MJG CPA

Taxpayer (age 20) died in 2006, but father did not get his investments changed over until 2008, so 1099's for 2007 are issued in deceased son's name - about $1,600 in interest & dividends and $700 net loss on sale of stocks.

There is no estate. If I report the income on the tax return of the brother who inherited assets, how will IRS know that it has been reported? I can't file a 2007 return for deceased taxpayer showing income in and then nomineed out, can I? Please don't tell me I have to open an estate for this...

Any suggestions?

I e-filed a trust return on Feb 8th. Status still shows "validated by EFC" and I have "synchronized" with ATX. I have also tried to find the return on the ATX e-file website with no luck.

Is anyone else having this problem or am I going to have to break down and call tech support? (I e-mailed them two days ago with absolutely no response.)

Thanks for the replies.

Pacun confirms my opinion. If the atty's don't come to a conclusion soon, I think it's a strong enough case to have the custodial parent claim the child, so barring some new information, that is what I plan to do.

The noncustodial parent stopped paying child support in July. She has already filed her tax return and claimed the child.

My opinion is that the custodial parent who provided over half the support and paid for the college should be the one to claim the child & education credits. NCP is not entitled to educ credits but still thinks she should be able to claim the child because she paid child support over half the year.

I told her paying child support over half the year does not equal providing more than 1/2 support for the year.

I imagine their lawyers are going to have to settle the issue since the parents can't agree. I just wondered what any of your experience has been in cases like this.

Divorce decree states NONcustodial parent gets to claim child. It states that an emancipation event occurs when the child turns age 18 or when she graduates high school, both of which happened in 2007. Decree does NOT state what happens in the year the emancipation event occurs.

The custodial parent now wants to claim the 18-year old child for 2007, and take the related education credits. The custodial parent provided more than half support, paid for college, etc. The only question is the divorce decree.

Is there a "normal" way that situations like this are handled when a child turns 18? Anyone have experience with this?

The erroneous 1099's may be intentional. Issuer may be using higher amounts to inflate his/her deductible expenses. If no one complains, they will probably get away with it [unless they get audited and can't prove the payments].

I had a client once whose "friend" filed a 1099 in his name (without giving him a copy) because he needed more tax deductions that year. IRS sent my client a bill for additional tax due. Nice friend ...

3/4 day on the day out and 3/4 day on the day back or "any method that is consistently applied and in accordance with reasonable business practice."

Does it seem that something is amiss?

RUN!!

I e-mailed a question to ATX support, but no response yet. I'm hoping they will reply so I don't have to call in. I also have paid for unlimited e-file, so am wondering why there would be any additional charge, other than the $15 fee we know about.

If I find anything out, I'll let you know.

Did my first FeeCollect. The $15 fee I knew about, but now there is also a $6 fee on my account at MyATX, next to the client I did the FeeCollect for. I already paid for unlimited e-file. Is there really a second fee for each FeeCollect transaction?

Anybody else have experience with this?

My Client Mail slip has my firm name at the top and the client/addressee name & address in the correct spot for the two window 8.5 x 11 envelope, but my name & address for the return address spot (1st window) does not print. Can someone tell me how to get my firm name/address in the return address window spot?

thanks

I had the same problem earlier, and I ended up customizing the master form. Override the formula's and type in your name and address as you want them to appear.

"She doesn't have to provide her SSN, does she?"

Was babysitter hired? Simple question, simple answer.

Want more complications to frustrate your client? W-4 and I-9! Both are required.

Exactly my point. If they were going to treat her as an employee, they should have required both of those things up front, not after the fact now that they want another deduction.

BTW, I have advised babysitter to provide SSN but also provided info on Household Employer to give to parents/employer so they know their responsibilities.

MJG,

Also...I'm sure you have thought about it....but make sure the employer knows he/she is NOT to issue a 1099 showing a "non-employee" amount.

Yes, I did tell them that. And the babysitter was not asked for SSN up front as she should have been if they intended to treat her as a household employee; only now that the cheapskates want another deduction.

I would not advise any client to try to "hide" taxable income. Setting a bad example, isn't it?

The folks that paid her, can claim it anyway, and provide the IRS with name and address. It isn't ethical, (In my NOT SO HUMBLE OPINION) to suggest not providing the SS#. It will only be a few dollars, and a very CHEAP lesson about how life is going to be later. I would instead, teach the teen a bit about work, pay, taxes, etc. Most don't get any training about these matters from their parents.

No, I didn't intend to advise anyone to hide income, but babysitting money?

After looking into it further, I believe the babysitter would be treated as a household employee. However, since she is under age 18, no taxes are required to be withheld, and if no taxes are withheld, there is also no obligation for the household employer to issue a W-2.

The child, with or without a W-2, could claim the income, but it is under the amount at which she is required to file.

So I guess in the end, there is no issue, but I just thought the whole scenario was a little strange.

Sec 1231 refers to depreciable property used in a business.

Sec 1245 refers to gains from depreciable [sec 1231] property.

So if you sell a 1231 asset, it produces 1245 gain.

Whether a draft horse is a 1231 asset would depend on the nature of the business [not enough info].

I have never heard of this before. Teenage babysitter watched 3 kids for a family who paid her $3 per hour. Now they [evidently] want to claim the child care credit and are asking for her SSN.

That would be self-employment income to the teenager. My initial thought is to tell them to get lost - if the teenager had known this would become taxable income to her, she never would have accepted $3 per hour!!

She doesn't have to provide her SSN, does she?

For an accrual-basis farmer, would accrued (unrealized) gains/losses from hedging transactions be reportable or only realized gains/losses from closed positions?

This farmer has consistently been reporting the net results each year which includes the unrealized g/l, but now I am questioning if this is proper. The only information I am finding that address this issue says you only report g/l on closed positions, but I'm wondering if it's different for accrual-basis taxpayers?

Any thoughts?

I get crop shares AND cash rent. I've been putting the cash rent on E and the crop shares on 4835. Is that right? I also need drainage tiles. Can I 179?

I don't think so. The ability to take sec 179 on a farm rental was contingent upon operating the farm on shares only, exposing that person to risk of loss (ie, no crops, no income). A person who also receives cash rent does not have this exposure, so can't take 179. My interpretation, anyway.

See my last post on the original thread "Sec 179 on farm tile?" because it appears this can be taken in certain circumstances.

No, it can not be §179d, but depending on the facts and circumstances, it might be expensed as a repair. The dollar amount is not the deciding factor, it's whether it is a repair or a full replacement. Without knowing the details, you have no way of knowing whether it was wrong or correct.

I called IRS with this question, which they wrote up and submitted for a call-back answer. I thought, yeah, right, I'll never hear back, but they did call back today.

The IRS agent surprised me by saying the farm tile IS available for sec 179 deduction on form 4835 because the taxpayer participates actively and receives crop shares as opposed to cash rent. I guess the distinguishing factor is that in a year with a complete crop failure, there would be NO rent. If this were a sch E activity, then no sec 179.

The following is an excerpt I received from the IRS agent via e-mail:

"The definition of qualifying property under Internal Revenue Code (IRC) 179 that includes field drainage tiles is sourced principally in IRS Publication 225.

Based on my research of other resource documents (BNA, CCH, RIA, etc) the most original source for this inclusion is IRS Publication 225.

BNA also references IRC sections 168(i)(13), 179(d)(1), and 1245(a)(3)."

I have not looked up these references yet.

I s it legal for employer to take ss and mdcr out of employees federal withholdinghe had for 2007??

It seems to me the employer is only correcting what should have happened in the first place. There should have been 7.65% tax withheld for ss & medicare and the employee's net pay would have been less. The only choice now is to take it out of the fed wtg or have the employee pay back the overpayment. So taking it out of wtg is probably the lesser of 2 evils, although it may leave the employee in a bad spot if there is now not enough wtg and they have to pay in at the end of the year.

The "VLT" is all deductible, which is a lesser amount than the total registration fee.

I agree. I hope these two get what they deserve and that they don't somehow wiggle out of it - or worse, that no one ever follows up on the complaint.

You're right about the support, but the product is good. If you don't have any major problems like getting locked out of the software, you should be okay. I can't imagine trying to change tax software at this late date, but you may be braver than I!

UNbelievable!!

The preparer and the taxpayer are now VERY nervous, realizing they have been caught in their lies. The lending company has said it is their policy to file a complaint in cases like this (with whom, I don't know). At any rate, these two are sweating bullets, asking the loan officer, "what's going to happen now?"

I guess they should have thought of that BEFORE they submitted fictitious returns!!