Mr. Pencil

Probably non-deductible. A recommendation or "prescription" from a doctor is not generally enough, unless it is for the treatment of a specific medical condition, rather than general health or safety. But you can be very lenient since you are not able to evaluate a medical condition. Explain the rules and what might happen if the IRS questions it, which is probably not much for the small amount Document your advice on the organizr, and accept the client's decision. . Edit: "treatment" is not the only criteria. There has to be a specific condition, but Pub 502 says "diagnosis, cure, mitigation, treatment, or prevention." If a patient has dementia and wanders, or balance problems and falls down, an alert bracelet would mitigate the condition.

An inspiration to me--time to get to work!

None of it is allocable to goodwill if he didn't file Form 8594. He has to follow the rules to get the tax break! It is a purchase regardless of the wording on the contract. Allocate the total price to the basis of individual pieces of equipment in the same ratio as their fair market values. Use short year accounting unless he started on January 1 or has a fiscal year. Keep a copy of the memo you send him, recommending he have an attorney review the purchase transaction.

New last year. It's fairly obvious, with columns for total income and allocations to each partner. Brief but helpful instructions for making the splits. There used to be a worksheet in Pub 555, plus better instructions, but I've always done it on blank paper for more detail. The rest of the country can generally still use the T/S comparison in your software, unless one or both of the partners is a resident of a community property state. But still take a look; you might find it useful dividing up payments from a joint account or something.

Welcome to the community, and thanks for an excellent question! I hope you stay around and ask and answer some more, because we need a boost in the community property category. I think Joanmcq had the answer for you. Let us know if there is something like a carryover or a suspended loss that affects 2011/2012, 'cause that would take some more thought! Does AZ accept the out-of-state marriage as legal?

I haven't said anything yet in this thread or the original, though I have otherwise been an active and controversial poster since joining last September. I have clicked the "Report" button twice, and both times got immediate action from the moderators. Both times (once here and once in Politics) I felt a post was improper even though it was generally on topic. The report allows a member to give a free-form explanation.

Did he really say "boo boo"? Man, this business gets more technical every year! No, obviously the guy is an idiot who did not bother to prepare for and rehearse his own presentation. Even he admitted it was not reliable. Get your money back.

Why not check with Maryland itself? I know Maryland has at least one form that pass-through entities must file. As always, I strongly recommend getting local legal advice for the specific state before choosing a form of entity (which is pretty close to practicing law). Serve the client professionally, pocket a referral fee for a one-minute phone call, and move on to the next task.

If you want to e-file as an LLC/partnership, you must go through the steps at http://www.irs.gov/Tax-Professionals/e-File-Providers-&-Partners/Become-an-Authorized-e-file-Provider. IRS says it can take up to 45 days after you open the account and submit fingerprints and so on. Why don't you as a sole proprietor contract with the new LLC/partnership to be the e-file provider? You will probably want to have further agreements for use of computers and so on, because it's a nuisance to transfer them in a short year. (As always, I strongly recommend you get legal advice in your own state before forming a new entity.)

Since the EIN is unchanged, I assume the entity is still the same LLC entity under state law (just electing to be taxed as a corporation now). Presumably there would be no reason to change the legal name. It could not, for example, be called ABC, Inc., because it is not actually incorporated. But if they like they could file a new D.B.A. (doing business as) name at the local county building. Then send out the letters KC suggested, and pretty much ignore the legal name.

A totally different approach that is probably more common with early retirement is to restructure the job as an independent contractor. Net income from self-employment can be reduced in ways that W-2 wages can't, such as home office or meals. Although health insurance premiums would not be excluded for Social Security calculations, they still reduce AGI.

I'll take Tabby's side in this. Most of my wealthy clients pay at least 25% more. There are several reasons for this, but not just because they can afford it or to offset somebody else's discount. Wealthy people expect to pay for first class service. Others only want to pay for basics if that's all they need. It isn't much different from telling a shoebox client I must add a bookkeeping charge, except wealthy clients already assume I will do whatever ancillary work is needed. Same with prioritizing. Premium clients may get special treatment in packaging or delivery--whatever they need without worrying about nickels and dimes. They know they can call throughout the year for simple planning questions or an IRS letter without going on the clock, so in that sense the extra fee is like a retainer. In a different view it's like bumping the fee for a troublesome client, except the extra handholding is already assumed. Another common reason for a higher fee is that a wealthy client's 1040, even if simple, may relate to a package of services. Perhaps it has to coordinate with a corporate or trust return. Maybe I throw in a dependent's return without separate charge. Also, even if a wealthy client has a simple return my E&O exposure may be higher, an intangible but real cost of overhead. So, yeah.

I'm sure glad the Obama administration made brokers start reporting basis for us! We will probably see lots of sales this year. Now that capital markets are restored, the next thing will be job creation which is Janet Yellen's specialty. No sense giving all that capital to Chinese workers! Unfortunately, I could never figure out the W-4 planner with more than one source of wages.

Do you really think the calculation will be that simple? I suggest you defer the answer until you have taken an update class and had a chance to study the IRS form and instructions, which haven't been issued yet because it doesn't apply until 2015 and part of the calculation involves the average price of bronze plans, whatever that turns out to be. Yes, like so many recent tax laws, it makes tax planning mighty hard. Is there some reason the client doesn't want insurance? Maybe he enjoys taking risks, so if he will risk his health he surely won't mind risking his tax. Well, never mind. If you must give an incomplete answer, the calculation will use a modified AGI like taxable Social Security, that is, AGI plus tax exempt interest and the foreign earned income exclusion. For self-employment income, I suppose that means whatever ends up on Line 12 minus 1/2 SE tax and any deductions for health insurance or an IRA. It will also depend on the number of family members and the number of months as well. You only count the excess over the filing threshhold, which I think just means standard deduction plus personal exemptions unless kiddie tax is involved.

I just don't know what to say, except there always seems to be more to the story when people complain that government doesn't work. The link goes to a site that requires registration, so I can't see what the burglary victim says about herself; she seems to run a side business doing public speaking and seminars. But here's another story reporting that she admitted she DID get full cooperation from the IRS. http://www.lostcard.com/tax-preparer-issues-warning-to-colleagues-about-identity-theft/. That author runs a data protection service. And here's still another story that says the case was solved by state and local law enforcement after a jurisdictional dispute with IRS. http://www.actionnewsjax.com/news/national/story/WSB-TV-Channel-2-Action-News-viewers-help-bust/YHtLVMc9lkCvmiIgQwBfoA.cspx. That story is by a news channel that wants some publicity for its own role. So, yeah, there's criminals out there, and we all love to hate the IRS. I just don't know what to say.

Haven't heard it yet, but last year when things started late farmers/fishers got a couple extra weeks for their special provision. Maybe what your client heard wrong was that extensions were NOT affected by the government being shut down on Oct 15. On the other hand, ES underpayment penalty is calculated daily, not quarterly, so being a little late probably doesn't make much difference.

No, no, no! I don't what ATX offers, but I'm sure it is not legal protection. Why do we even still have this question? The accounting industry settled it years ago. The IRS is not the problem. It doesn't cost the government anything, so they are not going to be interested unless there are multiple complaints, and even then in the most egregious case it wouldn't be more than a censure. The problem is civil liability. And that is personal--your own house and bank accounts--even if you operate as an LLC or corporation because you can never escape responsibility for your own actions. First, the third party might be injured if they rely on your statement. Suppose you tell or imply to a lender the client is self-employed. You do NOT know that. All you know is that last year the taxpayer filed Scheduled C based on unaudited self-prepared records (or less). Just about anything on the return could well be wrong. Or suppose the lender turns down the loan. Now your client is damaged, and he might not agree that he gave you permission to disclose, even if it was in writing. Did he specify exactly WHAT to disclose, or to whom, or when? Questions like that can be very expensive.

This is an open-ended survey about improving your business. Vote multiple categories, write out your concerns, respond with helpful suggestions. Cheery outlooks only, please! ^^^^^^^^^^^^^^^^ This year I will finally get into trusts & estates. I've never been able to wrap my brain around it, so I'm going to try some very basic learning tools like vocabulary flash cards.

Back to the original post. Bad tax advice, you know?

I wonder why that is.

I don't know--maybe nothing. I'm not the one who said the situation is ridiculous, and I'm not the one bad-mouthing the taxpayer.

Can you believe there are preparers who aid and abet these tax cheats? Sometimes they keep filing for about a decade, even though they think the situation is ridiculous. Sometimes they just like the clients, so they aren't going to demand anything from them as proof. For a fee of course. Such preparers give the whole industry a bad reputation. They're the reason we have Form 8867 in the first place, and the big push to regulate tax preparers. The only alternative would be self-regulation, so it's heart-warming when a preparer is seriously thinking about it.

Live signature is not required. According to the Instructions for Form 8879, "Return the completed Form 8879 to the ERO in person, or by U.S. mail, private delivery service, fax, email, or an Internet website."

I edited the choices a bit.