Richcpaman

How could Business a. Have a $1,000 loss, but the owner took $50k in "Draws"?  Wouldn't that SP have income of $49k?

Rich

You can't file it on paper.

Efiling it is not like filing a 1040.

Be careful about what you are getting yourself into.

As much as I am astounded by the fees charged by pension folks, they got that stuff down. 

If your client is trying to save a buck, make sure you KNOW what you are getting yourself into.

If you went on a Missionary Trip on Behalf of a Missionary Charitable Organization, why wouldn't they give you an acknowledgement?  Even if that acknowledgement states simply "Thank you for going!"  And paying your own way...

Rich

Sandy:

Welcome to the forum!

You can ask ATX to convert the Drake data for you.  They would do it if you were moving from Drake to them for the first time.  They may do it, even for a fee, that would save you a lot of time.

Rich

And she was not retired for long, either.

Sad.

Rich

Is this a question about "Audit Risk"  The answer to that one is easy.   There isn't a lot of it anymore.

But I still sign the return based on what I know and what I believe to be what is right.

And I find out what the real questions are on the return and then deal with those issues until I am sure it is ok. 

The original issue here, is a simple one, Dealer or Investor.  Your client did three flips.  Does the client currently own other properties or owned other properties? There is no bright line test in the code.

Too keep it simple, I would put BOTH on the return.  Take an amount from the gross sales, say 10% or 5% and that is the commission to do the work as a flipper on the Schedule C with appropriate operating expenses.. (SMR, Ins, M&E, etc.) of making the deal happen.  And then the Schedule D has the house sales less acquisition, remodel and selling expenses.

That is what you would do if someone was in the business of doing flips, remodels, renewals or rentals. 

Rich 

Is this a case where there is separation after June 30th and some years may be filed as "Single"

Either way, I would just paperfile and mark it "refused to provide"

Rich

21 hours ago, GGRNY said:

And while we're discussing it, how many are actually doing the basis computation and including it with the return when their reporting a loss?  I've spoken to other accountants who looked at me like I had three heads when I mentioned it.  

GGRNY:

Lots of preparers do not have a clue how to prepare a return above the most basic returns.  The rules changed in the past two years and now we are required to provide a basis worksheet with every K-1. 

Not that the IRS is going to do anything with that info....

IF this is your only S-Corp, then I congratulate you on paying attention.

Rich

This may be unpopular...

But I would have your client fire the employee, and make them a subcontractor.

Then, there is no nexus.

Maybe that will not completely get CA out of your clients pocket, but it is a start.

And yes, your client has nexus.

Rich

Bulldog:

I agree with you.  The excuses do not work anymore.

They have plenty of money and resources to generate notices and automatic levies, and nothing to do a simple "taxpayer in OIC Consideration right now" note in the file.

Rich

Edsel:

You quoted this:

Quote

A prior preparer left a huge (half million $) loss on her 2015 return, without taking any action on handling the NOL which resulted.  I rolled the NOL forward to 2016, but IRS refused because the taxpayer had not yet filed a 2016 return (see above).  They explained that the NOL had to be rolled back.  To simply avoid arguing a useless point, I decided instead to "roll back" the NOL to 2013.  This brought another letter rejecting my 2013 amended return because the prior preparer had indicated a desire to roll forward the 2015 loss and rolling back was against the desires of the taxpayer on their 2015 return.  A number of phone calls to IRS followed, and I charged the taxpayer for all my fuss and bother.

Seems to me... if the prior preparer did NOT elect the carry back of the loss on the 2015, then all the stuff you did with 2013, 2014 and maybe even 2015 are pointless.

For 2016?  You have your allowable carry forward, that might carry forward to 2021 or so.

The IRS can be  PITA, but sometimes, they are correct.

An NOL can not be rolled back after the return is filed and the election to roll back is not elected.

Sorry.

Rich

Its an election.  It is not mandatory.

She started it, but did not finish it.  Pay the tax. 

Rich

On ‎03‎/‎28‎/‎2019 at 11:43 AM, Margaret CPA in OH said:

Client exercised options, included on W-2, code V is exactly the gain ($85,000) reported on 1099B.  So I increased the basis on 8949 as the gain was taxed and tax withheld on W-2.  Box 14, however, shows Other Restricted Stock $17840.  I am baffled as to what, if any meaning, this amount has and whether I do anything with it.  The 1099B shows no basis for 5 transaction any where close to this figure.  Each of those transactions are code (e) referencing cost basis that may not have been adjusted for compensation income.  Client hasn't a clue.  Ideas?

Margaret:

Usually, if proper treatment, the Restricted Stock in Box 14 is for Dividends paid to the employee on the restricted stock, and it is included in their W2 boxes 1, 3, and 5.  It is just ordinary income.

Rich

Nice Chart^^^^

TaxTools had a worksheet as well.  *IF* you had a beginning basis, the worksheet did the rest.

Rich

If the replacement property had no basis, then the sale is all taxable.

No 8824 needed.  Just the 4797. 

Rich

BT:

Generally, a S Corp can not own another S Corp.  A C-Corp can own 100% of an S-Corp.  And its earnings are passed through and taxed to the C-Corp.

Why one would want to do that, I do not know...

BHoffman's article addresses this issue.

Rich

It doesn't matter to me.

But it would be nice if they printed it about 4 lines down from the top.....

Rich

This line:

"but by the end of the conversation she was laughing "

after a few minutes with you, I would presume we would all be laughing....

Rich

Is it a rounding issue?

What do you think the difference is?

Rich

What if the Farmer is still actively farming?

You can collect SS benefits, but still be working the farm. 

And we can only exclude CRP from SE?  If so, report on Sch F for matching, but not taxed, and then move to line 21? (the OLD line 21...;)

Rich 

23 hours ago, JohnH said:

Thankfully, NC changed its rules to allow taxpayers who claim the standard deduction on the Federal to switch to itemized on the state if it works to their advantage.  There are still some adjustments to be made on the state return, but it's worth evaluating. 

Virginia Voted Friday to "de-couple" from the Feds with itemizing, but MD voted to stay in the stone age.

Rich

If, playing devils advocate here:

The business owners are contributing to a an account labeled SEP-IRA, but they are only putting in the $5,500/$6,500 amount per the IRA rules,  and NOT deducting it on the Corporate return, and only on the 1040, then they just need to relabel the account.

If they are deducting the SEP contributions on their SCorp return, and not contributing the same % to the eligible employee's, then they are in deep kimchi.

Rich 

On ‎01‎/‎18‎/‎2019 at 3:27 PM, Roberts said:

The CPA journal did an article on engagement letters many years ago (I received it off of a forum like this in about 2005) that said engagement letters are almost completely useless as a legal liability tool in court. Their goal is to dissuade clients from taking action like Black Bart's letter tries to achieve. I have one similar to Abby's but honestly I don't think it'll do much in an actual court case.

 

As the journal of accountancy article linked above mentions, you need a very extensive letter that is highly personalized to offer any real help. You can't just write a single letter, give it to every person to sign and think you've done much. Of course, that's exactly what I do.

I use the engagement letter because it keeps the IRS out of my hair.  The IRS dislikes Engagement letters more than any one else.  The Engagement letter clearly puts it on the taxpayer, and not on ME for their fraud.  Or for their inability to give me info in a timely manner, or why I did year X, but no year Y and Z (when they didn't send me anything) or why state W was not filed for them.

I use the engagement letter EVERY Year so that you can say that you didn't read it one year, but EVERY year for 10 years?

I use the Engagement letter to satisfy a "block" that gets checked somewhere.  Even if I never get sued.  But if I do, it get checked.  It DOES limit my legal liability.  I may pay, but it might help save as well.

I use the Engagement Letter to establish the parameters of MY STAFF and MY behavior going forward.  Not the clients.  If I do not like what the client is doing, I fire them.  And then I do not have a problem anymore.

Rich

H:

When we installed ATX 2017 on our server in 2018, we then workstation installed several computers that were in the same building.  Using the local network that happened to be wireless.

When we installed the Hamachi VPN software in 2019, we were able to access the ATX2017 like we always had.  That is sweet.  We had moved the server computer to a new physical location away from these computers. 

However, in 2019, with ATX 2018, we have installed the local workstations without a problem.  Now that we have to install to he distant computers, we hope the Hamachi VPN can support that.  Otherwise, we might have to carry the distant computers to the other office, locally install the workstations, and hope it works like 2017.

And you thought ATX tech support didn't understand things...

Rich

ILL:

If a "new" client comes in, and presents Scenario #2, then you have to deal with the lack of compensation, and it has nothing to do with QBI.  The S/H has not taken a salary and should be taking something.

If it is an existing client, then you should have dealt with it in the past.  What other clients have this problem?

If the client is refusing to take a reasonable salary, then the whole QBI issue is moot.  You probably don't want them as a client.  They are going to cheat elsewhere as well, and make it all your fault when they get caught.

Rich