Sara EA

How does the bulk extension fill out the 4868? I hope not all zeros!

I don't like the practice of criticizing other professionals because it's not, well, very professional. When a client brings me a return prepared by someone else, I never say "that person messed up," but maybe something like "s/he did this differently than I do" or the code changed that year or whatever. We never know if the prior person had all the docs the client brings us, or if the client answered questions the same way. I respect letters after names, like EA and CPA, because I know how hard it is to earn them. And all of us, letters or not, make mistakes. Think of McDonald's commercials. They never even mention competitors (unlike their competitors) but just highlights how wonderful their own offerings are. I disagree and have only been there maybe once in five years because it was the only quick place around, but that doesn't mean they don't know how to cook.

You would have to do interest tracing.

Where is IRS interest deductible? It is not an "ordinary and necessary" business expense, and for an individual taxpayer it's personal like with a credit card.

I had a self-employed client who owed in the five digits every year. The first time I prepared his return I dreaded telling him he owed something like $20k. He didn't even flinch. He said he makes better use of that money in his business during the year and the profits more than make up for the interest and penalty. He had figured out what was best for him. I like Dennis's idea of having all the withholding in December. For clients who take their IRA distributions in December, they could have their year's taxes withheld and not bother with estimates. Now that banks actually pay decent interest, putting the estimate money into a savings account could yield some profit. I usually pay all of my estimates at once in April since I make most of my income in the first quarter and have the cash. I might rethink that strategy.

This is a legal argument, not the bailiwick of the tax professional. Don't go there. While we aim to please and serve our clients, sometimes they ask too much of us.

The remainder interest is subject to gift tax and Form 709 should be filed. This from the instructions: "The value of all annuities, life estates, terms for years, remainders, or reversions is generally the present value on the date of the gift." Since this is a gift of a future interest, there is no annual exclusion.

Isn't that what Excel does, with speed and accuracy? I know, sometimes it feels like you're more connected with your finances when you interact with them manually. I still keep a paper checkbook register and balance it almost monthly (tax season doesn't count).

Part-year residents are generally taxed on income earned in the states they lived in in each part of the year. Check the two state websites. In the states I am familiar with, wages, interest, dividends, etc. are broken down by which state the taxpayer lived in when they were received--there is no credit for taxes paid to other states because each one only taxes the income received while t/p was a resident. If your client was truly a resident of WI when he sold property in KY, it will probably still belong on the WI return. Only if he was a full-year resident of WI would his income be taxed a WI rates with a credit for taxes paid to KY.

A revocable living trust usually goes on the grantor's 1040. The exception is when the trust has an EIN and it is used on bank or brokerages accounts. The trust gets the 1099s and must file a 1041. You can elect Treas. Reg. § 1.671-4(a), which leaves the 1041 blank and provides a statement of income and expenses to be shown on the grantor's individual return. It essentially tells the IRS that these amounts are being reported by the grantor.

What are you reading? Form 1310, Part 1, Line B is where you check the box that you are the personal rep. It says nothing about amended returns. Read further in the instructions that are part of the form and it says: "For purposes of this form, a personal representative is the executor or administrator of the decedent’s estate, as appointed or certified by the court. A copy of the decedent’s will cannot be accepted as evidence that you are the personal representative." Why is everyone making this so hard? File the 1310. If you don't, you'll get an IRS notice and refund will be delayed for who knows how long.

Form 1310 is definitely required. For purposes of the form, a personal representative is someone who is CERTIFIED, and that includes a court-appointed executor. Spouses and someone who was not named by will or the court are the only ones who get away without filing 1310. Read the instructions to the form: "For purposes of this form, a personal representative is the executor or administrator of the decedent’s estate, as appointed or certified by the court. You must check Box B.

I don't like to file zero extensions unless I'm absolutely sure the client is due refunds. IRS can reject extensions you know. Say someone ends up owing $50k and filed a zero extension, IRS can say No Way and hit him with failure to file penalties. I've never seen it happen--has anyone else? I'd have the client pay $10 or something with the extensions.

To get the exclusion, the instructions clearly state that each spouse must meet the residency requirement. It says nothing about children living there. Looks like your clients will have to pay cap gains tax but, hey, they made A LOT of money on the sale. Don't forget to add selling expenses to their basis. I bet the realtor commission was enormous.

At a seminar an IRS agent once told us that the only vehicle IRS believes is 100% business use is a cement mixer.

No offense taken. I've always resented being included among "you guys," perhaps because after growing up in a household of three girls, my own family was all male (even the cat). I did not want to be included with those creatures that eat over the sink, miss the toilet, and think armpit burps are hysterical. I was just trying to inject a bit of fun into the decidedly unfun days we are all having right now. EVERY return I started today had things missing. Grrrrr

Ahem, I take offense at the title "You Guys." Many posters here are not guys. Did you only want the guys to answer?Now that I've moved to the South, I've taken a liking to the term y'all. It's gender neutral, respectful to both old and young, and sounds friendly. I used to think it was slang until I read some linguists' take on it and I'm now with them.

This was a grantor trust until the grantor died, so yes there was step-up basis in 2002. The wording you quoted clearly shows that the father retained power of appointment (he could do whatever he wanted with the trust), so it was a grantor trust. Not sure if it was a complex trust, which can change from year to year, but that doesn't affect your answer to this question.

In our business we spend so much time in front of a computer screen that I have no desire to read on one. We even get physical newspapers and enjoy our coffee and papers in the morning on our porch (even in the cold weather, just not for long.) I do subscribe to the NY Times and Washington Post online, although we buy the physical Post on Sunday and read it all week. I too love physical books. Nothing like flipping back to find what happened in an earlier event or to remember who this character is when he resurfaces. I get most of my books from friends and at the library book sales. I do love our local bookstores too, but I can't keep myself from going overboard when I visit. I don't keep many books. Almost all get passed on to friends, sometimes more than one, and a few donated. I'd rather have others enjoy them than collect dust on my bookshelves maybe to be read again someday. Share the wealth! Maybe that's another reason why i don't care for ebooks--you can't share them.

The fatal problem with AI is that it doesn't know how to say, "I don't know" or "I'm not sure," or our favorite in the tax business, "It depends." That inability is what gets it into trouble when it hallucinates, makes things up, gives irrelevant or wrong answers. When I retire next year I'll just do the office's trusts and estates plus family returns. That's enough. Time to organize those old photos, revamp the gardens, read more books, explore more of the history and attractions of our new state, help out at the library that does so much in the community, just maybe volunteer for AARP or VITA, spend more time with friends and others I've met whom I'd like to know better. It will be a relief to be free from so many commitments and deadlines.

Does it work with AMT? We haven't had much 'splaining to do since the TCJA, but it wasn't easy before then and won't be again if Congress lets the new exemption amounts expire in 2025.

I plan to retire next year, and the only thing I will keep is trusts and estates! To each his or her own. Jasdim did not make a mistake. The client did, but blames the preparer of course.

Jasdim, when this stuff happens I turn proactive and turn the tables by telling the client that I am here all year and why didn't s/he talk with me before taking such a huge distribution. If your client (ex-client?) is on Medicare, wait until he finds out his premiums go way up in a couple of years.

So does it get an energy credit or not? I think not. Solar just opens and shuts the panel, like the highway signs with the little solar panels powering them. The Dept of Energy states these are eligible, "Solar PV panels or PV cells (including those used to power an attic fan, but not the fan itself)." So maybe the cell is eligible but not the skylight.

If the state is classifying the money as stock proceeds, to me that means the state sold the stock. Now they are passing the proceeds to your client. He must report on Sch D. If he knows the cousin's date of death, just look up the value on that date for basis.