Sara EA

I wouldn't bother. With PTPs, losses can only be taken against income from the same PTP. If no losses are deductible, they won't affect federal or state income in states that start with federal AGI. It will only make a difference when the shares are sold, and the worksheet the PTP provides at that time should show the state amounts. Does anyone ever pay attention to that long list of state amounts on the K-1s? There are not enough days in the year to do that. I figure if the states actually notice they'll tell us.

Jerry W is absolutely correct. No money is to be distributed from the estate until all the bills are paid. If the beneficiaries took the cash before the creditors, they are indeed liable for the bills. Don't even think OIC, the law is pretty clear. In this case, it may be that the money was distributed before the taxpayer died? If so, were gift tax returns filed? Gifts made within three years of death are included in the estate, so the heirs can't claim it only has $1k. Its bank account may only have $1k, but the rest is sitting in their bank accounts.

Excellent advice. I assume you already agreed on a price for the business based on percentage of invoices of retained clients. In that case, your question is how much should you be paid as an employee of the new owner. Do you really want to be paid on commission? That tactic is used by HRB and others to ensure that employees actually work instead of play on their phones all day. You are a professional and unlikely to do that, so you either need an hourly rate or salary. With your credentials and experience, and being in VA Beach, I would think $40+ an hour. I think commission-based pay can be detrimental in the tax business. People will decline to do returns they know will require research, or slack on the research. They may cut off clients who need help with say W4s or an IRS notice. No one is going to want to do an amendment on a return a former employee of the company messed up. Face it, a lot of what we do as a service to our clients is unpaid but is excellent client service, which is what keeps them coming back. On the other hand, if I was paid on commission I would never take another phone call about the stimulus payment or advance CTC!

Yesterday I decided to learn more about the new CTC, advance, repayment etc. I ended up more confused than when I began. The advance phases out after AGI of $150k MSJ, $112k HOH, and &75k all others. The phase out is $50 for every $1k over. I didn't do the math to see where it ends. The normal $2k credit begins to phase out at $400k MFS and $200k everyone else. Repayment has a couple of safe harbors but I couldn't figure out how they intertwine--something like no repayment for AGI $120k, $100k, $80k, and full forgiveness up to $2k if IRS claimed the advance on too many kids for AGIs less than $60k, $50k, $40k. I might have the above all mixed up, but notice how every calculation has a different AGI starting/ending point? Who came up with this confusing/complex/no rhyme or reason perplexity??? I think we're all going to have to do something we hate to do--blindly rely on the software. Or maybe we should all demand that any politician who wants our vote have to submit the answer to the CTC for, say, a couple with three kids making $190k, and show proof of work done by hand!

We recently had a client who had rented an office building to a nonprofit and eventually donated it to them. He got the certified appraisal (40 pages worth) that I told him he needed. However, the appraiser refused to sign Part IV of the 8283, claiming he didn't appraise it for IRS purposes or something like that. I believe the two of them are battling it out now about why the client paid for an appraisal to certify FMV and now the appraiser won't attest to it. Have your client hire an appraiser very carefully!

I had this happen to three taxpayers with the exact same error message one year. I contacted the IRS liaison for our region (they deal with systemic problems), he looked into it and found it was a programming error so it got fixed. My error messages occurred during filing season, so maybe after a certain date Soc Sec cuts off those numbers? Maybe the bug is back? You can notify your liaison, but at this point you have no choice but to paper file.

Don't want to sound like a snob or know-it-all, but most of the IRS freebies I've taken have been way too basic. Nothing there you can't learn from the pubs. I took one on due diligence this year just to find out what documentation is acceptable to prove a child lives with the taxpayer, etc. The presenter said you don't have to list any if the responses to the questions seemed "correct, complete, and consistent," but our software doesn't know that and won't pass a return through diagnostics unless something is listed there. I didn't lose any money, but that's an hour of my life I won't get back.

All this to opt out? I would think it would be necessary if someone was updating info like bank account, address, child added to return, in case any of those changes are fraudulent, but you have to prove who you are to say you don't want the advance? I have a client whom I advised to opt out because income will go way up this year, and she didn't complain of any problems. Are they asking everyone to do this?

The child tax credit is for children under the age of 17. The advance allows for children who turn 17 in 2021. Any other child, whether an 18-year-old student or 25-year disabled child does not qualify as a "child" for the credit. Your client's daughter does qualify her for the "qualifying relative" $500 deduction, but no child tax credits.

I just had a request for a first-time penalty abatement denied too, even though taxpayer has always been current. The reason given in the IRS letter was that he did not qualify for "reasonable cause," which is not what we asked for. Has artificial intelligence been answering these requests? If so, it's certainly not very intelligent.

I read today that IRS is ignoring the 30-day thing and allowing taxpayers to verify beyond that time limit. But the poor frightened people don't know that! I wonder why the online system is down. A few years ago the system to recover an IPPIN was disabled as was the sharing function for the FAFSA because the ID thieves had enough info on the taxpayers to answer the questions no problem. Did it happen again?

I have a retired client who has a similar notice and called IRS THIRTY times and never got through to anyone. Her notice said she could not verify online (she is capable of doing so). This is terrible customer service, and I told her to contact her US rep and senators to tell them to fund the IRS so it can actually serve taxpayers. What a horrible situation for all the recipients of these notices--they're scared that their ID has been compromised and then can't reach anyone to help, all under time pressure. Unacceptable.

Our firm has taken the position that we will not recommend that clients take the money or opt out (except in cases where 2021 income is certain to be above eligibility). We wrote a generic email to respond to client queries that explains that there is an enhanced CTC and that half of it will be paid in advance for taxpayers within certain income parameters. Receiving it may lower their 2021 refund, or if their income rises above the limits in the IRS letter, they will have to pay some or all of it back. If they think their income will rise or they like the idea of a big refund all at once, they might want to opt out. If they need the money now, they might choose not to opt out. (We are not calculating their amounts or making the decision for them!)

I've been dealing with crypto for years because I have a client who is a miner. I had to study it, was fascinated, and now I follow it (would never buy it). By now a few other clients are buying/selling various coins, so I'm able to handle them. I will back out if any one of them ever starts buying everyday items with crypto as the constantly changing price would be impossible to trace. Few actually use it as currency, and I don't know why any merchant would accept it. Say someone buys a Tesla for $80k, but by the time the transaction clears (up to 20 minutes for bitcoin), the value of the crypto could have gone down by $5k or more (or up). I read about a guy who ordered a pizza and by the time the transaction cleared it cost him $23 more. The exchanges are going to have to do the tracking (like Coinbase does) because otherwise the taxpayer and tax pro and IRS will never be able to figure it out. It would mean a five day audit for a $20 transaction.

We find that you can't beat ATX for price and ease of use for 1099s, W2s, etc. For our practice of maybe 1500+ returns, including lots of partnerships, S and C corps, trusts, estates, some nonprofits, and many complex but some simpler individual returns, ATX does not meet our needs. We use UltraTax, which is expensive but very powerful and does almost everything we need. It isn't perfect on states, but close. A weakness is the tax projection module, which doesn't consider increases or decreases in credits depending on projected income. Of course, they sell a separate projection piece, which I'm sure does a better job for a higher fee. That brings me to an issue we are all seeing more and more. Things that used to be included are now part of a separate package for a separate fee. Even Quickfinders, which used to tell us all we needed to know, now has frequent references to "see our XXX book," sold separately of course. You can't buy Adobe any way but subscription now (with constant reminders to upgrade to the next level). Heck, Mahjong and solitaire used to come with your initial software but no more. I used to get a printed offering from Comcast showing what stations were included in which packages. Now I can't even find it on the website, so I'm afraid to downgrade in the event we lose one of our few must-have stations. Businesses are just too clever.

The eastern panhandle of WV is beautiful and has a vibrant economy, certainly other areas of the state do too. There is much to praise about residents being independent. You won't find a million fast-food restaurants but lots of mom-and-pop places with great, affordable food. Not many big box stores, but you will get to shop at local hardware , appliance, and furniture stores and niche sporting good, auto, plant, you name it places. I once bought a bag of mulch at a local ACE hardware store (family owned), and it was bagged in nearby Virginia. No matter where you go in WV, you'll feel like you're in a neighborhood.

We had an incident when the person doing the efiling filed parents' return instead of son's (same first name as dad). We hadn't started the parents yet, so the filed return was blank. Imagine how many lines of "explanation for changes" that took. The culprit no longer works for us (not her only mistake).... I'm impressed that people are filing amendments already. We have so many on extension that it will be months before we get to amendments. Almost all of our state returns with unemployment that were filed before the law changed will have to be amended. We will have to triage here: Extensions where people will owe money first, then regular extensions if we have the info, then amendments for unemployment, and last amendments where people found another form or just thought up some deductions. I guess the principle is initial filings get priority, then amendments not the fault of the taxpayer, then amends for those who already had their chance to do it right the first time. I'm starting to worry about clients who had lowered income in 2020 but are back to work. That advance child tax credit is going to be sent automatically starting in July. Many will not be eligible based on their 2021 income and, unlike the stimulus payments, my understanding is that overpayments will have to be returned--making for a very unhappy 2021 tax season. Ideally we can warn these clients to opt out of the auto deposits, but I don't know how to begin to identify them. What are others doing?

No loss allowed if sold to a related party. I believe the unallowed loss is added to the new owner's basis provided she holds on to the house for a specified period of time. You can research that in your spare time since it won't affect anyone's taxes in 2021. (Spare time--what a concept!)

A little south of Winchester. I would love to connect with more tax pros here. I cannot imagine how you solo practitioners do it. I've always worked for a firm with other tax pros to bounce thing off of and help or get help when needed. I belong to both NAEA and NATP, and over the years in CT I got to know lots of people from attending seminars together. I am working remotely for the tax firm in CT where I've been for 18 years or so and interact with my colleagues there, but here in VA I don't know a single person in this crazy business.

I could be wrong, but I seem to remember from an update course that unlike the stimulus payments, the advance child tax credit will have to be paid back if 2021 income is not what the IRS calculated the credit on. This year I had a few clients who could not come up with how much stimulus they got, but when I looked at their 2020 income and realized they were not going to get any more anyway, I just plugged in the standard amounts or entered zeros. (Say they really got $1k instead of $1200, but their 2020 income was too high to get anything, it made no difference what I put in there because they were definitely not going to get a recovery credit.) We won't be able to do that with the advance child tax credit in 2021 and will have many clients moaning when we present their tax bill. Right now we don't know enough about it to warn them. The IRS may do that, but how many people won't read it because they are thrilled by the thought of getting extra income?

Get ready for the phone calls!

We have been in VA about a year a half and love it. The people are genuinely kind, real southern hospitality, and it is beautiful here in the Shenandoah Valley. Real estate taxes are less than a quarter of what we paid in CT, gas is cheaper, utilities and insurance are less, roads are in great condition, state budget is healthy. Housing is expensive though, and we aren't in the beltway. Our son lives 40 miles away in WV. It too is a beautiful state with low housing and property tax costs. You can get any environment you want there--mountains, plains, rivers and lakes. I don't know why it hasn't been discovered by the masses yet. What is neat about both states is they have history everywhere--castles, plantations, revolutionary and civil war battlefields, underground railroad sites, canals that existed before the rails dominated. Take some vacations this year to explore potential new home sites. Looking at the zillions of returns we have on extension, and all those state returns that will have to be amended after the late federal changes, it looks to me like another tax season that will never end. This one will hurt more because last year we couldn't go anywhere even if we had time; this year we sort of can....

I had to learn about VC several years ago when one of the boss's clients started mining. He's my client now and still mines. He has the magic software and this year gave me a 29-page 8949, all filled out. Put the totals on the return, attached the pdf, done! He did all the work (well, his software did), but I still charge him a lot because of my "specialized knowledge." As of now, VC is not subject to FINCEN reporting. Proposed rules may change that. If held in a foreign exchange and greater than $50k, it should be reported on Form 8938.

If the house is mortgaged, the bank has the title so your client can't gift something she doesn't own.

Does ATX have a more powerful (expensive) version that will do the 8615? In UT, you simply mark one return as the parents. Then you go to the utility, choose the parents and each sibling, and run it. Done! Last year it even told if it was better for the child to use the trust or parent tax rates. I too used to set up each family member on different computers and run back and forth. It was work and doubtless less accurate. Can you save or print each child's return before the kiddie tax calcs and the parent's return to somewhere and work from there (hopefully you use two monitors)?