MargaretMort

How nice of you to share. May the coming years bring nothing but joy--along with the frustration, etc. They are worth it MM

I was wondering that, too. Happy Thanksgiving to all. MM

Sincere congratulations. They are beautiful and I can imagine that you are tired. Good luck in the future. MM

First, let me thank KC and anyone else who has responded to my questions about the IRA roll-over and reconversion. Still have a couple of questions, of course. The amounts being reconverted are not the same as the amounts that were rolled over because money was held out for taxes. Does it matter that the reconversion amounts are not the same? The other question, KC said to add an explanation about reconverting from the Roth to the original IRS and that, if I use ATX it is easy to do. I think my mind left town but I can't find anything where I can explain that. Please, please give me some guidance. I want to get this finished and off my desk. MM

I also received it. Didn't have 30 min. right then to even look at it. Since I am retiring I might not be polite so maybe I should just not say anything! MM

Thank you. I will try to do that tomorrow and see what happens. Yes, I do use ATX. MM

Sorry, It has been recharacterized in 2011 but I am under the impression that as long as this is done by Oct 2011 it is as if the roll-over never occurred. The original roll-over occurred in March or April of 2010 but was erroneously reported on the 2009 tax return. The roll-over is reported on the 2010 tax return which has not been filed. That is why I am unclear about how to go forward, file 2010 and then amend? File 2010, leave off the reporting the roll-over and explain with a letter? I don't know about anyone else but I am confused. MM

I have asked this question before and received no answers. I am hoping that now that things have settled down I will get some answers or suggestions. Client mistakenly reported rolling an IRA into a Roth in 2009 to take advantage of low income. In fact, the roll over took place in early 2010. The tax consequences of this are way more than they want to pay so they have rolled the roll-over to the Roth back to the original IRA. The 2009 tax return has been amended and sent to the IRS. The 2010 tax return is on automatic extension. I have read everything I can get my hands on about recharacterizing and truly don't know exactly how to proceed. Do we send to 2010 showing the roll-over now and then amend it before Oct. showing it has been changed? The TP just received the 5498 for 2010 and is very worried about the entire situation. I sure don't want to do it incorrectly now. Any help will be greatly appreciated. MM

I would suggest you get in touch with Canadian Tax, www.cra-arc.gc.ca/tax Several years ago a Brian Levy,a Canadian CPA, used to contribute. The email addresses I have for him are:[email protected] or [email protected] Earlier this tax year I got a phone number for CanadianTax but that seems to have disappeared. I have found them to be very helpful. MM

Congratulations to all of you. My husband was a fighter pilot and I was never really sure man was meant to fly. His life long dream had been to fly and he was able to live it. Your son had a goal and met it. Can't really ask for more than that. MM

I want to make sure I am doing this correctly, especially since I have had no experience with this. The client thought he rolled a traditional IRA into a Roth IRA in 2009. The actual conversion occurred in 2010. The taxes owed would have been a lot, even split between 2011 and 2012 Tax years. He has told the broker to roll it back into a traditional IRA. As I read the instructions in The Tax Book, all that is required is that a statement should be attached to the 2010 return--it hasn't been filed yet--explaining the recharacterization and include the amount converted. Is that all there is to it? I amended the 2009 Tax return to take out the incorrectly reported conversion and now a simple letter added to the 2010 is all that is required? Do I leave the reported conversion in the 2010 return and include the letter showing it isn't true? Do I e-file the 2010 return and then paper file an amended return with the explanation? Help! As always, my sincere thanks for any and all of your help. Wouldn't have made it through this year without this board, 25 years experience just didn't prepare me for this year. MM

Sent the last e-file Saturday, it was rejected. Said the Sch M didn't agree with their files. I wasn't aware that the IRS couldn't talk to me about rejected return-how dumb is that! I told one person that I could always show the client had received $250 in 2010 and probably fix the discrepancy but I felt that was wrong because the client had not received $250 in 2010. Apparently, late in the filing season, the IRS began having errors with the M. First I had heard. Hopefully I have taken care of the entire problem. What a pain. I was surprised no one on the board ran into this. Just a note of interest. MM

Yes, I wondered that, too. I haven't told my son yet that I am not going to change my mind on this. I think the CPA firm is incorrect. The speaker told the audience that this was a gray area and the IRS says, in SE cases, the money should go on the Sch C. Perhaps by telling the client this, if the client says go ahead the CPA has covered their behinds. MM

Many thanks for all the help. The advice finally percolated through my brain and I did the son's correctly yesterday and finished that return--YEAH! Dad's is being reworked in a few minutes so I can chalk another one up to the good guys. MM

I agree with you and I thank you for your reply. I will be sending an email shortly. MM

I am sorry, I misled you, K.C. The father gave/sold his sons a piece of property. The sons sold the property in 2004 and have been showing the principal and interest since. In Sept 2010 Dad bought the mortgage from the sons. Each son will report the principal and interest paid until Sept. My thoughts are that I will report what Dad paid son as other income and Dad will report the principal and interest from then on until the mortgage is paid off. I am not sure if I am clear yet or not. My brain isn't fried but it is working on it. Thanks for any and all help. MM

I live along the Gulf Coast and, though we weren't directly affected by the oil spill last year, the loss of business because of the publicity was a big factor in the economy of the area. My son is a realtor and applied for BP payout. He received some money and a 1099 Misc. with the money in Box 7. I followed the rules and showed the funds on his Sch. C. Today he attended a briefing for realtors by a local CPA firm. They said they are putting these payouts in other income, Line 21, because they think this is a gray area and TPs shouldn't have to pay SE on this income. I don't quite agree but I am interested in what other Preparers in this area are doing. Any suggestions or thoughts from anyone will be much appreciated. The CPA firm did say the IRS says this is SE income, the CPA firm disagrees. Thanks, MM

Don't quite know how to title this one. Brothers had a piece of property, sold it and financed the mortgage. Each one reported half the interest and principal paid on own tax return each year. This year each one needed some extra money so their father bought the mortgage from them. He did not pay the entire remainder of the mortgage. My understanding is that he gave them the piece of land in the first place so there is no capital loss. Am I correct in showing the purchase amount in Other Income? As always, I appreciate any and all help. MM I am now doing Father's return and it dawned on me that I have no idea how to do the 6252. Nothing has changed as far as original sale and payments in the past. Do I simply input, probably over-riding things, what has gone on in the past? To my way of thinking he is simply collecting the mortgage and paying the taxes on the income, the amount he paid his sons is immaterial.ARGH!! Can't decide if I am in the throes of terminal brain fatigue or simply over thinking things

Client is a realtor. When I put in the mileage and other expenses in the Asset Manager it shows the amount on the 4562 and again in auto expenses in the Sch C. I have never had that happen before, is it something new this year? Interestingly enough, the two figures are not the same. I can work around it, I am sure, but it is frustrating. MM

I thought so but couldn't find anything that referred to it except for late fees for mortgage payments. thank you very much. MM

Are late fees deductible? Client buys equipment, financed by a loan agency. Late payment equal additional fee. Interest is deductible, of course, but can't find anything about late fees. Thanks. MM

No, what actually happened was that the TP income was very low in 2009 and they decided to rollover their IRAs to take advantage of the lower tax bracket. Their broker said it would be a 2009 event even though the rollover didn't occur until Mar 2010. The fund didn't agree, issuing the 1099R for 2010. I felt the broker was incorrect and wanted someone to back up my thoughts. The TP would really like the broker to be correct, of course, but has finally come to agree with our thinking. Thanks for the help. MM

So for the 2010 tax return we report the roll-over and the tax due would be in 2011 and 2012. Then, for the 2011 tax return the recharacterization is reported and no taxes due or paid in 2011, 2012. Is that correct? Thanks for your help. MM

Boy, will I be glad when this one is over!!!!! TP thinks he wants to recharacterize the Roth he rolled his traditional IRA into in 2010 back to a traditional IRA. I am putting his 2010 Tax Return on automatic extension because we need to file the Amended 2009 Return. As I am reading about this, what I plan to do is okay and it can be done this year by the extension date but...How do you show the recharacterization? My brain is fried and I am going to find something else to think about. In the meantime I am forever grateful for all your assistance. MM

Thanks. I thought as much but someone, their money manager, I gather, thinks differently. What a mess this one is. MM