Corduroy Frog

Millions of taxpayers will pay in their own manner and the IRS will have more problems on their hand to chase them down. Some people will revolt.

Sounds like Drake (and ATX also) are not the problem, but the IRS itself won't allow direct withdrawal after April 15, even if they have extended the due date. Doesn't make sense. I think my client wants to pay on October 15th, so I'll just send him a voucher and he can send in a check any time he wants. Thanks to all -

For this year only, Tennessee has been told they have until November 3rd to file, pay, pay estimated taxes, whatever. A return I completed owes $35,000 (not the real number) and client wants to pay it October 15. Drake won't allow it. Their message says April 15 is the last acceptable date, and goes on to say that this is true even for states with disaster declarations. I've second-guessed Drake before and I'm usually wrong, but I'm wondering if they've updated properly.

Strange that no part of North Carolina is on those releases. I just returned from Asheville, NC and the flooding there was the absolute worst on either side of the state line...

On a Nashville radio station, where listeners call in to ask tax questions and get them answered. One of my clients apparently heard the same thing. Lion, you are correct about the disaster area with hurricane Helene, giving those in certain East Tennessee counties until November. However, the radio station did not limit the canvassed area, and the radio station which hosts the program is powerful, and can be heard in 5 different states.

I've been hearing about some bizarre schedule where all estimates can be paid on November 7th. So....what is going on? Can it be this simple for 2025?? Date of Payment #1________________ Date of Payment #2________________ Date of Payment #3________________ Date of Payment #4________________

Yes Miss Sara, that is exactly what has been happening.

Good advice from all. I have told him to expect anything. And, yes, his AGI was $750,000 this year.

Thanks for the responses. The sale will not occur until 2025, so I will not be able to advise about this until we have the information of which you speak. Interesting...

Thank you Mr. Normal. This is a PTP. Taxpayer paid $175,000 for it, and has been reporting income for 5 years, and has been also receiving distributions which are not necessarily equal to the income. Will sell in 2025 for $200,000. If there is no need to track basis, then is it as simple as reporting $25,000 LTCG? Can't find this in IRS Sch D instructions, and not sure I would understand it anyway.

The formula for partnership basis calls for a decrease if there are nondeductible expenses. One example is 50% nondeductible meals. However, in a "limited" partnership, nondeductible losses could include losses disallowed because they are passive. Question: Are passive losses required to be deducted from basis according to the formula? I don't see why they wouldn't but thought I would ask...

"Go to the ATX forum, idiot."

Thanks for all the comments. Looks like the "plan" won't really work. This is not "acquisition debt." Dan, I did research the (voluminous) instructions to Sch E, line 12. Lots of cross-references to other situations. I'm happy you understand it. Thanks.

Thank you Gail for response. I'm sure none of the parties are considering a "sale" to the LLC with gain or loss, but more of a "transfer", i.e. the property has the same basis as the taxpayers prior to the transfer. And the only question is whether the "tracing" rules will insist on forcing interest to be deducted on their primary residence rather than the LLC. Since it is a new loan, it smells like acquisition debt, but the purpose is an obvious replacement of their old residence loan.

Married Tennessee taxpayers own a house in Memphis, mortgage free with no interest. Also owns a primary residence in Nashville, encumbered with mortgage and interest. For purposes of illustration, assume the taxes on both houses, interest on their primary residence, and contributions total $29,001, meaning their itemized deductions are next virtually without tax benefit. Nashville is a boom town, and Memphis has become the crime capital of the USA, so they can't sell their house in Memphis. Nobody wants to buy in Memphis, everyone wants out. So......here is their plan. Put the Memphis house into an LLC and begin renting it out. The LLC deductions will be property taxes, depreciation, repairs, and little of anything else. They would like to also deduct interest but have no mortage. So they can borrow money against the Memphis home, and with the proceeds pay off the Nashville mortgage which was not helping them anyway taxwise. Since the Memphis house in the LLC is now mortgaged, can the LLC deduct the interest expense? (assume the LLC makes the choice of entity, for example a partnership). Or will the "tracing" rules prevent it? My guess is yes they can...but would love to hear from some of you...

This was (and is) a one-way trend for document corroboration. Before 1987 a taxpayer could pretty well claim any itemized deductions with no documents required. Even before then, the "TEFRA" act (1982) began the issuance of 1099s to recipients for services rendered. Nowadays look at the itemized deductions. Mortgage interest deductions are supported by 1098s, education credits supported by 1098-T, student interest supported by 1098-E, etc. Not to mention the standard deductions are so large most people cannot itemize anyway. Also, in earlier days, tax rates were higher, such that tighter control of expenses could justify lower rates (which were broadly announced to delight the public) And we also have the thinly disguised effort to make auditors of taxpayers via the 8867. Although the IRS denies it - the mechanics of correctly navigating through the 8867 really means much of the busiwork of an audit has been transferred to the preparer. Self-prepared returns don't require an 8867. And the legislation making its way through congress does nothing to reverse the trends.

Tornado warnings all afternoon for Tennessee. Damage reports just now coming in. We're OK in Manchester - about an hour plus away from Rita.

"Oh by the way, can you quickly do my kid's taxes, he doesn't have much??", as the client expects a simple return that won't take over 5 minutes. Right. You might get a kid of 14 who has unearned income over $1400. Or a kid whose been getting child tax credit for years, but has just turned 17. Or an 18 yearold whose W-2 is so high his parents can't claim him. Or a college student with educational credits who may or may not be able claim him, assuming his parents cannot (which brings on another question). Assuming a child's return has no issues may be one of the most underappreciated things we run into.

Are you experiencing slower than expected refunds? For years, after electronic filing and acknowledgements, refunds would typically come through in about 10 days. My own refund took about a month. And I'm getting calls from clients who somehow think I can speed up their refund. Am I the only one? or are you experiencing the same.

In the last few years, I have had three appraisals because of death, and all of them approximate original value. It is ridiculous to think that a rusted-out grain bin is going to be worth as much as when new. However, some of the larger pieces of equipment, especially tractors are overhauled every 8-10 years or so, and if they are running, will exceed original value. A John Deere purchased for $20,000 will easily be worth $20,000 when the same model now costs $50,000.

About a week ago on my way to North Carolina, I stopped in at Rita's place in Crossville, TN. Yes - this is the same Rita that hosted our get-together 6-7 years ago. She looked good in her office perched on a hillside. She and I have been friends for a long time and live an hour plus away. And as I was leaving a pretty young lady came in to have her taxes done. Not a lot else to say, but for some of you that came to her place that year - I thought you like to know that she's still doing well, even though she doesn't post much. Just one of the great people who are on this board.

"Dianne" comes to me to have her taxes filed. "Jack claims Toddler in odd years, and I claim him in even years." [me] "Did Jack give you an 8332?" [Dianne] "Oh no. We sorta just agreed to that." So we don't have an 8332 and we go ahead and file electronically without one. My question: Will the IRS hold up processing the return? Researching to see whether "Jack" has claimed Toddler?

I charge $$ for answering these letters. Over 50% of IRS letters are totally wrong or wrong in part. I do charge, but somehow I can't seem to charge enough. Clients don't understand why it takes so long to write a response, plus produce statistical information which is almost always needed. And the clients aren't really anxious - they feel if they just file their taxes correctly once a year, and do nothing wrong, that should be enough.

And your doctor recommends you to another specialist. Let's say your primary doctor recommends you to a dermatologist. Now you have to fill out and answer the same questions over and over again - same information that your primary doctor has. They can't or won't share information - "privacy" they call it. A year later you go back to the same dermatologist -same questions over and over again.

Judy's experience is exactly what I'm talking about and how we can turn this around. One thing is for sure - we're dealing with corporate America, because when the big fish swallow the little fish the problem gets worse. If and when these facilities figure out that they are losing more revenue than the cost of answering the phone, things will change.