RitaB

15 hours ago, Tracy Lee said:

TP sold a home that was a primary home from 2003 to 2014, then married and moved in with (now deceased) husband into his home and let her kids live in it from 2015 to 2020. She then turned it into a rental from 2020 until in sold in 2022 at a substantial gain. Is there any way I can reduce that gain because it was a primary home for 11 years?  If so, where would I acknowledge that? Right now it is being reported as a bulk sale on the Schedule E fixed assets form and flowing to a 4797.

She did not live in the home two of the past five years.  It is reported on 4797, correct.  

I would fax a very short cover letter, the "agree in part," section, and the 1040-X to the fax number provided on the Notice CP2000.  The one I'm looking at from December 2022 says at the bottom of first page to write "CP2000" on top of the 1040X and attach behind the rest.   I would do exactly as they instruct on that one; it also happens to be the easiest thing for me, and I would think the most readily understood for everyone.

On 5/9/2023 at 9:59 AM, M7047 said:

Anyone else have married clients getting letters from the IRS separate from each other? I would have thought the would be joint letters since they filed MFJ. Each letter has half what the couple would owe as a penalty.

I believe each letter shows the total owed.  I am looking at a CP22A that says under additional information:  "Please note:  Only pay the amount due once."  I assume that would also be the way it works with the "you didn't make estimated payments like Rita has been hounding you to do" letters as well.

53 minutes ago, RitaB said:

They still can find a payment from a spouse with a flashlight and both hands.

* Can't.  I always proofread ten minutes after I hit sned.

They still can find a payment from a spouse with a flashlight and both hands.

23 hours ago, Abby Normal said:

I hate doing tax returns without reconciled bank statements and balanced books. There's close to zero chance that the return is correct.

Also hate doing the books for people who think running it thru the bank account converts a personal expense to a business expense.  

2 hours ago, Abby Normal said:

The one account that always makes me facepalm is 'Reimbursements.' "We were just reimbursing our employees for things."

Reminds me of one who couldn't figure out why they had a profit:  "We just make enough to pay our bills."

On 4/17/2023 at 12:56 PM, GLJEANNE said:

I have one like that, doesn't get me his stuff until April and it's always a Quickbooks mess that requires lots of back and forth with his bookkeepers.  This year I'm trying to have all my extension done by 4/30, so when I saw the QB guy's mess, I told him that I'd put him on extension with a super rough estimate of what he should pay, but then he should find someone else to actually file for him, because I just know that would drag on into June.  Too bad, he's a nice guy, but it's the same thing every damn year.
Otherwise I have one person waiting on a trust K1 that will probably be in May, and that's it!!  On to the 941s and 990s...

I have two Sch C folks whose QB reports were worse to me than if they had brought a shoe box.  I finally created a fill-in-the-blank organizer for them two years ago.  They both act like I'm a rocket surgeon, and it's a pleasure (sort of) to prepare their returns now.  Yep.  I just entered the categories off Sch C, added a bunch of lines for assets purchased, date, cost.  Assets sold, date, proceeds.  And a separate page for vehicle information.  People who don't understand accounting create trainwrecks with software.  It's true.  I give those organizers to virtually every business owner now; amazing that they think they're so helpful, and it's just putting the lines from the tax return on anything besides a tax return.  

10 hours ago, PatE said:

Client inherited a house from her father and sold it.  Do I use the Market Value or the Assessed Value as basis?  There is 100k difference.

Thanks

 

 

Agree with Tom.  If you mean county property tax assessment value, that's not particularly accurate here. 

On 3/30/2023 at 1:20 PM, Catherine said:

I'm glad you enjoyed my little offering.

I recall you saying one time we were in the "softly whimpering" stage of tax season.  LOL.  Thanks for a pithy one liner I have remembered every year since.  I am also frequently heard saying:  "This is too stupid to be real."

19 minutes ago, BulldogTom said:

Wine or Whine?

Tom
Longview, TX

Yes.  

Why Are You Still Standing Here Wine

Pick Up Your *Stuff* Sangria

Oh, So YOU Have Been So Busy Frozen Peach Margarita

* That last one wasn't too creative; I just want a Frozen Peach Margarita.

4 minutes ago, RitaB said:

... I have saved many, many hours by NOT talking to clients.  

* by NOT talking to clients on the telephone.  When they drop off, I talk to them as much as I need to.  I have learned not to believe them when they say, "It's all there."  I go thru the paperwork at drop off and that also saves time.  For example, "I need the Bursar's statement, please."

20 hours ago, BTS said:

RitaB !!!  Dont give clients your cell number !!!      We have clients always asking for our cell numbers.  But lordy, if we did we would get bombarded with texts and calls.  Especially the pain in the arse ones.  We just kindly tell them, "sorry our cell numbers are for friends and family only", please use the office phone or email any questions.

I use my cell phone to text clients because it's convenient for ME.  I also like getting answers in writing and send text messages to my email for documentation purposes.  (No, most of my clients do not use email effectively.)  I know to ignore all, and I do mean all, client calls to my cell phone, my greeting says hang up and call the office.  I also know not to respond to text messages I get beyond office hours.  I have saved many, many hours by NOT talking to clients.  Thank you for the advice, but I can tell you, I do what works for ME. 

On 3/29/2023 at 6:56 PM, Margaret CPA in OH said:

More than $300 but, if well organized, probably less than $500.  If lots of messages getting the documents (like the 1098T and answers), maybe more.  I bill by time, not form.  When it takes a lot of time - begin the return, ask questions, pick it up again, more messages for answers, etc. - it costs the client lots of money.  Like the video that's been around, I'm billing time and also expertise.

I agree my needy clients pay more.  They should.  Last week I increased on invoice because a new client, who had told me he got text messaging, called me asking when they could come in and see what I had done with their [very special] tax return.  I generally hate phone calls as they waste my time.  I had texted him on March 16 that the return was ready, please come in at your convenience.   He had made two trips to drop off, called before each one, my greeting plainly says come in at your convenience, and he likes to hear the sound of his own voice.  At pick up, he lamented that according to my projection for next year, he not only does not need to make estimated tax payments, but he will get a $4,000 refund.  "Oh, no, I really hate getting refunds."  Me:  "Well, that's on you, Chief, tell somebody to reduce withholding by $4,000."  He kept talking.  And talking.  He now knows the tax brackets, has a copy of same, and that it is cutting your nose off to spite your face to pay 22% on a withdrawal you don't need because you don't like getting refunds.  Notes in file in charge more next time.

So anyway, Kathy, I'm probably at $285 federal, $50 state, provided the client didn't waste a lot of my time.

We have a preparer here who plays that game with the invoice listing every form in the return, some not even in the return, with the big discount.  I am getting several of her clients because she's making mistakes.  The last one in here, the 2021 invoice was $325 marked down to $110.  If the return was correct, $325 would have been fair.  As it was, $110 was too much.  Everything is relative; all returns, all clients, and all preparers are not created equal.

On 3/18/2023 at 5:46 PM, Dave T said:

Had a similar situation only it was 28 trips in total to 10 different organizations.

Weill try and remember the 12/31 trick next year.

 

As @Donnarae once said, "Zip up your jacket; your heart is falling out."

7 minutes ago, Terry D EA said:

Just wondering but that sounds a bit bizarre to me. Was the program using the dependent standard deduction and then recalculated with the non-dependent standard deduction? Is this maybe what happened? I would check to see if dependency changed in the returns. Normally the excess scholarship funds to go on line 8 or 7 of the 1040. Different line for different years. Adding to or taking away from earned income shouldn't have any affect on the standard deduction or itemized deduction for that matter.

It's a dependent return.  A dependent with 2,000 earned income will have a different SD than a dependent with 5,000 earned income.

On 3/14/2023 at 9:17 AM, Randall said:

I prepared a return for a dependent.  Excess scholarship as income on line 8 from Sch 1.  ATX calculated the standard deduction with W2 income plus $400.  Parents came in and dependent came in over a week later to sign 8879.  ATX made me recreate the efile and when I did, ATX used the excess scholarship income (as earned income) and increased the standard deduction up to the full amount.  I guess ATX had a recent update.  Anyone else see this.  Just a heads up.

 

Yes, someone on the Facebook group reported an issue with the calculation being incorrect, and they fixed it.  Thanks for the heads up, and I recommend making friends with "ATX Tax Software Support Group" if y'all have a Facebook account.

16 hours ago, Catherine said:

And if Ann shows up wanting to become a client, you tell her you're not taking new clients at this time. Then lock the door when she leaves!

Absolutely!  Ann probably thinks MY ministry is to do discount work for angels.  Hard pass.

Well, Bob brought in the settlement statement prepared when Bob obtained ownership of the lot on 9/08/2020.  Don't you know, the settlement statement looked nothing like the story.  Sales price 7,000 and Realtor commission was 2,000.  Other settlement fees were $500. 

Bob did put a note in her stuff saying, "Received lot from Ann 9/08/2020."  That's the gist of this whole thing.  I'm going with Bob's basis is Ann's basis.  $5,000. 

That was my first thought, but Bob kept talking, and I kept thinking.  How Ann reported this is not my concern.  She may have reported 17,000 on Sch A donations for all I know.  Thank you, all, for your input.

Stay strong!  It's about time for the three clients you hoped went elsewhere to show up with half their stuff.  Hugs!

47 minutes ago, cbslee said:

Wow, so the realtor gets a 30 % commission?  

Yeah, I don't know what planet these people are living on, correct.  

1 hour ago, Lion EA said:

Were any of the transactions contingent on any other transactions? Actual contract or implied contract? When Ann gave Bob $10,000, could he have moved to the Bahamas and never bought the lot? In other words, was it a gift with no strings attached? Then, you go through each step with your questions.

One scenario has Ann filing a gift tax return for $17,000 and a $5,000 gain (less costs) on her 1040 plus Bob with a $10,000 basis. But, I can see all the other scenarios, also.

Intent.

There were strings.  It was understood that Bob was "buying" the lot, so realtor could get HER commission.  Bob is also an angel, and she would never abscond with the dough.   She would mess up my highlights, but never abscond with the dough.

8 minutes ago, kathyc2 said:

Basis could be 0, 3K, 5K or 10K depending on how you look at it.

 

Well, I never got to Zero, and I thought I had looked at it all the ways.  

38 minutes ago, BulldogTom said:

@RitaBWow.   I want an angel like that in my life.   Can you introduce me to Ann and does she have any more lots?

But to your question.....

OK, you could say that Bob received 2 gifts from Ann ( 10K first, then 7K later).   He used the 10K gift to purchase the property.   Basis is 10K.

Or, under the substance over form doctrine, Bob was gifted the property, in which case Bob gets the basis of the person making the gift.  Basis is 5K.

I don't get to 3K basis, how did you come to that conclusion?  Not criticizing, just wondering what your thought process is to get to that number?   Did I miss something?

Tom
Longview, TX

Yes, I originally thought Bob's basis was $10,000 as well, but then I started thinking the second gift should be subtracted.  10,000 - 7,000 = 3,000.

Ann paid $5,000 for a lot.

Ann engaged Realtor and listed lot for sale for $10,000.

Bob expressed interest in the lot.  Since Bob is a dear friend of Ann's, Ann wanted to give Bob the lot.  But Ann is, yes, in fact, an angel, and she also wanted the Realtor to make $3,000.

So Ann gave Bob $10,000.  (Ten thousand dollars.)  Bob purchased the lot with the $10,000; and Realtor got $3,000 commission.  Ann received $7,000.  

Ann then gave Bob the $7,000. (Seven thousand dollars.)

So, of course, now Bob sells this lot, and if you thought that explanation was tedious, you should have heard Bob tell this (not her real name, and she's a hairdresser). 

Is Bob's basis $3,000?  Because I think Bob's basis is $3,000.