mekCPA

@rfasset - the taxpayer worked approximately 1-2 days a week. Let's assume 2 days a week for 52 weeks at 8 hours a day. That equals 832 hours devoted to the full time job, less vacation and sick hours (yes, it's a sweet deal of a job, full time pay without full time work and also paid vacation and holidays). We provided a detailed schedule of hours devoted to the Real Estate business that more than equaled that amount. Considering a 40 hour a week job is 2080 hours a year, in my opinion, there was more than enough time to do BOTH. However, according the the examiner and all the supposed "Tax Lawyers", if you have a job that pays a full time salary, even if you do not work full time hours, the fact that you have a JOB, automatically means that you cannot also be a "real estate professional". I don't see the logic in that. Neither did my client until now. @MAS - we DID provide a contemporaneous log showing that the hours needed to qualify as a "real estate professional" were met, however as I said to rfasset, the IRS and the "Tax Lawyers" have stated that if you work a job, it's "black and white" that you cannot also be a "real estate professional". I'm not seeing the Black and White. And I agree, if the taxpayer didn't qualify for the R/E professional in the first place, the taxes would have been paid at that time. I just am hoping someone has some information that's "black and white" (ha!) for me on my liability. But, I guess that's why we have lawyers!

I've come here looking for some guidance. A client recently underwent a Schedule E audit for material participation. Based on our conversations and my understanding of the situation, they were entitled to deduct losses based on the Material Participation requirements. The taxpayer had a Real Estate license, and devoted over 750 hours to the profession. Taxpayer also had a full time job. However, that full time job required approximately 1-2 days per week in the office, which is what allowed the taxpayer to devote more than half of the time worked in the full time job to this real estate business. We defended this before the examiner, who has said that the fact that the taxpayer had a job negates being able to claim material participation, and upheld the proposed additional assessment. The taxpayer was able to get the penalties waived, so what is left owing is the taxes and interest. Here's where I need you to be kind: no, I do not have errors and omissions insurance, and I did not use an Engagement Letter. I have definitely learned my lesson. Never having gone through this before, I need advice. Of course now that the taxpayer has exahausted all remedies which I have helped them with along the way, they are now stating that I should be liable for the taxes. It's my understanding (and forgive the lack of proper terminology describing liability) that if I was not negligent in the preparation and used reasonable care and have support for my position, the taxes are the responsibility of the taxpayer. While trying to sort this out, I provided the taxpayer with possible tax attorney contact information, and the taxpayer has stated that they told her this is "black and white, by having a job, the taxpayer can never deduct material participation losses". It has progressed to the taxpayer now stating that if it was black and white, I should have known that and should be responsible for the additional taxes due. I do not agree that it is black and white. Perhaps I am incorrect in my understanding. I'm thinking at this point I need some legal advice, so if anyone has a reference they can provide for that, I'd appreciate that too! Like I said, please be kind, this has been a stressful situation that has escalated to an even higher level now. Thank you!

I've started receiving emails recently from a company called Tax Exact Pro with a link to their website. I searched the forums and did not see any mention of this software, but I am also not the best at having successful forum search results. Their email says their software is $399. I am not especially interested in switching away from ATX, but I just looked at what next year's version will cost me and it is up to over $900. I know this concept of ATX increasing their fees to be more in line with the Intuit program has been discussed numerous times over the years, but I really feel like they are pushing it by nearing the $1,000 threshold. Here's what their "about" page says: Taxexact Software Development, Inc. In addition to developing new income tax software, we are reintroducing TaxExact, an industry proven leader for tax software that has not been marketed since 2006. Due to customer demand, we are also in development on an online consumer product that will allow our members to compete in the online individual taxpayer industry. TaxExact currently has a comprehensive staff of highly trained developers who understand the needs of our customers and are ready to meet them. This staff is currently refining updates for TaxExact Professional Desktop and TaxExact Online Consumer Income Tax Software. Upon completion, our customers will be able to utilize all available individual federal and state MEF forms along with business federal and state MEF forms. The developers building the TaxExact File Center have over 100 years combined experienced within the income tax software industry. Due to our extensive technical planning and layout, the file center for TaxExact and YonderWorks BETA will easily handle all electronic filing with zero downtime. We are using cloud computing for our filing center on the pacific west coast with a complete mirrored file center at our home office in Murfreesboro, TN. It is these new ideas and innovations that we feel are the steps to allowing our customers to stay focused on the growth of their business. Our investment of time and commitment is the gateway to building trust and business potential. Now is the time to join us as we become well known as one of the leaders in this industry. I don't know what it is, but there's something about them that seems suspiciously similar to TRX. Maybe it's the concept of sending emails to ATX members and quoting low prices, and the fact that their website just seems a little less than "full disclosure". Maybe I forgot to take my non-paranoid prescription this morning, too, there's no telling. Speaking of TRX, I also receive emails from them that I have had no success in being removed from. Any one have any suggestions on how to get THEM to stop emailing me? Thanks! mekCPA

And, this week our local news had a bit on the "SnapTax" smartphone App. They had a teacher, with two W-2s do her taxes on SnapTax. Then they had a paid preparer do them. The paid preparer resulted in a bigger refund. I think it was about $400, which is probably the MWP Credit. I was happy to see that, and hope a lot of people saw it and will hopefully leave the tax preparation to a tax professional instead of their "phone".

I never thought I'd say this...."yay, Turbo Tax!". LOL

Here's the obvious "question of the day"..... ...why would that preparer be the "previous" preparer?? Lot's of possible answers come to my mind! :)

Thank you, tkamba. I was about to go crazy trying to figure that out myself. What a PITA. And, Ken, I agree. ATX broke something that was fixed, OY! Oh, well, at least it is a "simple" enough fix.

Thank goodness for this forum!!! I would have never figured this out on my own. And there are so many emails from CCH and ATX, there is no way I would have read, or understood that, in an email from them, without actually doing the returns.

Thanks for this information. I read publication 946 on GAAs, and did not find any exclusions for farming or depreciable trees, so that is what I am going to go with. It makes sense when you think about how the IRS handles other tax issues. I really appreciate your response to this and it helped me "get one more done".

Thanks for the tips, I shall try that out. I had not thought about setting up a "disposed" asset in the method I was considering. I think your method of doing that makes it a lot more clear and leaves a lot better trail should anyone other than me be looking at this year's information or preparing a future year's return. Thanks, again!

Because of the drought and watering restirctions in California, many farmers are forced to let 30% or more of their crops die or pay for water at higher "tier" levels. As a result, one of my tax clients has reduced their orange tree farm from 198 trees to 108. I am trying to figure out the best way to "dispose" of those 90 trees. They are currently listed as an Asset on the Asset Entry form as 198 Valencia Orange Trees with a date placed in service of 1/23/04 and a life of 10 years. I can think of all kinds of "creative" ways to dispose of them to get to the number I want and to make sure the cost and accumulated depreciation carryforward to 2010 at the correct amounts. But, is there a simple way within ATX to accomplish this? Any help is greatly appreciated! Marlene

Good to know, thank you for sharing your knowledge and experience with the rest of us. To date I've only had two of these, so this is a whole learning curve for me, and again, I really appreciate your willingness to share what you know with those of us just coming up on these!

This method works? I had assumed if I did this it would go through as filed, then months later the TP would get correspondence and a check in the mail for the $250. You know what happens when they get a letter from the IRS saying they are getting a refund because the IRS knew of additional deductions that were not on their return (mortgage interest, etc).....TP questions why we "missed" that, although they didn't tell us of that amount to include in their return because they lost the 1098 or it got sent to a different address, or it came after they gave us their stuff and they never let us know. I was considering doing it the opposite way....filing by taking the $250 credit, let them know it could reject and we'd have to take the credit off and resubmit. I was not looking forward to those conversations either. So, if this method of "not" taking the credit when the TP is entitled to it will cause the eFile to reject, I much prefer the "bearer of good news" method to tell them they are getting another $250 back. You've had success with this? I did not expect the IRS cross checks to be this sophisticated, but am glad if they are!

LOL 'dog. I couldn't agree more. I had a post today asking MWP 101-type questions and thankfully this Board rocks and I got some clarification. Additionally, I had two eFile rejections for retired TPs who had Federal Government or City Government pensions and each also had SSA retirement income. Asked both if they had gotten the $250 prior to filing and they said no. After both returns came back rejected for MWP saying records show they already got it, (returns had Sch M credit), I discussed with them, one now remembers "getting a letter from SSA that said something about $250" but she never "got" $250. The other still contends they got nothing from the SSA in either the form of a letter or cash-ola. Both agreed to remove the $250 credit and refile. I am waiting for the eFile ACKS on those two now. So, I couldn't say it better ....holy carp...this should not be so freaking hard. At least now I know, better now when it is slower than April 14!

Thank you guys for the help. I guess my problem was me. I thought I remembered when the withholding tables were changed, they said they were giving the workers the money back through withholdings, and that it would reduce the amount of their refunds, or make them owe more come April 15. Anywhoooo, I get it now. Thanks for setting me straight!

I am having difficulty understanding this credit, because what I have read and researched and understand about it is seeming very contradictory to me. I admit I am more of a lurker on this Board, but have been associated with the ATX forums since the first year they started, and have been preparing returns for over 15 years, so even though I do not have a lot of posts, I am a seasoned tax preparer. I have searched all the posts on this, read the Schedule M instructions, reviewed the Schedule M form, and completed the Earned Income Worksheet. The only thing I have not done is take a CE training course on this. So, if that is what I need, I'd appreciated guidance to one that can get me on the right track if those that respond are NOT able to help. Thanks! If I just add a Schedule M for a return through ATX, it is calculating a Schedule M credit and carrying it forward to line 63 of the 1040. This is for a Single filer taxpayer whose only income is $58,222 from W-2 wages. I completed the Worksheet in the Schedule M instructions, and the result is that his full $58,222 should go to Schedule M, line 1A. To shorten this a bit, the result of filling out Schedule M is that it shows he is entitled to $400 on line 14 of the Schedule M. Here's my key confusion on this: I thought that the tax withholding tables were updated to result in less withholding so the taxpayer would receive the credit evenly throughout the year, and thus not be entitled to it in their tax return. If I allow the Schedule M to flow through to the 1040, he will get a credit of $400, but didn't he already get that $400 and is not entitled to it? If the answer to that is yes, then that means the ATX programming should recognize that if there is W-2 income, that means the taxpayer already "got" it. But, reading the instructions supports the way the ATX programming is working. So, that leads me to believe that my understanding that you "got" it during the year and would not get anything else at the end of the year was wrong. Anyone? Please help set me straight....but also please be kind! :)

For years I filed ON October 15. Somehow I could never get around to August 15, despite not usually having clients on extension that long....talk about Procrastinating. And, my returns usually resulted in refunds, so what was my problem?! I finally sat myself down and had a long talk, and now me, myself, and I meet the April 15 deadline. I think this is the third year in a row.

Since "Quoting" everything would have made for a reeeeallllly long post, how about this: DITTO

JB - Maybe you could amend your response and say "I have several other friends whose satisfactiion I care about as well, so in addition to Tech Support responding to me, I would also request that TS respond to (list their names), and once I have received confirmation back that they have received satisfactory assistance, I will THEN respond to sales". You wouldn't mind coordinating this would you? :-D Can my name be first? I'll give you a banana! :dunno:

Thanks for your fast reponses. I was not clear in OP that, yes, the Car Allowance is included on the W-2 for all employees receiving Car Allowance, including this General Counsel. Unfortunately, like many companies, we do not have clear policies in place for issues like this, and we have some past practices that are not consistent. As a result I was looking for the "easy" way out...."the law says"....but it looks like I am going to have to instead attack this from a reasonable person point of view...and each person has their own interpretation of what is "reasonable", hence: Rock---me---hard place Thanks, again!

Where I work, our General Counsel receives a Monthly Car Allowance. She recently came to me to find out if she drives "excessively", if she can also get Mileage Reimbursement. (by excessive, she means outside the County we live/work in). Since then, she has turned in a mileage reimbursement request for 5 trips out of the County....from her HOME, which is further from her destination than our workplace, resulting in higher mileage reimbursement than computing it from our place of business. Anyone have any insight on this? Or can you guide me somewhere to investigate taxability issues? Yes, I know the mileage reimbursement must be figured from our place of business and NOT her residence. My personal take on this is, you receive a Car Allowance, and I am betting all those OTHER months, you rarely drove "business miles" so let's just call it even, k? There is no precedent or policy on this, we are charting new territory, and I'd like to have some decent support for not allowing it. And if it IS allowed, I am wondering if it should be reported through the payroll process, and thus taxed since it appears to be "excess car allowance". Anyone? Thanks in advance!

I am offended that U almost always must follow Q. What did Q do to have need another letter to "follow" him. ..sounds a little "1984" to me..........

It is possible to purchase a new computer without having to succumb to Vista. I refused to go to Vista for my most recent computer purchase in December and was able to do it. The only thing is, that if you must buy a Dell, HP, or other "name brand" I believe they have contracts with MS that require Vista. My computer was built by a local "computer factory" by people that are far more techno than I am. They advised that I could buy the operating system of something like "MS Vista with XP Downgrade rights". What that means is I technically "bought" Vista, but they were authorized to install XP on my machine and then, someday, in what I am guessing will be the distant, distant future, when Vista is "stable", I can then have them (not me...tooooo scary!) install Vista for me. I am thinking it might be when the "next" operating system comes out! LOL

Thanks to this Community, I learned that we were able to check eFiles on the ATX site, not just through the ATX software. I am so glad this site exists, I may never have figured that one out on my own!!! I do have a question for those of you that have used it....after you click "Efile Status" under the Support topic, it opens a new window in which you can type the TIN or SSN and it brings up the return(s) you are seeking. Spiffy! ...but, after you are done, there is no way to "exit" or "logout" or "go back" from this page. That concerns me. I am technically still logged in at the main ATX site, and can go back there and log out, but should I be at all concerned about security issues with just "X"ing out of this page? Thanks for your help!

Thanks for asking for our input, but MORE important....thanks for maintaining this place for us! I think it looks great!