miatax

I have a client who is on extension. He owes around $8,500 for 2009. Last year, his divorce settlement asked him to come up with a given sum of money. His credit got ruined from his x-wife. He had to withdraw everything from his retirement account to pay what he owed on the divorce. Due to that, he owes an early withdrawal penalty on his 2009 1040 and that jumped him up to a much higher tax bracket as well. At the end he owes $8,500 to IRS which he doesn't have as the divorce cleaned him out. He does have a job but still has debt from the divorce. Would you recommend an offer in compromise? I have never done one of these before.

Hello. Has anyone here registered through Efast to file 5500s?

Not yet.

No acknowledgments yet. I'll feel more at ease when they come through.

FYI.. The general sales tax tables that ATX uses includes only the state sales tax % automatically, however it does not include the local tax % based on zip code where taxpayer lives. The preparer has to manually input that percentage in. I figured this out using the sales tax calculator per the IRS website. Whatever it may be, at the end you may save your clients a little more money - for those you have on extension at this point.

Found where it goes.... Never mind.

Last return I'm working on... Client purchased a new boat in 2009. I thought the Sales Tax was deductible in addition to the general sales tax option. Please confirm and where do I enter this? Also, if a large portion of the boat was financed, is the whole sales tax (limited to the sales tax % in our state, Florida) deductible in 2009? Thanks!

Thanks Margaret. You're right. I'm not thinking straight and I was just choosing the filing box and manually choosing the additional worksheets / schedules.

I waste too much time when printing the returns out regarding which additional worksheets / statements to print along with the return. Is there a way for ATX to automatically print those additional worksheets based on what was used per the return? If I choose all then the return includes all zero and unnecessary forms.

I don't know if for my few returns / extensions, I should just print and go to the post office!

I have a friend / client whom I just finished prepping his 1040. He went through a bad divorce in 2009 and had to pull funds from his retirement account to satisfy the divorce settlement (which increased his AGI)in addition to $3,000 in canceled debt and $1,500 from a 1099Q. He got 20% withheld from the distribution (with a dist code 1) but bottom line, he still owes $8,700 based on his numbers. The problem is for 2009 he had a few less Sch A items and the distribution caused his total AGI to go up. He is making ends meet with all of his payments and to top it off now he has an $8,700 bill from Uncle Sam. Am I missing anything new in the law relating to taking money out (penalty free) from a retirement account to satisfy divorce settlements? There are no alimony payments for reduction of AGI. I am trying to see if there is anything else that may help and I would feel terrible if I missed something. He doesn't qualify for making work pay credit either because of his out of the ordinary AGI. :-(

Does anyone know the procedure for filing the 5500s electronically through ATX? I think there is a separate registration process but was curious if anyone had gone through this already. Thanks.

I called IRS E-Services and according to the rep, all of these 4 were accepted. The rep told me to call the tax software company to see how I can get the ack confirmations. As of now, they still all show 'rejected by agency'. I'm on hold with ATX now.

JKL.. Thanks for responding. This is so frustrating.

I transmitted all 4 at the same time but I never selected anywhere to submit as a batch. Now that I printed out the acknowledgment histories, I am noticing that the DCN number on these returns are all the same. I am also noticing that I filed two more extensions on 3/15/10 and they were accepted. I definitely know that on 3/15/10, the others still showed as 'transmitted to agency', so it's not right that the ACK Status date on these 4 now show 3/13/10.

I e-filed a few 7004's on 3/12/10 and checked back days later and they still showed transmitted to agency. These returns were rolled over and there were no errors. Now I check and 4 were rejected by the agency and ATX shows an IRS acknowledgment date of 3/13/10. I checked on the 16th or 17th and they still showed as 'transmitted to agency'. EFile Rejection is as follows: "Taxpayer EIN in the return header must not be the same as EIN of a previously accepted electronic return for the return type and tax period and Type of Return Code indicated for the tax return type. " What do I do now??? I am a bit frustrated. I can't even find the problem to these rejected extensions! It's my fault for relying on ATX for these simple extensions which I would've never thought would be rejected by IRS! Please help. This never happened to me before. Should I and how can I re-submit? Now I am going to have to pay penalties for these 4 clients.. CRAP!!!! How can I check the last time I opened ATX to receive acknowledgements besides today?

I e-filed a few 7004's on 3/12/10 and checked back days later and they still showed transmitted to agency. These returns were rolled over and there were no errors. Now I check and 4 were rejected by the agency and the ATX shows an acknowledgment date of 3/13/10. I checked on the 16th or 17th and they still showed as 'transmitted to agency'. EFile Rejection is as follows: "Taxpayer EIN in the return header must not be the same as EIN of a previously accepted electronic return for the return type and tax period and Type of Return Code indicated for the tax return type. " What do I do now??? I am a bit frustrated. I don't understand this error. Please help and can I re-submit?

Thanks Old Jack. That is what I will recommend my client to do. The question then is on a cash basis C corp, is interest recorded on the books only when that payment is made to the shareholder or is it one of the cash basis exceptions that should be accrued? No interest has been accrued on the books and client did get paid back $10,000 in December.

OK Jainen: Thank for your information. You may be someone who reads IRS publications all day and replies to people in these forums - sometimes correctly, however sometimes with UNNECESSARY sarcasm. What kind of good natured person would take this approach??? I don't criticize anyone and by the way, there are no questions that merit sarcasm. As a college instructor, I would NEVER treat my students that way! Taxes are NOT my forte and so I come to this forum to get help - not to have someone bash a doubt that I have. 'why in the world would a responsible tax preparer be asking such a question?' I don't consider myself irresponsible. This is something that has been in the books for a while. He gave the company money when it needed it. That's all. It's been sitting on the books for quite sometime (before I was involved) and I just recommended he take some of his money back now that the company is doing well. My question was in reference to the correct classification and any interest. It's a cash basis company and there has been no interest accrued. My question was what is the correct way to treat this.

Since I don't do many of these 1120's, I figured I'd ask in this forum as I'm sure many here know the answer to this in a heartbeat. C corp has capital losses. Can they be offset against ordinary income or are they strictly to be offset against future capital gains? Thank you.

What had happened was that years ago, the company was running into cash flow problems, so the owner gave the company money in a few payments. The owner never really determined whether that money was to be paid back or not. So does it really make a difference whether it is treated as contributed capital or a loan? It's been reported as loans to shareholders on prior year tax returns. Would it be incorrect if it's reclassified in 2009 as contributed capital and then he is getting back a return of capital when he makes some payments back to himself?

I have a cash basis C Corp client that has one owner. The company owes the owner about $100k. There is no official note and there has been no interest accrual. Now that the company is good with cash flow, I am recommending he get paid back a part of the loan. Would it be correct to have the company pay him money WITH interest on the date of payment as the company is on a cash basis? I know that C Corps on cash basis can accrue the following: Payroll Tax Liabilities S/H Loans I do not recall if it should have been accruing interest for the s/h loan though...

I have a client who has owns majority stock in a U.S. company that he operates. He is a shareholder and a U.S. Resident. The company also has a foreign minority shareholder with no U.S. TIN. If the U.S. Company makes a payment to him, these amounts are accrued and reported on a 5372 but does there need to be backup withholding when the payment is actually made? Does it make a difference with respect to the withholding if payment is for for services (consulting) or a distribution?

Help please.. I'm meeting with client this afternoon and I'm not sure what to say other than he must consult an attorney, but I would like to know what has to be done at least from a tax perspective.

KC: I am not sure what you mean by franchise tax reports. Do you mean the annual filing report with the state? If that is the case, then yes. I did check and it is an active LLC renewed every year since 2006. It just has not filed any tax returns. My question is if in 2009 it buys and rents property, do I just begin with a 2009 tax return? It has 2 managers - a U.S. resident and a Foreign Company.