Randall

If client takes out a distribution in 2011 from a 2010 conversion, is all of the conversion taxable in 2011? Round number example, $120k converted in 2010, client elected two year deferal, 60k each year to be reportable in 2011 & 2012. Client takes out 70k in 2011? Pub 590 seems to indicate only 70k taxable in 2011 and balance 50k taxable in 2012. A PPC pub says all 120k is accelerated into 2011. They reference IRC 408A(d)(3)(E) which seems ambiguous to me. Walking thru 8606 Part III also comes up with the whole amount 120k taxable in 2011. Any help or clarification?

And watch out for AMT. Ouch.

I haven't brushed up on 2012, but I thought for 2011 the monthly payments had to be electronically. But if your quarterly total was under $2500, you could still pay by check with the paper 941. Has this changed for 2012?

And if a loss, carry forward. Inform grandparents, parents, to keep copies.

I think the engagement letter is one of those things, that if you don't have them, it can hurt you, but if you do have them, it doesn't help you.

I'd back out of it. It's March 31. Tell the client if they've already done most of the work, make amends and try to get thru this year with them. Tell client to work with them, negotiate fee if possible. Come to me to review their work and for next year if they're unhappy with the preparer.

I don't think there is a specific report for disposed assets (all disposed assets in past). The 4562 statement shows those assets still being depreciated. The Tax Classification Report shows all assets with those disposed having a double asterisk. I like to pdf these reports each year to give me a quick way to review the history. But a quick look at a few of my reports, and I'm wondering if the double asterisk is always there. I saw it on some reports, but not on some.

Not sure how the preparer of the 1041 came up with the loss. But in my similar case, I have a 1099-S in the name and id of the estate. There were $6000 in improvements to ready the house for sale. I was just going to show sale price and basis equal to process the 1041 as initial and final and clear the 1099-S and EIN. I really don't think I can add the cost of improvements and come up with a $6000 loss to pass thru to beneficiary. There was no appraisal so what would be the FMV at date of death. I was just going to assume the sale price would be the FMV at date of sale and assume the additional $6k was part of that and FMV at date of death would be sale price minus the $6k. But then, many people say fixing up expenses don't add to the sale price, just help the home sell faster. Is there a reasonable position to use sale price as FMV at date of death and add the $6k to basis?

Thanks. Who would have thought?

I'm trying to input an allocation percentage of a half percent (0.5). But it keeps coming out 50%. I have one partner with 97.5% and five partners with 0.5%. I can't figure out what I'm doing wrong or not doing. Any help from anyone?

1099R should say gross distribution $20,000, taxable amount zero.

I'm trying to charge more for new clients, setting my minimums higher, asking in advance about rentals, Sch C activity, Sch D activity, even Sch A stuff. Quoting higher fees up front. For existing clients, trying to keep them but raising fees gradually, unless something new is going on, then letting them know up front that new circumstance will increase the fee.

I used it for the first time this year too. I knew one client would have a lot of trades. I got another one with a little surprise, had more trades than I thought. It was a weekend so I just entered them, not too terribly bad. But next year, I think I'm going to get all clients to have their broker send me the csv file before hand and use the import feature all the time. I think ATX will add improvements to this each year.

I like to use 1040X too. I just have it in my mind that the IRS processing procedures can run much smoother this way.

The SEP max contribution is based on a percentage. The SIMPLE max contribution is based on a dollar amount. So unless the sole prop makes a very high income, the SIMPLE is preferable because he can put in more dollars. I don't know off hand regarding your problem of the sole prop having a regular job and participating in his employer sponsored plan. But for those who only have their business activity, the SIMPLE is usually the preferable plan. Also, if he has employees, his match to them is lower in the SIMPLE than the SEP. For businesses with high turnover though, the SEP may be preferable because of the vesting rules on the employer match. They leave not vested, those dollars are redistributed the everyone else in the plan, the employer getting the biggest chunk of that. So he can grow his own account more over the years. This doesn't answer your problem, just wanted to address the SEP vs SIMPLE topic.

Catherine, something's got to be happening because for the most part, the tax laws were the same, extended two years thru 11 and 12 (although the extenders were extended two years for 10 and 11). So something's happening. Line 61 is before payments and refundabe credits but after the non-refundable credits (lines 48-54). There could be cap gain instead of $3k cap loss. Could be less ordinary dividends, something could trigger more Soc Sec taxable, loss of child credit, ed credits, AMT. I don't know but if normal income (W2) is the same, something else has to give.

Most clients confuse the child credit with the dependent deduction. When you tell them they don't get the cedit anymore, they think they're losing the dependent deduction too. 'What do you mean, I can't claim him anymore!!'

That's what I'm thinking too joan. Remember with the no make work credit, those working got a 2% cut in SS. One recent client couple had a surprise when they owed $5000. He retired mid-year, took some retirement money (no withholding), took SocSec (no withholding),she still worked making decent income (low withholding), they paid off mortgage (much lower deduction). They were a new client but even so, they really didn't plan. But they had the money to pay, just were surprised. Another client, husband died, she took $35k in IRA out at once (no withholding). Couldn't understand why she owed so much. I realize she was under stress but she didn't call me to ask. I wonder why the financial institute didn't talk to her about some withholding on the IRA.

ATX has been good at improving the program from year to year. Hopefully, they'll be adding some good improvements on this for next year. Doesn't help this year I know.

Ask about legal fees included too. You'll have a deductible but you need to know that's your max out of pocket.

I know you said you didn't mix them up, but double check every place the filer and spouse are listed for check marks for spouse, etc. Usually, we have the husband listed first. When I have the wife as surviving spouse, I put her first as filer with the deceased husband 2nd as spouse. There are several places to make changes including filer info, W2s, 1099s that are marked as filer or spouse. Not saying that's your problem, just saying double check.

The statement about principal and interest may be from the investment point of view (whether retirement account or nonretirement account) and not reflect tax basis and taxable growth above basis. If the annuity is an IRA, the insurance company may not know if it were a deductible or nondeductible IRA. The client needs to provide info this. As fredazcpa said, need 8606. Or history statements of money going into the IRA and source, with copy of 1040 showing no deduction.

JohnH - I'm not going to fall for that one. I'm not that tired or that much of an idiot.

Beam me up, Scotty!

I'm an idiot twice. I've seen this before and still fell for it. Sheesh. Leave me alone.