Edsel

Whatever happened to "Inside Basis" and "Outside Basis?" Do I have this confused with something else? "Outside" basis is tracked by the partner and not the partnership. It retains its original cost and accumulated depreciation at the time of the asset contribution. The depreciation continues for the duration of its remaining depreciable life. "Inside" basis is tracked by the partnership and not the partner. It is recorded on the books of the partnership at its FMV at the time of the asset contribution, which is usually higher than the adjusted book value of the asset on books of the partner. The partnership applies depreciation on the FMV as if it had been purchased from a disinterested party. The varying dollar values will create a natural difference between the inside vs outside basis for as long as annual depreciation continues on either books. The difference should be tracked by a competent tax preparer for as long as the difference exists. When asset is fully depreciated, the difference will cease to exist. If subject asset is disposed within a prescribed time limit (7 years I think, but they keeping changing it), a special allocation is made to the contributing partner on the K-1, and the original owner must recognize full capital gains/recapture on his/her own return. By all means charge extra money for this extra work. In fact, inform the partners that contributions of assets instead of cash will result in higher fees. Remember, most partnerships do not last very long - often beginning with two dufus-looking guys showing up in your office and saying "Duh...we're sorta partners" and six months later they hate each other. Contributions of equipment in lieu of cash are perfectly legal, but in many cases is prompted by a cash shortage of one of the partners. Am I cornfused about the treatment described above? Won't be the first time...does the treatment differ for an LLC if reporting as a partnership?

It was my understanding that when Trump took office, some kind of executive order directed the IRS not to enforce collection of ACA penalties. Everyone thought this was going to be a little-thought factor at the time, since it was assured that congress was going to do a slam-dunk to Obamacare and put a merciful end to it. Six months later, and the "slam-dunk" hasn't happened and if it ever does, no one knows how much different "Trumpcare" will be compared to "Obamacare." My software company never jumped on the wagon to eliminate the ACA penalties and I'm told none of the other tax software packages did either. So....word of the non-collection has spread to our clientele, and more and more of them are now telling us not to compute the penalty. What say ye?? Better not wait on congress!

What does anyone think can be gained by hiring thug-like agencies to collect for the IRS? Does anyone believe that the IRS is too kind and gentle to engage in collection activities? If an all-powerful government agency like the Treasury Department, with all the power of the Almighty, cannot collect, then what makes anyone think a private collection company can collect?

As all of you know, the IRS changed the due dates of 1120-S, 1065 etc. for this past year. Even our best efforts to inform our customers fell on deaf ears for the most part, and very few of them produced any substantive information which would allow us to file on time. So now the IRS is sending out penalty notices. These have resulted in several letters from many of us asking that the penalty be waived, as our clients were really blindsided. [We were told in seminars last year this was going to happen, and we should be able to expect waivers of the penalty on a massive scale this year]. In spite of letters written to absolve the penalty, these letters are not being answered in the affirmative or negative. I would imagine there are hundreds of thousands of such letters and if any IRS resources are assigned to deal with these letters, they are overwhelmed. But guess who is NOT overwhelmed? You guessed it!! The collection division!! They are sending out letters threatening levies even though the audit division has not made any final determinations. And their usual position is "you should have dealt with this before it came to us - we can't do anything about this assessment." That can be their position but the audit division is not doing their job. They should issue a final determination to deny penalty relief before collection division is even notified. How are the rest of you dealing with this mess??

Design and usage of the 3115 should be to change accounting methods and not simply to correct errors. I believe the 3115 to be one of the most needlessly proliferated of all forms. If you are doing it "wrong" and now are doing it "right" doesn't mean you've changed methods or approach. It could simply mean that you made a mistake. From the original post, the rules and procedures were in place from the very beginning about capital leases, imputed interest, present value, etc. None of these change simply because it was done wrong. Not that it applies to this situation, but most of the needless 3115s I have seen have been for depreciation, when the only "change" was the wrong year, the wrong application of DDB, misuse of "bonus" depreciation, and mishandling of s.179. These are simply errors and not changing any of the rules or procedures of depreciation.

Roberts, I'm thinking there would be a W-2 (if indeed any of this is legitimate, and it's not). My last exposure to this was with a number of USCitizens living on Kwajalein Island (Marshall Islands). They were exempt from income tax but not from Social Security or Medicare. At the time, they could earn up to $75,000 with no income tax withheld, but SS and Med were withheld at the normal rate.

Thanks for the responses. Sorta reinforces what I thought and was able to research. Gonna tell my client I can't go down the road with him on this. Still don't know why his co-workers are getting refunds.

Strange phone call from a good, long-time client. Backdrop: Japanese, German, and Korean auto manufacturers have plants all over the sunny South - in particular places where they are unlikely to encounter a labor union. I live in the middle of two Nissan plants - one in Smyrna, TN and another in Decherd, TN. Both plants have "posted in conspicuous place" some message that the plant property is under foreign sovereignty or some such message. I don't know whether this is true, or to what extent it is true. And some of the workers are claiming foreign income exclusion by virtue of working at these plants. My client tells me they have filed amended returns for 3 prior years and are receiving thousands of dollars in refunds. In busy years, with overtime, a skilled worker can easily make over $100,000 per year at either of the two plants I mentioned. My client tells me a couple people have refunds over $25,000 and this is easily believable. What is NOT believable is that they qualify for the foreign income exclusion. I've looked at the IRS definition and simply cannot find any support for this. Keep in mind that they have these refunds because of amended returns. The 1040-X cannot be electronically filed, so some IRS employee has to see these returns before entering them and arranging for the refunds. What say ye? Is this a local hoax, or is there a legitimate way for them to be claiming refunds??

Sure it is! Typical of worthless legislation, those politicians in my state were smiling on TV when this "Do not Call" was legislated. The result is what happens when politicians want to pass a popular law, but never come up with any enforcement money. In recent days, the cellphone companies have been on TV telling everyone that they are going to stop robocalls on cellphones. In the conversion from land-lines to cell-phones, the phone companies are now reaping financial objectives they were never able to achieve in decades worth of land-lines: namely the ability to charge by the minute for local calls! Cellular customers who now look at the "caller ID" are simply not answering the phone, whereas without the robocalls they would routinely answer the phone and accumulate minutes. Since there is a negative economic impact to huge multinational fortune 500 companies, my guess is the providers will be more successful than government efforts. Note that the same providers are not acting to protect land-lines, as the economic benefits do not exist. My wife and I receive at least 15 calls a day from unwanted callers. I tell her to not even answer the phone to hang up, because it verifies that the caller has reached a working number.

A client has credits for "increasing" R&D costs dating back to 2001. There has been insufficient income to absorb all the credits. Is there a limit to how many years these credits can be rolled forward? Looked at section 174 as well as instructions to form 6765 and don't see any discussion as to whether there is a time limit. Form 6765 addresses current year only and thus is not relevant to this discussion.

99% C Corp owner has a life insurance policy for $1,000,000. The C Corp at one time had a line of credit with the bank, and the bank required him to carry this policy with the corporation named as beneficiary. The policy is still in effect but the line of credit requirement is gone. When the line of credit was paid off, his age was such that keeping the policy was a prudent thing. Premiums for this policy last year were $14,000. Can the corporation deduct this as an expense??

One year ago, a profitable C Corp, had an unusual $5000 loss. At the time, it was considered uncharacteristic, and the company would return to profitability. So the corp elected to roll FORWARD the loss instead of backward. It is my understanding that when this is done, the election is irrevocable. Another year has passed, and the 100% owner has had an epiphany of some sort, wants to do something different with the rest of his life, and has decided to abandon the corporation, drawing out his earnings over a period of time. So the last year has passed, and there was another loss, this one for $3500. The amount showing on the face of the 1040 (line 29) is $8500. We would like to carry back this amount two years. I had thought all we could carry back was $3500. Am I correct? If so, is my software putting the wrong amount in the NOL?

Semper stupidus. Phrasies borniei prodigii collosus moronos.

Thanks CPAMan. I thought it was illegal to use IRA funds to finance such personal business. You say it can be done. If it can be done I guess it's no worse than a ESOP with Enron.

To JoanMcQ Joan, I can almost swear you used to post on another board and were from Sacramento. Some of your posts were from the heyday of our favorite Roni Deutsche. Are you now from Nevada? I know a few people that got sick of the politics in CA and moved to NV.

Just so you can inform the ignorant...can you tell me what a ROBS is? Is it like a thief?

I am in the business of preparing taxes. I would be happy to prepare their tax return, and not feel obliged to give them a "soundbyte" over the phone, which this customer thinks would be adequate. There are numerous elections which come with depreciation -- and an IRS publication which is a half-inch thick. Don't tell me you are going to use TT and expect me to advise you. The advertisements for TT are everywhere, and tries to make the listener believe they can spend a lousy 40 bucks and be as smart as a CPA.

Tell him to raise the selling price enough to cover the double taxation if buyer wants to purchase only the assets. Simple as that.

I increase rates to accomplish 2/3 of the increases I have to incur. i.e. if my costs increase 6%, my rates go up 4%. I have had only one year in recent memory where I didn't have to increase prices. Most of the increase in costs come from sources within the industry. Providers of seminars, IRS fees, postage, publications, etc. I am lucky with software as Drake has increased prices only one time in 20-something years, and it was only $100. Another thing which doesn't register as a price increase is the amount of time I have to spend in the off-season maintaining files, records, etc. Example, I project all known depreciation for the succeeding year in the off-season. And I do charge for depreciation schedules, but not until the next year. Much of the competition does not raise prices. Most preparers do, but TurboTax never seems to go up, and there is now a number of "free" do-it-yourself options. The public doesn't know it, but "free" is worth what you pay for it.

A new customer has not filed in years. After spending time you believe 2013 will have a refund, 2015 will have a refund, and 2016 will have a refund. You believe the missing year, 2014 will have a large balance due. The customer does not want to pay you 2-3 hours at your hourly rate to file 2014, and would prefer to file only 2013, 2015, and 2016. What is your ethical responsibility? Remember we are not collection agents for the IRS. File all four returns and leave them for the client to mail in? Refuse to file 2014 because you're not going to be paid? Tell the client he has to mail in all returns? ???

I am a faithful Drake user for eight years. They have had one price increase in 25 years. Prior to that I was with TaxSlayer, but found their state programs for corporations and entities severely lacking. TaxSlayer did fine for Georgia and South Carolina, and was a success story - having started with a chain of 22 tax prep offices in Augusta area. They got tired of being held hostage by software companies so they developed their own. Good support staff but software was weak for many states and other entities. Prior to the CCH, I used ATX for 4 years. They increased their price every year. About 15 years ago, they had a massive crash and the support staff did everything they could to get me off the phone because the volume of complaints was mountainous. Users received an apology from the CEO at the end of that tax season, and an offer of financial substance. The "financial substance" was a discount on travel tickets to Europe, and a stiff price increased loomed large even after the poor performance for the year. I bailed. On the positive side, ATX is the only software I know using the tax forms as an input guide instead of the DOS-inherited questionnaire format. I've tried to get Drake to adopt this, but to no avail.

Idea seems to be catching on in other states, and I think we have to deal with this as a fact of life. Alabama has started requiring drivers' license, supposedly to combat identity fraud. I think the real reason is they want to offset refunds for back child support, unpaid driving violations or anything else owed to the state or subdivisions. Of course they already have the information, but are requiring it so they don't have research anything or pull it up on their systems.

John actually I know Rita personally, and wouldn't object to any hug by her. Many of you have met me, including yourself, and will know my other identity in time (if you don't already). Someone earlier asked me about the old "ATXers" forum. I think it may have been sponsored by the software company ATX prior to it being bought out. The problem with the forum was ATX didn't assign anyone to monitor the posts and they became increasingly vulgar and the board was ultimately discontinued some years ago.

Greetings. I am trying out this message board after avoiding it for many years. The old ATXers had degenerated to vulgar usage and comments about women, so I have not been interested. You might say I am a refugee from another message board, which was very good for a long time. I am finding out that many of my old friends from that board are over here now. I've been reading some of the topics and it appears this board is very relevant. There is a member on the other board who answers every single post and never answers a question. After so many of his responses like "Have you read the instructions" or "contact the lawyer of the deceased" I finally blocked him. If he finds out about this message board, you will know what I'm talking about, unfortunately. I was recently told about this forum, and may try posting questions here. My surname, Edsel, is a famous classic epitomy of a failed venture.