mriina

If you're going to tackle a 2013 income tax return, I would suggest that you obtain a transcript from the IRS first.  That way you know exactly what is recorded for that SSN.  Then, you can take those numbers and prepare the return.  If you see that BOTH the 1099-MISC and the W-2 were reported, complete Form 4852 with a complete description of the problem, and send it attached to the 1040.  Good luck!

We charge the little guys $110 quarterly for payroll services.  However, there are the "owner only" entities who don't believe it is worth it, and for those, I suggest they inquire as to whether or not their bank offers that service when they open a business checking account.  More and more banks are offering payroll services at a very low rate, and I would rather have my S-Corp owners do it that way than not at all or have them fight over the bill.

20 hours ago, jklcpa said:

Well, that makes it a little easier anyway. I mentioned the AMT because you didn't say how long ago the assets were put in service.  It's anecdotal, I know, but it's been my experience that if no mention of AMT or its calculations are shown on an amended return, the IRS will put processing on hold until the AMT calculations are provided, whether it applies to the return or not.

I had this with amended returns for an individual's NOL carryback on a 1045, and I had included a statement that there were no adjustments in any years for AMT depreciation or other AMT adjustments, and that the AMT could not have any impact based on the level of income of the original and amended, but the IRS didn't reason any of that out.  The IRS wanted the 1045 schedules all recomputed on the AMT basis as proof before it would finish its processing.

If I were doing this, I'd make sure that the amended K-1s have -0- printed in the AMT adjustments/preferences box, and include the form 6251 on the individual amended returns too, even if that form comes down to -0- adjustment, but that's me. You may choose to do otherwise and hope that you get agents that don't question the returns, but at this point I'd think you and your client would want to leave as little open to interpretation or questions as possible.

That's a good recommendation.  I will make sure I get the AMT calculations in there.  Thank you!

On 8/24/2017 at 11:23 PM, jklcpa said:

I think you would need to prepare the 3115 because this spans so many years. If the depreciation that was missed was for the first year in service and caught before the second year is filed, it is possible to simply file an amended return for the first year to start the depreciation and carry on from there, however, once 2 years have passed without taking the depreciation, it is my understanding that that establishes the method (lack of) as an impermissible method and requires the form 3115 to correct that. Plus, there is the potential for missed elections during those prior years, or again the lack of elections, that you'll have to consider.

As far as not having the balance sheet, M-1 or M-2, are you sure that the net assets after the accumulated depreciation deductions would still be over one million?  Are the revenues over $250K that would require those schedules regardless of asset value?

A few other thoughts come to mind on this too:

• First is that you will also have to calculate and show the AMT depreciation also so that the IRS will know that the effects of any AMT have been taken into account.
• Second, I'd be very careful with any amendments since you said that your predecessor was in big trouble to the point of his computers being seized. When you prepare an amended return, you are signing with the jurat stating that to the best of your knowledge and belief, that the return is true, correct and accurate. This is the reason that many preparers will not amend a return that was not originally prepared by them. 
• Third, without having all of the returns affected by the lack of depreciation, are you sure that there weren't, or aren't going to be PALs in any of those prior years at the individual level?
• Fourth, with this being a partnership, unless this is a joint venture with a spouse, are you also handling the other partner(s) returns too, and do you have those returns?

This could be very messy and at the very least time consuming, so make sure you really want to be involved in this.  I'd make sure to have a solid engagement letter and consider getting a retainer up front.

This is neither the first or second year that the assets were left out, and no depreciation was recorded.  They are 8 years down the road on this now, and the prior preparer was a family friend who really didn't know what he was doing, not a CPA. The assets are 39-yr, straight line assets, so I wouldn't need to worry about AMT.  The rental qualifies as active instead of passive, so we are good there.

On 8/28/2017 at 2:02 PM, OldJack said:

If I was guessing I would say all the assets had been fully depreciated in prior years right or wrong but fully deducted.  If I did his taxes it would only be current and forward from current information.  Let the past be the past.

The assets aren't old enough to be fully depreciated.  The only assets there are the buildings that they rent out, so they are S/L, 39-yr assets.  My biggest worry is that I am going to complete schedule L and list depreciation on page 1, and it is going to trigger an audit.  That is why I was considering the 3115 to acknowledge the mistake, and move forward.  My understanding is that the 3115 does offer some audit protection.

No, he still owes $1,593.  Tax = 6,593, less 5,000 in tax payments would still be $1,593.

I need a bit of assistance.  I have a new client who has a 1065 for business real estate rental, and a schedule C for investment sales.  Her past preparer got into big trouble, and all his computers were ceased, but she was able to give me her last two years' returns.  The first thing I noticed is that the 1065 activity is listed on Page 1 of the return and that there are no schedules L, M-1, or M-2.  I know for a fact that there is $1.2mil in real estate in that business, but it doesn't appear to have ever made it on to the balance sheet.  I'm thinking it probably won't hurt to keep the activity on page 1, although it isn't technically correct, but do I need to file Form 3115 to put the assets on the balance sheet and start depreciating them?  Any insight is much appreciated.