Sara EA

You are correct that if the properties are treated as one enterprise, actual and suspended losses on one stay suspended until all are sold. That's one reason I never make this election.

Doesn't sound like a partnership to me. Your client was merely an investor. The money received on his investment is cap gain. He put in $1.09m (58%), partner put in $775k (42%). Client is getting more than his share of the sales price.

The trust doc provided more info than the original post--lesson learned that we must see it! Still confusing though. If the wife had power of appointment, she could do whatever she wanted with the assets, yet the trust doc said she could only withdraw up to 7% principal each year. Rather than drown in the legal terms, just include it in her estate since she won't being paying estate tax anyway.

None of this goes in the wife's estate because she did not own the assets, the trust did. This is an irrevocable trust that gives her the right to income (I think, not clear from the info given) and a limited amount of principal. Upon her death, the assets owned by the trust go the beneficiaries and the trust dissolves. The 1041 will have three beneficiaries--the wife's share of income received before death and the two children's share of income each received after her death. If the assets have been distributed, you can put the property distributions on the 1041 at the trust's basis to zero it out. No income there--the 1041 is an INCOME tax return. Are you actually filing a 706? The wife would have to have $12 million in assets to necessitate one.

You have to enter ALL the divs reported on the 1099 and then back out the ones received after death. Otherwise the computer matching will result in a letter from IRS.

You have to enter the entire proceeds, cost, etc from the consolidated 1099 as usual. On the next line I put "IRD reported by EIN XXXXXX" and enter the totals pertaining to the sales that occurred after death as negative amounts. Stick with the costs reported on the 1099 here, as you just want to end up with the gains/losses from before death On the 1041, I enter the brokerage name and "IRD reported to [deceased's SS number]." Use the date of death value as the cost. You have to do the same thing with the dividends and interest if any. Be aware that any dividends paid after death on a stock that is later sold may be short-term if the div was reinvested into the stock after death. I charge A LOT for these returns.

I think the mileage would be a start-up cost. He closed a rental enterprise and is starting a new one. Travel would be a deductible expense if already in business, not a capital one. The capital investment is a different category. Here's a quick reference: https://www.irs.gov/newsroom/heres-how-businesses-can-deduct-startup-costs-from-their-federal-taxes

He will owe NY tax but will get a credit in KY, so total tax paid will be roughly the same. There will be extra cost for the NY return though.

Take a look at IRC Sect 6103. For joint returns, both spouses are entitled to copies of the joint individual tax return. For the partnership, Section 61403(e)(1)(C) states copies can be provided to: in the case of the return of a partnership, any person who was a member of such partnership during any part of the period covered by the return; There is a later section that states the requesting partner cannot get the parts of the 1065 that relate to the other partners, e.g., K-1s. If their info is listed within the body of the 1065, white it out before copying. So you can provide either or both with copies of their 1040 and 1065.

I too am due for EA renewal next year and will pay whatever they want because I NEVER want to take that exam again. Fortunately, my employer pays for continuing ed. I renewed my NAEA membership this year but think I won't going forward. It's expensive for the benefits received, which to me is pretty much the journal. I love their journal, but their meetings where I can network with other tax pros are so far away I'd need a hotel stay. I find their forum so-so; many posters try to be helpful but others seem bent on showing off their knowledge and putting others down. Nothing like here, where nearly everyone freely shares, emphathizes, and truly tries to help. No one cares to be the smartest person in the room. Clients who do their own accounting don't realize that you may have to do hours of cleanup. I had a client whose relative did the books, and it took me a full week to do it right. (Dunkin' and McDonalds charges listed as "meals and entertainment"; cigarette purchases and wife's gas station fill ups under transportation, and on and on). Tell your client no discount or price reduction until you see how long it takes you to clean up. He might not save a dime, and it might just cost him more (especially if he uses QB online, where changing things takes a whole lot longer than original entries).

Your clients will not lose the $1400, only the $500. Since the daughter got an extra $1400, the family comes out ahead $900. Amending the one return and paper filing the other will take a year to process, and then the IRS queries will take months longer. Is it worth it? There have been many posts here and all over the tax blogs about students who graduated in 2021 and claimed themselves, so they got the $1400. Their parents already got the $1400 for that student based on their 2020 return. No paybacks required. Look around to see.

I had an instance a few years ago when a student sold her eggs to an egg donor place and didn't tell her parents. She got a 1099 and the s*** hit the fan come tax time. I wouldn't automatically rule out identity theft, but since your client's daughter got and cashed the check I think Lion's suspicions should be considered. Will the parents save at least $1400 on their return by claiming her? If not, I'd let it go and file their return without her. If she incorrectly claimed herself, let the IRS handle that one.

I don't know which version iphone I have, but I've had it for quite a while. I don't have a notice for an update, but I went to settings and it said an update was available, so I'm installing it now. Thanks for the heads up.

In the bill the senate just passed (making it likely to become law when the favorable house votes on Friday), it looks like the energy credits for EVs will be applied at the dealership--leaving tax pros and the IRS out of it. YEA!!! Of course, buyers will most likely have to provide the dealership with tax returns to verify AGI --not sure if I'd want to do that. Also, they will only be able to provide the return from the prior year, and I don't know if the bill will determine eligibility for the credits on the prior or current year AGI. Yes, we will have to learn a lot about the application of the law to explain to clients, but at least we don't have to determine if the car or buyer qualifies and calculate the credit. This is a rare social policy initiative that congress hasn't dumped on the IRS; they too must be relieved. Now if they would just get EITC out of the tax administration system and into social services where it belongs....

First look for a reason the returns were possibly pulled for further examination. Did either client claim the recovery rebate credit? Perhaps purchased insurance through the exchange and didn't include Form 8962? Those returns that need a person to review are taking forever.

A full-time student under age 24 who does not provide more than one-half of her own support cannot file independently! She must check the "can be claimed as dependent by another" box and is only eligible for the nonrefundable portion of the education credit. (I sometimes do this for parents who make too much for the credit and the dependent has a tax liability that can be offset by the nonrefundable credit.)

While hand-written charts, spreadsheets, even software may work well, they all require extra steps. You have to go to whatever system you've set up and mark off each step. Ours is a more visual system: incoming work goes in the inbox, then to the "needs info" box if necessary, then to the "awaiting sigs" box, then to the "ready to efile" box, then to the "accepted and ready to scan" box. No extra steps. I for one would forget to go to the master system to record each step, especially during the busy season.

TP A is a limited partner and is subject to SE tax only for services he provides to the partnership. He doesn't provide any services, just money. Hey, if hedge fund managers pay cap gains tax on their enormous earnings (really derived from services), TP A should get the same treatment.

When you are working 110 hours a week like jasdim or have a five-month turnaround time like Lion, it is time to hire help! We all get calls from clients wanting to know if their returns are done (even if they dropped off yesterday). In our office we avoid the guilt by having the receptionist who answers the phone ask if we have called them. When they say no, she just tells them we will call with questions or when it is done. This avoids the guilt because we don't get those calls! (To emails, I just respond that they are in queue.) In Lion's case, perhaps you can alert those with particularly complex returns that they will go on extension because their work will take up too much time during season. We do have a group of returns from a family that it crazy complex (corps, s corps, partnerships, multiple trusts), but they always bring their info to us in January. We get them done before things start getting crazy in mid-Feb. We don't always have their individual data in January, but at least the hard part is done early. Can either of you convince some clients to aim for January? I am serious about hiring help. The hard part is getting competent help. We have too many clients and not enough of us who know what we're doing (and just as important, who know what we don't know). We have hired several preparers but have discovered that it takes a few failed tries before landing a good one.

Did you complete Schedule AI of the 2210? It is not enough to "explain" that your income varies by quarter, you have to do the math on this schedule. I've done it for clients multiple times. It's a pain to fill out and very time-consuming. Even when huge increases in income occur in the last quarter, I have never seen the result amount to more than a minimal reduction in tax. I've stopped doing them because it was ridiculous to charge the client $150 for my time to save them $20 in tax.

When I filed my mother's inventory with the state years ago, the attorney told me that she was the only decedent she'd ever encountered who had cash in her possession!

I doubt that any of us even question clients about these lesser gifts. I've filed lots of gift tax returns but have never asked if they also gave their offspring $25 with a birthday card, bought them a sweater for Christmas, or took them out for lunch last Sunday. Nor has any client volunteered this info. Should I be asking? Would the IRS actually ask about this? The only ones I can think of who would care would be the states if the giver eventually applied for Medicaid. Christian, Pub 550 contains detailed information and an example of how to report previously taxed interest. Essentially you report the amount on the 1099INT when the bond is cased (which will be all the interest the bond earned since purchased), the enter on another line "U.S. Savings Bond Interest Previously Reported” as a negative number. This will include the accrued interest her dad reported when he transferred the bond and the accrued interest she was required to report each year after that. Since most savings bonds are online now, and this one will be when transferred, do advise your clients to create an inventory at treasurydirect.gov. You enter the bond purchase date, face amount, and serial number, and you can update it each year. While treasurydirect will give you the accrued interest each year, only the inventory gives you the lifetime amounts as well. This way when the bond is cashed you have a clear record of how much accrued interest was already taxed. (I once complained to treasurydirect that I couldn't find the total accrued interest, and they told me to use the inventory feature.)

From the instructions to Form 709: The value of a gift is the fair market value (FMV) of the property on the date the gift is made (valuation date). I don't think basis comes into play, unless Series H bonds. Your client will report the current value of the bonds as the gift and report all previously accrued interest on his tax return. While he seems to want to avoid filing a gift tax return (even though it is unlikely any gift tax will be due), the bigger problem is adding all that interest to his income in one year, potentially raising his marginal bracket, taxing more Soc Sec, increased Medicare surcharge, etc. You can crunch those numbers for him and perhaps end up advising him to spread the gift over a few years.

When ownership of a US Savings Bond is transferred, the original owner must report all previously accrued interest on his or her tax return for that year. The new owner must then continue to report the interest that accrues each year. The same rules apply to inherited bonds. From Pub 550: Ownership transferred. If you bought Series E, Series EE, or Series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. The current value of the bonds would be the amount gifted. I'm not sure how you'd calculate basis. Heck, is this guy ever going to reach the $12M lifetime exemption? Just give the daughter the bonds and file a gift tax return. No gift tax owed, and the expense of filing the return will probably be less than looking up the law on basis of gifted bonds and crunching all those numbers.

Electronic records are the way to go. Hire a student for the summer to start scanning, starting with the most recent prior year. We did this and went back ten years. All the paperwork was then shredded. We did keep the paper records of a very few clients who had really complex histories, but now all original docs are returned to the client when the return is completed. We also keep original docs with sigs for POAs. We offered clients with massive old files the opportunity to retrieve them if them desired--only one did. It is so easy to find things in the electronic file cabinet--no digging in file drawers, where something is always misfiled, no need to refile anything. Client needs W2s for the past three years? Print them out in a minute. IRS notice and your response? Right there under the year in question. The back room is now usable instead of being lined with filing cabinets, and no one has to muster the courage to go down in the basement.