwill items? I am leaning towards telling the client we can only deduct $4,999. Thoughts?

Thank you for all your replies. I knew there was the FBAR and Form 8938 filing requirements if the foreign assets exceed certain amounts. I was not aware of some of the provisions of the Foreign Account Tax Compliance Act (FATCA) that took effect in 2010. I guess I will be reporting my client's foreign dividends.

I have a client that is a US resident (Physician) and his only earned income is from the United States and he lived here all year. He previously was from another country and still has family there. He has investments held in his home country and says his account over there paid dividends of about $1,500 (when converted to US dollars) in 2013. He is not filing a tax return in the other country and is asking me if he needs to report the dividends from the other country on his US tax return. He will not be receiving a 1099 of any sort from the investment firm in the other country. I know he needs to do the FBAR filing by June 30th. I have searched and can not find a definite answer on if the dividends from the other county need to be reported on his US tax return. If so, is there any special notes I should put on the Schedule B to report it? I appreciate any guidance.

Good points....thanks