DANRVAN

I think sum members are worring two much abuot typeos and gramor while posting to this bored.   The mane thing is to xpress your thouhts.  If yore concerned, try draffting on WORD, then copi and paste four your postin

I don't charge extra for e-filing, it save me time. I don't miss printing filing copies for federal and state, stapling W-2's, providing mailing envelopes.....

 if I can find an once of grey. Give an a slight crack and I'm willing to fight.

I believe there is a dab of grey area here and I have not seen any authority cited; including the audit guide or the instructions for 1099-misc.  The audit guide is correct in stating that the referral is included in income but makes no reference to S.E. income.

In the OP the attorney is an employee of a firm.  I believe it is common practice for the firm to receive the referral fee rather than the e'e.  So if he receives one referral fee in ten years, it could be argued that was seperate from his "business" of being an employee of the law firm and instead was an isolated activity. Then you can look at Rev. Rul 58-112 for guidance:

"In Deputy v. duPont, 308 U.S. 488 (1940), Ct.D. 1435, 1940-1 C.B. 118, it is stated that carrying on a trade or business involves holding one's self out to others as engaged in the selling of goods or services. An isolated or occasional activity is not a business. However, an individual may engage in several trades or occupations either independent of, or in connection with, his principal business. Freedman v. Commissioner, 301 F.2d 359 (5th Cir. 1962); Joseph M. Philbin, 26 T.C. 1159 (1956)."

Once you have gotten over that hurdle, you can look at the other elements in determining if the fee is subject to SE income.

"Regularity of activities, frequency of transactions, and the production of income are, accordingly, important elements in determining whether an activity will be considered a trade or business for self-employment (SE) tax purposes." (Rev Rul 77-356)

Without knowing all the fact and circumstances I could not give an opinion.

We held our annual partnership meeting in Hawaii, so that makes our trip deductible. (dad mom and son are partners)

CONGRATULATIONS!

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I think you should delete that document from your post because, unless that information is all a matter of public record, you shouldn't be disclosing that on a public forum.

I don't believe it is ever appropriate to disclose any client provided material to anyone without permission, or to disclose who your clients are. Even though it might be public information, it might be considered sensitive and private to your client.

Although the chance of anything from this board getting back to your client is next to nothing,  the best practice is to black out name, address, etc.

The Brown ruling is an good case study of the "placed in service" requirement. Colorfully written, Judge Holmes opens with a quote from Hemmingway. As the drama unfolds, Brown's team of five lawyers is shot down as the IRS lawyers cite case after case in the commissioner's favor. One case in particular that would have seemed to be in Browns favor involved a sail boat waiting for sails that was ruled as placed in service. Ultimately, it is Brown's own testimony that flies back in his face. 

The Judge notes that this was not Brown's first encounter with the IRS.  Notice 2002-59, 2002-2 C.B. 481, was issued to disallow a split dollar life insurance arrangement he helped concoct. That was brought to the IRS attention by an article in the New York Times.

The tax treatment depends on the fact and circumstances.  There are various reasons for an adjustment.  For example Farmer A might have a couple of acres that are cut off from his farm by a river and adjacent to a field owned by Farmer B.  A boundary line adjustment could be used to transfer the land to Farmer B for a price. In that case it would be treated as a sale of land from Farmer A to Farmer B.

 

 

I checked with the appraisers office and they told me they only go back 5 years concerning records kept concerning when the property was transferred.

 

The county clerk should have a record of the deed.

The answer depends on how the land was treated for tax purposes in the past.  Most likely all the farm buildings were depreciated.  How much of the land was allocated to the farm in determining the amount of property taxes, insurance, and mortgage interest (if any) that was deducted on schedule F?

In the area I am from, the property tax statement breaks out the house and small amount of land surrounding the house as a farmstead.  The county has a record of when and how the property was transferred and the amount of any consideration given

No blind dates for me. What would motivate a client to use this service and what kind of a gimmick is Intuit using to attract them?  Why should I donate 25% of my revenue to Intuit?

I agree with you 100% Rita. Also, since I am a one man operation, it is important that my clients have the information if anything should happen to me.

Unfortunately, like other professions we have our share of quacks.  But I would not judge the accountant without knowing exactly what the conversation was between him and the church employee.

The real proof comes when you see the quality of  their work. Mistakes can come from a lack of knowledge or quality control. I recently amended a return where the other CPA apparently did not know that 1231 gains count as business income for Section 179.  He also missed the fact that the farmer's insurance expense was understated by about $4,000 and did not follow the regs for a multi-asset 1031 exchange.

The amended return netted the client about $20,000 and just went through audit.  The only audit adjustment was disallowance of cell phone expense.

Please let us know your clients outcome.

Client received his full refund as direct deposit. Never heard a word from the IRS.

" A man a plan a canal Panama."

(I had an accounting professor that was a palindrome junkie.)

I was going to eat a bowl of ice cream and go to bed, but In recognition of the 7th Birthday of the community, I am going to eat a second bowl.

Thanks to everybody who keeps this board going!

Without looking it up, I can tell you that the assignment of income doctrine places the tax burden on the owner of the property that produced the income. The land is the property and the timber is the income. That is no different than a farmer trying to gift crops to his children.

The standing timber could have been gifted by a deeded cutting right but that was not the case here.

Another factor is control and mom held it. She decided when and how the timber would be cut and to who and for how much it would be sold for. Then she had buyer pay the kids for the proceeds that she alone was entitled to (unless I missed something in the post). The only thing she transferred was the proceeds from the sale.

As I recall, there is a supreme court decision regarding assignment of income that said something like the fruit belongs to the tree which produced it.

Good night.

For a trust, I believe the charitable deductions are taken to determine taxable income and are not passed through to the beneficiaries.

It would be interesting to know how mom's tax preparer is going to handle the "assigned income". You can't gift the income and retain the property that produced the income.

So unless mom transferred the land or deeded the timber cutting rights, the income is hers.

Just curious why a 1099 vs W-2.

You need to help your client decide whether there will be a greater benefit by going forward or back with the NOL. There are all sorts of possibilities.

For example there could have been lower tax rates in the previous two years due to capital gain or offsets by tax credits. Higher rates could be expected in the future due to lower depreciation deductions.

On the other hand, consider the time value of money (cost) by waiting for future tax benefits of a carry forward.

A 1099? Parent's office? Are the parents partners or sole proprietors? If so then child's wages are not subject to social security. Are you preparing taxes for the child but not the parents?

It's great to see a family get along so well with each other.

Capital gains are included but do not include any gains from land, grazing rights etc. That should be spelled out in the instructions to Schedule J or Pub 225.

If it should have been reported on 4797 in 2012 and doing so would save $5,000 this year, then why not amend 2012 and extend 2013?