Mr. Pencil

That is not correct. The divorce settlement is an agreement between the two spouses. It is not binding on the IRS or any other third party. We have no information as to whether the attorney tried to get the loan released, but the lender is certainly not required to do so and typically would not without additional security or fees. So suing the attorney is a long shot, and can't even be done until she tries to mitigate the damage in other ways like filing for innocent spouse. Though no guarantee of success, innocent spouse would be easy and cheap to claim based on fairness and maybe lack of knowledge. But one of the requirements is that she not benefit from the loan. That could be hard to show since the car was part of the property division, especially if she used itr during or after the marriage. At least she must resolve the problem that she was in fact relieved of a legal debt. Meanwhile she can probably get a settlement adjustment or other judgement against him. But that would mean a private investigator would have to find him to serve papers, and she might be better off if he stayed out of her life.

That shouldn't be so obvious. Paying the tax is the simplest solution, so it should be considered a viable option. There are other options, but they may incur accounting or legal fees with no promise of success. Sometimes it is best just to move on. From your position as a professional, don't be too quick to believe her one-sided story. Finance companies don't write off debts without trying to collect them first, so how did this happen? Did they repossess the car? Do you have an opportunity to serve her further, by advising her attorney on tax implications of seeking an amended order in family court?

Thank you for the compliment, but since I haven't read the trust either I don't know the answers to the excellent questions that others have raised here. The relationship between the grantor (before and after death), the beneficiary, the other relative, the trust, the attorney, and of course the IRS is not clear in the brief original post. However, as my regular readers know, a lack of facts is no impediment to my opinions. So I would guess, #1, passive losses are transferred with property and remain suspended until a taxable sale; #2, there is no basis step-up; #3,somebody has to report the income but the IRS doesn't much care who.

Yesterday the Supreme Court declined to hear an appeal of the employer mandate on religious grounds. ACA is such a sweeping change, there is sure to be some adjustments in the courts and legislature. But so far the basic structure has stood up against Constitutional challenges.

Here's what you need to ask an attorney, that you can't figure out on your own. First, whether you are a defendant or just a witness. What information they are seeking. What information they already have. What questions are safe to answer. What questions you are not required to answer. What questions would be unethical to answer. What questions you can demand payment for answering (as an expert witness). What expenses you can demand payment for. How to schedule a reasonable time and place. Whether the interview will be recorded, by whom, and with what technology. And then there are all the circumstances of alleged collusion. Start with your engagement letter (or if none then anything else that explains the relationship, such as correspondence, interview notes, invoice and payments, third-party referrals or info, etc.) Who your client was, one of the partners or the partnership as a separate entity. Whether your services included analysis or advice other than tax preparation. You should get legal advice on all of these things, even if you go to the actual deposition or trial on your own. Your lawyer's fees will be tax deductible, at least.

You need a lawyer, at least for an initial consultation. The reason is because you think that "you have not done anything wrong." I'm not saying you DID do something wrong,, just that you THINK it, Since that thought is a totally irrelevant distraction, you should not be thinking about it at this point. Go talk to a lawyer.

I would guess the agency isn't open to abatement since she didn't accept their amnesty. Ordering and receiving by mail is such a deliberate act I can't imagine what she could claim for reasonable cause. But the penalty is only a few hundred dollars anyway. probably less than the cost of your representation. The rest of the bill is just what she would have paid buying smokes locally anyway (plus interest). So she gambled on saving $3000 but lost $300.

The 2010 return was due in 2011, so three years is 2014.

First find out why the employer sourced it to California. I would guess that the employer is wrong, but there are some reasons why they may be right. There is no easy fix. He can file to recover the CA withholding, but only by reporting his world-wide income. AND there is probably almost $1000 in State Disability withholding, which he can't get back except from the employer. Meanwhile he might have an underpayment to his home state.

He's going inter-state as a sole proprietorship? Well, as I said, even an independent-contractor agent will give him a California nexus. The trade show sponsors themselves will probably balk if he tries to dodge sales tax. He will also need to allocate California source income and file a non-resident return. I recommend he take it easy with the tax agencies so he can focus on sales. Set up a California LLC already. And put the agent on payroll so he can't send his ex-girlfriend when he's too drunk to do the show! Yeah, rule #1 for an independent contractor is you don't get to say who the actual worker is. 3000 miles away.

That is Jack's position, but the flaw is that it blames (or praises) the victim, without holding the perpetrator responsible. Even if I am personally able to shrug off a disparaging remark, another member might still be offended at personal insults to anyone. So let's continue to maintain civil respect.

Thanks, Taxed, but I see it as a simple confirmation of my main point.!

Grown adults can and should have sensitive feelings. It isn't the victim's fault if someone is abusive. This forum allows plenty of leeway for subjective opinions, but still requires civility. In particular, personal insults violate our terms. I don't think there is an exception even if the insult is true. Asking the moderators to uphold our terms is what a grown adult would normally do.

California also has several definitions. The one MAS linked is for unemployment insurance, the most aggressively enforced. What you describe sounds like an employee. But even with an independent contractor, your client will probably be considered to have a nexus that requires registering to do business in California. It's a great market here, but access is not cheap.

Basically, "stocks or securities of one corporation are not considered substantially identical to stocks or securities of another corporation." See Pub 550 for "all the facts and circumstances in your particular case."

I don't know, but it's a good question. I would guess IRS is more interested in a minimum of 100 or 500 thousand (more potential revenue). The biggest issue seems to be the structure. I think IRS is suspicious of the loose accounting in LLCs, and other Schedule C or Schedule E pass-through entities. And I agree. In terms of dollars, I believe those taxpayers underpay far more than the sad self-employed or independent-contractor guys scrambling for EIC.

Yeah, yeah, we hear the same excuses about minimum wage. The FACT is in the line I isolated above--staffing at "fast food and retail stores" is based on revenue, not expenses. That kind of work doesn't take much lead time, so none of those companies are making any serious plans about 2015 yet. It's just the usual WSJ political rhetoric nonsense.

I agree with you on this one, KC! And it is not just our business. Insurance, banking, education--anything based on paper can be computerized to hide malpractice. I don't know the details of this case, why the government didn't file criminal charges. There were four related civil cases against the worst franchisees. But fraud is hard to prove, and this one already took four years. Notice in the preliminary injunction you linked the defendant was allowed to continue full operations for another year.

Nope--they are not continuing to build the case. Nothing more will happen to him. The case is closed, and no one goes to jail. Or even gets fined. Your link is to the preliminary injunction from a year ago. The actual trial was this summer, and now the judge has given his final decision and order. http://rothcpa.com/wp/wp-content/uploads/2013/11/ITS-opinion3.pdf. The 233 pages can be summarized, "Don't do that any more."

Gee, what a harsh penalty! " Don't do that any more."

I'm not sure money is the main problem with federal contracts for computer programming! Let's see. ACA created a political firestorm as a new way to process 11 million applications over six months. Are you suggesting a new way of processing 150 million tax returns over six weeks?

That's good, but warn your clients the IRS computers might question it anyway. No big deal, that's just them doing their job. Make sure you keep the full documentation, showing joint ownership and the distribution/transfer transactions. Also check the boxes for third-party rep, so you can easily respond if they get IRS letters.

That's what I understood because you said Sr. Care Benefit, which sounds generic but is a specific program for veterans. Also, you said 80K limit. I don't know the details but I'm sure they let vets keep more than the Medicaid limit of $2000. And apparently no look back. An estate planner might suggest putting the excess assets into a special needs or other irrevocable trust so it wouldn't count for eligibility but would still be available for her lifetime needs.

I wouldn't say "scrambling." The question was addressed in regulations more than a year ago and has long been before several courts. The legal argument is that residents of certain states want to deny themselves a tax credit.. Really, that's the argument.

The IRS doesn't even claim to be accurate about these things, so it's become just an ordinary part of our business. Simply respond following the instructions in the letter exactly. Include your ACKS, or proof of manual filing.