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Sara EA

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Everything posted by Sara EA

  1. Lion, you and I must have taken the EA exam together! It was in 2004 at a hotel in Bristol, near ESPN and its huge satellite dishes. I was kind of glad we couldn't take our exams home. When I got back I opened a beer and went out on the deck to enjoy the relief and marvel at the hurricane-threatened sky. If I had had the exam questions, I would have been in the house frantically looking up things I wasn't so sure of. And Gail, not only were no calculators allowed, but no phones (lest you call a friend on the West coast where they started the same exam three hours later and divulge some of the questions). The proctors announced they would follow you to the restroom to assure no phone calls were made, but they never did that. With today's phones, you could probably send pics of the entire exam from your watch. Are calculators and/or phones allowed now? Does everyone get the same exam?
  2. I wish you success, not luck! Back in Catherine and my days, the exam was four parts over two days (8 to 4:30). The third part was corps, which has now been rolled into the business/entities part. That change puts all the worst cougars in one cage. Everyone thought individuals would be a breeze, but that was not at all the case. I too passed all four parts on the first try, but my corp score was barely passing. Back in those days, you got to take your exam home with you because everyone got the same one at the same time. You could contest answers graded wrong, and the professional associations dug in and did just that. After the corrections (two answers correct, all answers correct), my corp score went into the high 80%s. Can anyone contest answers anymore? A disadvantage we had is that passing scores were curved, like the CPA exam, so if a bunch of geniuses happened to take the test when you did you might not pass with the same score you earned at a different sitting. Do your best, answer every question even if it's a wild guess, and do NOT go back and change any answers. Time again, that practice has proven to be fatal.
  3. Contact the IRS liaison for your area. They deal with systemic problems. Explain that the computer is not reading the form and fortunately for this client, the refund will be corrected. How about the other taxpayers who had the same issue but didn't get through to such a patient agent? Ask that all such returns be reviewed. The liaisons can make sure problems with IRS systems get fixed.
  4. I actually prefer the Regs to the Code because they usually contain great examples. Anyone who has taken an EA prep course is well-versed in triple negatives ("underline all the NOs and NOTs and count them backwards).
  5. If they insisted they didn't get the stimulus, I did enter zero. Some did and their refunds were short. Not my problem. The only pattern I discerned of people who said they didn't get the money were MFJ returns where a spouse had died. I had enough of those where the surviving spouse said no second stimulus was received to believe them. I put in zero for the second and in all cases the rebate recovery was paid. At least I believe it was because if not I'm sure I would have heard about it!
  6. Half of taxpayers probably don't remember receiving their stimulus. Most of those discover they did when we make them look it up. I had one who says he did look it up after I asked, still swore he didn't get it, and then looked it up again when he got the IRS notice. Sure enough, he got it. I would trust the IRS on this one. He can set up a taxpayer account and see what they sent him and how. Someone on this board said their client who didn't receive the stimulus discovered IRS had a issued a debit card, which is why it didn't show up on the bank statements. This is NOT OUR PROBLEM to solve but the client's. We've given up trying to help and just give them IRS phone numbers.
  7. I have a client who ELECTRONICALLY paid $5k with his extension. Turns out he had a huge refund, which came in $5k short. IRS transcript shows the $5k received. This coupled with the other comments here suggests the IRS is now so dysfunctional they aren't even keeping track of the money. Okay, so they can't answer phones or timely look at faxes or correspondence or do enough audits, but keeping tabs on the money? Hey, they're part of the US Treasury, whose job is to account for the money. We might need a new accounts receivable department.
  8. If that is the case, no OIH in deduction?
  9. These things happen when the software automatically populates fields and we're too busy to attend to minute details. (Anyone pay attention to some brokerages that changed addresses last year?) I looked over the revised Pub 1345 for efiling and was hit with the requirement that if a client has moved and the tax forms have the old address, we are supposed to enter it into the space provided. I guess I always knew that but stopped doing it long ago. Also, any handwritten or typed tax form has to be marked nonstandard. Such items may seem insignificant and don't affect the numbers at all, but I guess they're important to the efile and identity theft guards.
  10. The advance payments end in 2021, so unless congress decides otherwise there will be no advance in 2022. Reminds me of years ago when IRS offered advance EIC payments so the money could arrive monthly to help with bills instead of all at once at tax time. After a few years they discontinued that option because of lack of interest. Anybody remember that? An issue this year will be that people will be surprised when their refund is lower than usual because they already got some of the credit. For example, if they normally get a CTC of $4000 for two children, this year they are entitled to $6000 but already got $3k, so the credit on their tax return will be $3k instead of $4k. They might notice that. I am so not looking forward to the coming tax season!
  11. An LLC is a business structure granted by state statute. For federal tax purposes, it is disregarded. All it does it protect (sometimes) an owner's personal assets from being seized in a lawsuit against the company. That's why it's called a Limited Liability Company. It does not make a passive activity active. Real estate professionals who meet the material participation tests file Sch C, not Sch E, and can claim home office. Your client's single rental property likely is a passive activity (unless it's a huge complex that he works on full time). In a nutshell, forming an LLC and putting property into it is a state classification and has nothing to do with federal taxation. To the IRS, it's still whatever type of business it is and all the usual rules apply.
  12. I do a lot of deceased taxpayer and estate returns and would NEVER check the box that there is no court appointed rep if that is not the case. The refund will come to the person who signs the 1310, who is supposed to distribute it according "to the laws of the state." What is s/he doesn't? If a court-appointed rep, the refund is paid to the estate, and the court verifies that it is distributed according to the state law or will. If you check that there is no court appt on the 1310 just to be able to efile, you may be cheating the other beneficiaries (or creditors) out of their rightful share if the payee just keeps the refund. Don't do it. I also don't understand how you can attach docs that aren't listed on the 8453.
  13. What will we put to verify identity on the ELF screen? Last year's AGI automatically populates in UT, or we take it from last year's return if we didn't prepare it. These numbers come from the original return, so we ignore amendments. Now that IRS is changing AGI, without an amended return, what number will go there? UT and I'm sure most other programs automatically updated returns when the unemployment mess got cleared up. It wouldn't if we never entered the return again after it was efiled, but we had to enter many to amend the state. So the new numbers will get proformaed. Is this another reason tax season 2022 will be a time-consuming disaster? (In addition to no one remembering the $1400 stimulus that came over a year ago by he time we see them, advance child tax credit, increased state refunds because of unemployment, and on and on and on.)
  14. Read the trust document. Ask questions of the trustee (the ones in my first post). Rather than have the potential tax liability hanging over them, maybe suggest they just pay the tax bill and distribute the remainder.
  15. What kind of trust? If revocable the house will be part of the estate and IRS will have claim to its piece. Irrevocable, it depends. Did the deceased have a retained life estate? Regardless of whether it was written or unwritten, if he lived in the house and paid the bills the house is part of the estate. Did he put the house into trust after the IRS debt was noticed? Did it go to the trust after death? In either case the IRS may have claim on it.
  16. Charging that kind of money for audits and you only need a few clients a year!
  17. Sinister! All that money this crook owes might buy the IRS a new computer or two or a few printers or maybe some phones and people to answer them.
  18. Spouse might not be so innocent; the IRS will determine how much she knew when it reviews her innocent spouse claim. I wouldn't touch it. His criminal attorney surely has contacts with a good tax attorney for the spouse. Just decline the engagement because this situations calls for an attorney.
  19. Sara EA

    Coinbase

    Yes, converting one coin to another is a sale of the first coin (Sch D) and a purchase of the second (no reporting), just like selling Apple stock to buy a fruit farm is a sale and a purchase. Both sales and purchases come with fees, just like many brokerage accounts used to impose. Brokers will usually report proceeds net of fees; Coinbase does too, but I'm not sure of other crypto exchanges. I will never embrace crypto! I have been fascinated by it ever since a client started mining years ago. The boss gave that piece of the return to me and told me to figure it out. Now I'm hooked and not only have taken several courses but follow the business news about crypto. I would never buy one though. Even my miner client says he can't wrap his head around non-fungible tokens (like digital "original" artwork, first-edition digital baseball cards, etc), but I don't see the difference between those and cryptocoins. Blockchain technology can establish proof of ownership and definitely has a use (no more title searches!). Digital coin transactions, however, are mostly the traders placing a value on essentially nothing and waiting for another trader to buy the nothing for more than they paid. Perhaps someday they will be useful for purchases of goods and services, but not until they become less volatile. No way will I accept $300 in bitcoin for tax prep knowing it might be worth $250 in the 10 minutes it takes to convert it to cash (of course, it could be worth $350 by then, but I'm not the gambling type). The prolific use of crypto for ransom and money laundering taints it as well.
  20. Sara EA

    Coinbase

    Follow Pacun's explanation to get a grasp on crypto. IRS regs consider crypto to be property, subject to the usual cap gain/loss rules with the exception that wash sale rules don't apply; no FBAR reporting is required either at this time. (Not sure about a Venezuela registered account though.) The FMV of the "rewards" is reported as other income, because the client got something of value for nothing (just like getting interest). I'd say the Venezuela freebie is also other income (just like banks used to offer you $20 to open an account), again because you got something for nothing. Crypto purchases are not tax reportable (just like buying stock isn't; IRS even says not to mark the box on the return if the client only bought crypto). Sales, however, are capital transactions. Conversion is selling one type of coin to buy another (just like selling GM stock to buy Ford stock), so it goes on Sch D. Using a coin to pay for something is also a sale, but hardly anyone ever does that. Moving coins from one wallet or exchange to another is not reportable, just like changing banks doesn't have any tax implications. Just think of the coins as stock. If you buy it, nothing to report. If you sell, it goes on Sch D. Tell crypto clients to get the tracking software. My clients who have it produce a filled in Sch D complete with 8949s, which I attach to the return. Coinbase statements often don't give dates and even if they did, the prices of various cryptos change by the second so there is no way to look up FMV like you could for a stock. The software may also account for things like "hard forks" and "airdrops" that I won't confuse you with because I'm confused! The basic rubric, though, is treat it like a stock transaction--that should make it simpler in your mind and eliminate most of the noise.
  21. Apparently if you owed tax and requested a direct debit, even though IRS had your banking info the return only authorized them to take money out, not put it in, so those folks may have gotten checks or dr cards. SS recipients have direct deposit info on file with SSA, so I'm not sure if IRS was able to use that if the client owed tax.
  22. Prior to EIP3, you could go to irs.gov and look up your EIPs. Years back you could also look up special credits with an IRS tool. Wishful thinking here, but it would be great if IRS would make both payment amounts available online.
  23. Gail, did your client's debit card perhaps get stolen and used by a thief? Anyone get one and know how they get activated? Is it easy for someone else to do? And how did IRS decide who gets a debit card? I have one client who got the 3 stimuli payments all three ways--direct deposit, check, and dr card. I find it hard to believe that so many people just threw them out. When an envelope contains a plastic card, you can feel it. When you get a credit card the month your old one expires, it too comes in a nondescript envelope. Do people throw those out too?
  24. This is overkill. When a business is audited, the first thing asked for is bank account statements, so that info is available when there is "need to know." If they actually looked at just about all bank accounts, there would be so much data it would be impossible to mine anyway. As for hiring more employees, we all know how badly the IRS needs them to conduct audits, answer the phone, open correspondence. We never thought about the people who do those things until this year when there aren't enough workers to get them done and it's affecting us and our clients.
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