Ringers

Thanks, Judy. Does anyone know about ATX and the IL SA?

I use Pro Series and the users in their forum are having a hard time convincing the "powers that be" that the IL SA (Specific Accounting) form is a necessity for this year. IL raised its tax on 7/1/17, and the SA form lets you do a calculation at the old rate and new rate for half of the year and then combine the two instead of using the "blended" rate that the form uses to calculate the taxes. For tax preparers especially the form is an absolute necessity, as much of the income comes in during the first half of the year. What I would like to know is if ATX and Drake have the form in their programs. Perhaps we Pro Series users could parlay that knowledge and create a fire under Intuit programmers. Thanks much!!

That is the exact method I have used over the years when new articles are purchased and donated to a 501c-3 (such as a Church) for distribution to the homeless, poor, etc. It has withstood 2 audits, so our thinking on the matter must be correct.

In Cook County Illinois as well as surrounding counties, property taxes are imposed in one year and billed in the subsequent year. In other words, the taxes imposed for the privilege of liviing in your home for they year 2017 are payable in 2018. If you sell your home on Dec 31, 2017 you have to provide the purchasers with the money to pay the real estate taxes that YOU incurred during the whole year 2017. Furthermore, if you were to sell yor home on Dec 31, that payment to the purchasers gets added on to the real estate tax you paid during 2017 to give you a 2017 deduction of two years of tax payments. Since prepayment is thus required in the case of a sale, I see no reason why prepayment is not an option at any time. Cook County only allows you to prepay 1/2 of your current tax bill, but the collar counties mostly allow full prepayment of an amount equal to the amount you paid during the current year. I have advised my non-AMT clients who can afford to do so to prepay as much of their property tax as the county will allow.

When you plug the external hard drive into a USB port on your computer, the computer will assign it a drive letter. Then, in your backup program, just use that assigned letter as the destination for the backup. If you want to copy the returns instead of backing them up, select the files you want to copy by left-clicking them while holding dwon the control key (or you can select all of them by clicking on the first file and then, while holding down the Shift key, click on the last file). When all are selected, RIGHT-click to being up the menu and select "copy." Under "This Computer" or whatever the name of your Windows version's drive listing program, find the drive letter corresponding to your external hard drive, left'click to select it, and then RIGHT click to being up the context menu to select "Paste." Hope this helps.

I have the same "password-entry- every-half-hour problem" with my software (ProSeries) also. I downloaded a free softwware program called "typertask." It lets you assign a key or group of keys to any word or message. I assigned my password to the F12 key and now all I do is just press F12 and it enters my password. When I change the password, I change it in typertask. It has worked for me very well and the typertask program has a very small footprint.

What you are saying makes perfect sense to me, Judy. I couldn't believe that IL sent a correction notice explicitly including the nonqualified annuity in the deduction and that the group of auditors from IL that I spoke with all ageed that it would be excluded. Proseries also has a checkbox which is automatically checked when code D is entered and must be manually overwritten in order to NOT exclude the income on the Illinois return. The right way to do things isn't always the way that Illinois does them. Thanks for the information about Drake and Lacerte from the other forums.

My client purchased an annuity with after-tax dollars from Prudential and received a payment on form 1099-R coded "7D." My software (ProSeries) transferred the taxable amount of the payment to 1040 line 16. On the IL 1040, however, it did not deduct this amount as being from "retirement income" which IL allows as a deduction. The taxpayer later received a correction notice from Illinois stating that the amount of retirment income allowed as an Illinois deduction was understated by this amount. I talked to an IL auditor and, after he conferred with a few other people at the office, stated that anything on Federal lines 15, 16, and 20b will always be allowed as Illinois retirement income subtractions. This means that if you use after tax money to purchase an annuity, the interest received will be tax free in Illinois, while if you put the money into a CD, the interest would be fully taxable by Illinois. I asked the auditor if this made sense, and his response was "that is why our state is in such sorry financial shape." SMH In looking on the Web, I find that ProSeries does not allow such payments as IL subtractions, but its partner Lacerte does allow them as IL subtractions. I am just wondering how ATX and Drake would treat code 7D payments regarding states which allow retirement income to be exculded from taxation.

My dentist is also my client! I loaned him the money to buy his practice when he graduated from Dental school. He is fantastic at dentistry, but cannot balance a checkbook. I told him I will handle all the "money" and "taxz" stuff for him and he can handle all my dental work. We have a pact--he does the teeth, I do the books, and no one gets hurt.

If it turns out that there would be no change in the TP's 1040 with the filing of the Trust returns for past year, I would probably just file Trust returns from this point on and show the rental property as belonging to the Trust. If IRS got involved in a later year I would show "substance over form" and that there was confusion as to whether or not the asset was a Trust asset which was resolved during the current year. It has been my experience that IRS is not interested in "reinventing the wheel" if the bottom line tax situation would be the same.

I believe that as long as TP is the sole beneficiary of the Trust then the net rental income or loss would have been passed through the trust to the TP as a gain or loss on lines 7 or 8 of the Trust's K1 and thus correctly reported on TP's 1040 as passive income or loss.

I am also not haveing any problems with MWB and Taxbook Forum, but I access it with Google Chrome.

Judy and Rich, thanks for your inputs. Yes, it was a two person partnership with the partnership agreement stating that upon death of either partner, the remaining partner would buy out the deceased partner for $800,000, which wold first be used to pay off the decedent's capital account and the rest would go to buy out the decedent's share. The buyouts were funded by each partner having a personally paid insurance policy for $800K on the other partner. When the partn4r died, the remaining partner put the $800K insurance proceeds into the partnership and incr4eased his capital account. Then the full $800K was used to buy out the deceased partner's capital account of about $500K and the remainder to pay for gains on other assets of the partnership which were in the process of being sold, but not yet closed, on the date of the partner's death. Applying $230 K to these gains would account for a capital gain by the estate of deceased partner and increased basis in these assets for remaining partner to prevent him from having to pay double the gain on the assets in question (his portion and the deceased partner's portion). Can the remaining $70K of the buyout be used to increase the basis of the remaining assets ratable, or would it have to be shown as goodwill? If goodwill, and the LLC becomes a SMLLC and is disregarded, how would remaining partner ever recover that $70K, since he would not ever sell any portion of the SMLLC but only the remaining assets and show gain or loss on his personal return. After remaining assets would be sold, the $70K of goodwill would stand alone in the SMLLC and have no value. Nothing like a tough one to keep the mind sharp!! Thank you very much for you input and links. I have looked at many other links, but I will check the two out that you provided, Judy.

Hello All, Here is a situation I have with one of my clients and partner deceased on June 30, 2017. Each partner had $800K life policy on other and buyout agreement stated that deceased partner's estate would receive the $800000 in full paykment of capital account and buyout. The way I treated it is outlined below. I would appreciate any comments, critiques, and suggestions from the members of this most-esteemed forum. I really have respect for and trust you guys!!! LLC BUYOUT (2 PARTNER LLC TAXED AS PARTNERSHIP REMAINING PARTNER BUYING OUT DECEASED PARTNER WITH PROCEEDS OF PERSONALLY OWNED LIFE INSURANCE POLICY) DECEASED PARTNER CAPITAL ACCOUNT $500,000.00 DECEASED PARTNER L/T GAIN ON LAND $150,000.00 DECEASED PARTNERS L/T GAIN ON SECURITIES $2,000.00 DECEASED PARTNER ORDINARY GAIN ON RENTAL SALES $75,000.00 (DEPRECIATION RECAPTURE) DECEASED PARTNER L/T GAIN ON RENTAL SALE $3,000.00 TOTAL $730,000.00 BUYOUT PRICE PER AGREEMENT $800,000.00 ($70000 OVER CAPITAL ACCOUNT PLUS ASSET GAIN) THESE ARE THE STEPS I WILL TAKE: 1. Deposit the $800000 form the life insurance proceeds into the partnership bank account - DR bank, CR remaining partners capital account. 2. Pay the $800000 to deceased partner's estate: CR Bank 800,000.00 Dr land 150,000.00 Dr rental prop 3,000.00 Dr accum dep 75,000.00 Dr dec. prtnr cap 500,000.00 Dr securities 2,000.00 Dr ????? 70,000.00 QUESTIONS: 1. Do these postings make sense? And what account will I put the $70000 into--Goodwill? Or divide pro rata to existing asset accounts? 2. Wil deceased partner estate have ordinary income for $75000 dep recapture only and $22500 in cap gain? 3. If the balance of the $70000 goes to goodwill, how will the remaining partner treat this when LLC is disregarded entity or dissolved?

Regarding the "never delete" policy --I keep my electronic records all the way back to 1990. This year a long time client (since 1993) sold two mutual funds and his broker listed the cost basis for each as the infamous "n/a." He knew what he bought the funds for back in 1995 and 1996 and had not sold any of either fund since the purchase date, but all dividends and capital gains were reinvested. I was able to reconstruct his cost basis by looking back at his returns form 1993 through 2016 and finding the dividends and capital gain distributions from each fund, since I had them listed separately on schedule B for each year. His broker had told him that the only way to calculate the basis was to obtain complete histories from each company, and that he, the broker, wanted no part of that. This, by the way, was a full service broker who had purchsaed the funds for my client originaly, but had purged some of his old records. Needless to say, I scored major points with my client and tremendous word of mouth advertising. By the way, I keep the 1990 - 2000 returns on an old XP computer and the newer one on my Windows 10 computer.

Lion, I can't think of any easy way not to let the Win 10 update install, but it is not a harmful update. I installed it two days ago and have had no problems with any of my tax or other programs running. It updates the Edge browser, finally, and makes it faster and better. It also installs other security updates, which is not a bad thing either with the massive hijacking that went on over the weekend. It does take quite a bit of time to finish the install, so be sure to allow at least an hour for it to complete. If you don't like the results of the update, you can always restore your operating system from your latest backup of the system drive. Good luck!

Reminds me of a 4th year Latin pop quiz I once had (55 years ago and I still remember): Osibili, si ergo Fortibusses in ero ! Nobili, demis trux -- Sewats enim, Cowsendux !! And our Latin homeroom motto from the same year-- "Semper ubi sub ubi."

I agree with you completely. Loans to the business are not income just as the payback of a loan is not an expense. The numbers to maximize EIC are just too "convenient" to make the inclusion just an oversight on the former preparer's part.

Thanks all for the valuable input. I have asked my client to get me a copy of the trust document. Hopefully, the father's trust was finalized and the mother had the stocks transferred to her own account, which she then put into a new revocable trust which became irrevocable at her death. Under those conditions, I believe there would be an additional step up in basis to date of mother's death.

Client's father set up a trust with my client's mother as beneficiary. When he died, she received assets of trust (stocks) with a step-up in basis to his date of death with stocks remaining in the trust. She dies with my client as beneficiary of the trust. The broker send out the statements to my client with sales not marked up to mothere's date of death. I had my client quesiton him and his reply was that the mother had received the step up in basis and so he could not get a step up basis because only one was allowed. I had never heard of this before. Am I missing something or is the broker just repeating something he heard from his barber?

As long as the property was "available to rent" on Dec. 9, 2016 you can deduct the expenses incurred in 2015 (including 30 days of depreciation) on the 2016 schedule E. The points must be amortized over the life of the mortgage, unlike a personal residence. The mortgage insurance, as long as it does not cover more than one year, is deductible when paid, that is, in 2016.

Here are two of today questions asked on the Turbo Tax question site. What is even more disturbing are the number of people that find these questions HELPFUL. Are we really afraid that Turbo Tax will put us out of business??? 1099 Div with Acorns I'm currently have an Acorns account and they sent me my 1099, but didn't tell me which suffix to use on my... bballking195 19 people found this helpful last activity 1 day ago what are long-term care insurance premiums? Is life Insurance a long-term care insurance? justlikemommas 9 people found this helpful last activity 1 day ago

I think that if the student COULD be claimed by the parent as a dependent, the student is precluded from taking the education credits and student interest whether the parent actually claims him or not. The same as for the dependency exemption on the 1040.

Some of my senior clients are now, unfortunately, in memory care facilities or full care nursing homes which charge $75-$100 K each year, currently deductible as a medical expense, which takes their entire pension, IRA RMD, and Social Security to pay, but at least they do not owe tax on the funds used to pay the facility. Under the "new" tax proposal they would be paying tax on the pensions and RMD's even though they did not have any of the money left to spend. Happy golden years!!!

We need to keep in mind that the "easy" returns for us are not necessarily the "easy" returns for a lot of the taxpayers out there! Regardless of how the software phrases the questions, some taxpayers will still misinterpret the instructions. I have seen "Turbo-taxers" add together their FWT, FICA, and Medicare and enter the total as "Federal Taxes withheld" because they decided that was the correct amount of taxes they paid in, regardless of what was in the various boxes on their W-2. I have seen them add their qualified dividends to their ordinary dividends and report that total as dividends earned. We hve been doing taxes so long that what is "easy" for us stlll presents a challenge to many of our fellow citizens, who will never be able to get parts of their returns done corectly by themselves regqrdless of future software innovations, IMHO.