Mr. Pencil

No, Jack. It was the result of later action in court. The original post was a perfectly good tax planning question. Please don't turn it into a political rant..

The five-year look back is a federal requirement for Medicaid everywhere.

Income below 100% of poverty line does not qualify for a subsidy. I expect this to be addressed next year, along with workers who can't afford qualifying employer plans. It was not the intention of the law and isn't in any politician's interest.

A general definition of conservatism is to retain or restore traditional social, economic, and political relationships. In that sense it is not possible to explain Obamacare to our clients without liberal "under tones." Obamacare is a new understanding of the social contract in America. Government is still exploring it, but socially the uninsured/underinsured are eager to move forward. For the corporations, it's already a done deal.

Don't blame the IRS--those amounts are set by law (Section 86) and do not have an inflation factor. It will take an act of Congress to change them.

I believe this is unconstitutional, I look forward to the conservative arguments about states' rights, because the Constitution says "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State."

You may not have to go to Section 121, because they probably had a non-deductible personal loss anyway. Depending on the DETAILS, maybe you can say the settlement was tantamount to a return of capital. With luck, the IRS won't notice that the taxpayer ended up with XXX dollars, whereas even if the property had been foreclosed at a higher value he still would have lost everything. So the economic substance from that point of view looks taxable.

That's a real clever argument! You will need very complete documentation to pull it off. Was there an actual sale in direct relation to the foreclosure? The settlement money wasn't actually from the buyer, so it's hard to see it as an adjustment to price. But was there C.O.D. income, een if excluded? There was probably a law firm representing the victims; maybe they can give some background on how the settlement amount was calculated.

After I posted this several members have agreed in what I consider too cautious a way. In my opinion, this is a reasonable tax planning engagement for you to take. You are able to answer their specific question accurately and clearly, and have a couple of IRS references to back up and expand what you tell them. Unless the mother is also your client, you have no particular obligation to her. Even if she is your client this factual information about gift tax would not be a problem. As for a look back period, the possibility of Medicaid would suggest she make the transfer as soon as possible. On the other hand, $260,000 will last four or five years in facilities that are a whole lot nicer than V.A. or Medicaid will provide. The government programs basically just take the pension money anyway.

Since the expected estate is so far below five million, the estate and gift tax provisions are irrelevant except for the requirement to file the return. Pub 950 explains the issue pretty clearly, even though it wasn't updated last year.. The Instructions for Form 709 give more technical details. However, be careful not to suggest there are no implications to such a gift. Refer your clients to a qualified estate planner. The mother may well have specific things in mind for her assets, such as charitable contributions, college funds for grandkids, or whatever.

You're tough! Haven't these paranoid Conservatives taught you anything? First of all, the concept of incompetence only applies to government. For everything else, the free market is plenty good enough. And this registration is just the first step--wait until you are required to buy insurance. PTIN really stands for Phederal Taxation Insurance Nexus

I wouldn't assume the foreign system is similar to FUTA. If the taxpayer paid into the fund, it might be non-taxable. Otherwise it might be treated as earnings or as other income, depending on who paid it and why. It also might be exempt under the tax treaty (which is posted on the IRS web site).

Nothing to worry about here. The requirement is only that Health & Human Services has to write a report explaining how they plan to verify income. Anyway, they already wrote it last summer.

It's a bit out of my league (not that that would ever stop me from posting). At least it helped me, in that I discovered I am not one of the three you blocked. I was worried that my political posts were too edgy for a Haybaler. Some of the moderators think I'm an imposter anyway.

That's a GAAP thing, Tom, and pretty rare. Hopefully one of our CPA members is online this time of year. For purposes of the tax return, Section 312(n)(6) says, "In the case of a taxpayer who uses the completed contract method of accounting, earnings and profits shall be computed as if such taxpayer used the percentage of completion method of accounting." In other words, even though you aren't going to tell your stockholders about the income until next year, you still have to pay taxes on it. Does that help?

That is not one of the permissible disclosures under Reg 301.7216-2. The penalty is $250 for each name you provide without client consent.

I was only talking about individuals. I never mentioned religious organizations, but if you insist I could point to many. One very large religion had an official policy of protecting church assets at the expense of victims of child abuse. Several countries have national religions that discriminate against minority beliefs in social and economic rights. It shouldn't be controversial to observe that tax laws are sometimes inconsistent or conflict with other laws. That is talked about all the time in this very forum. For example, yesterday I explained a change in Section 162 for next year. It allows some taxpayers a much larger benefit, is of uncertain effect in prior years, and of course is still completely out of sync with GAAP. We can pretty easily figure out how to advise our clients in terms of Form 1040 or 1120. But the study is looking at the international implications. Since 1980 the U.S. tax system has spurned international accounting standards by giving government benefits to companies that upgrade their equipment. Even within the U.S. that tax strategy has closed some factories, creating social and economic problems. And since those same companies may have factories overseas, such social and economic problems can run against our treaty obligations. From this thread it sounds like some people have not thought about that, so I'm glad michaelmars started this thread.

Unfortunately, the Parable of the Good Samaritan is still very relevant. It is not hard to find religious arguments used to justify denying help to, for example, immigrants, sexually active teenagers, low-income workers, or homosexual couples,

The international legal association that sponsored this study is thinking on a different level. They point out that local tax laws exist in a broad environment of treaty and other obligations, both legal and ethical. They don't draw a line between "evasion" and "avoidance," but talk of abuses which "deprive governments of the resources required to provide the programmes that give effect to economic, social and cultural rights, and to create and strengthen the institutions that uphold civil and political rights." They make a compelling case. "Actions of states that encourage or facilitate tax abuses, or that deliberately frustrate the efforts of other states to counter tax abuses, could constitute a violation of their international human rights obligations, particularly with respect to economic, social and cultural rights." But, again, I guess that some readers can't understand this if they have politics opposed to government regulation and religion opposed to helping others.

We finally do have a de minimus amount for expensing new acquistions! The final regs for section 162 aren't effective until 2014. Supposedly we can also apply them to 2012 and 2013 but IRS hasn't issued instructions yet for making the retroactive election. The maximum safe harbor is five hundred dollars per invoice. The five thousand you remember is only available to companies with AUDITED financial statements and a procedural manual for accounting.

Interesting. Besides bank secrecy, questionable strategies include "transfer pricing and other cross-border intra-group transactions; the negotiation of tax holidays and incentives; the taxation of natural resources; and the use of offshore investment accounts." The idea is that such incentives deprive developing countries of the resources needed to provide basic human needs like food, health, education, and security. The problem has certainly been around since the days of Empire, but it has been receiving some intelligent analysis recently, notably at G8 and G20. The report appeals to widely-accepted ethical norms. I would guess some readers would not understand the issue in terms of opinions expressed regarding the evils of government and the irrelevance of helping others.

Rumors are that Senate negotiators are considering an income verification step for the Obamacare exchanges. I wonder who they could get to handle verifying eligibility for a tax credit.

We knew yours wouldn't be left.

That's to be timely filed. Many taxpayers would have little or no penalty for filing late.

I think the assumptions were reasonable and did not go as far as you suggest. In the original post, "my problem" was stated in terms of the professional knowledge. Details included information stated as facts that required personal knowledge of the tax returns. Even so, I don't see any response about preparing a return. Just the opposite, which we all seem to agree on.