KHWEBERCPA

Client is a struggling musician who barely makes over the poverty line income. If he takes the self employed health insurance deduction, it would put him below the poverty line, and exclude him from getting premium credits. I have tried to find anything that says you have to take the self employed health insurance deduction if it is available, and am coming up empty. The best outcome for this client would be not to take it, and get about $2,000 in premium credits. However, I don't want to trigger a notice. Can anyone point me in the right direction? Thanks. Ken Weber Vancouver, WA

Client received a CP11 for additional tax due. The only tax due for this client was the repayment of advanced premium credits on line 46. They also had a foreign tax credit. Another tax program allowed the reduction of the balance due by the foreign tax credit. The IRS wants that amount back, according to the CP11. It would appear that there is a flaw in the program, or the IRS is wrong, and I am having difficulties finding out if the foreign tax credit can reduce the repayment amount. Anybody else experienced this? Ken Weber Vancouver, WA

First time for this one. Client contributed a universal life insurance policy to a charity. Since the cash value is over $5,000, it appears to require an appraisal. How do you get a life insurance policy appraised? The insurance company has provided Part II of Form 712, showing a value on Line 58 (f) for net value of the policy for gift or estate tax purposes. Will that suffice for an appraisal? If not, what have you used? Thanks for any advice you can give. Ken Weber Vancouver, WA

Client has a business (husband and wife are shareholders) sitting on a large piece of property. The business has been struggling, and has accumulated losses of approximately $200,000. An interested party wants to purchase part of the property, and selling it would generate approximately a $300,000 capital gain. It appears to me that if client sells the property, they will have a $300,000 capital gain which would pass through to the S Corporation shareholders, and the $200,000 of negative basis will continue to carry forward. The client will need cash to pay the taxes on the capital gains. Can the S Corp make a loan to the shareholders to cover the tax hit? That would seem to be preferrable to paying a large bonus to the shareholders, that would only server to further increase the accumulated losses and negative basis. Is my thinking correct? Any comments or suggestions would be appreciated. Ken Weber Vancouver, WA

Thank you for the insight. I appreciate it. So there really are people out there who don't report all their income? :-) Ken Weber Vancouver, WA

I thought this was relatively simple, but as is usually the case, the problems are in the details. Client hired a nanny. Thought they would hit the $1,900 threshold, so started withholding Social Security and Medicare. Earnings got up to $1,500, and the employee quit. My research leads me to believe that the client can reimburse the withheld social security and medicare, but they appear to still owe Federal Unemployment, and state unemployment.. My research also leads me to believe that a household employer only needs to issue W-2s if the social security wages are in excess of $1,900. That doesn't make sense to me. Shouldn't the employee receive a W-2 showing $1,500 of wages, and showing zero in the social security and medicare boxes? The employee obviously isn't an independent contractor, so a 1099 isn't appropriate. How does the $1,500 of wages get reported? Has anyone encountered this before that can point me in the right direction on this? I appreciate any insight anyone can give. Ken Weber Vancouver, WA

Client's return has been e-filed and acknowledged for about three weeks. This week, his employer notified employees that they had made an error on their W-2s, by not including life insurance in excess of $50,000 on Line 12, Code C. The employer decided to issue revised W-2s, which will be out this week. My client's income will increase by about $80. Amending the Federal and state return will result in an additional $25 Federal and $8 state. Do you actually amend the return given this scenario, or wait for a letter from the IRS. I will tell the client what should be done, but as a practical matter, would you amend in this situation? Thanks for your advice. Ken Weber Vancouver, WA

Taxpayer and wife jointly purchased a home from wife's parents in June 2009. My conclusion was that it was a related party purchase and did not qualify for FTHBC. However, I read something in Kiplinger the other day that purchases with the same facts prior to November 6 were not considered related party purchases because only the wife was related. Did I miss something? Luckily, the return hasn't been prepared yet. Ken Weber Vancouver, WA

Try contacting your rep. I called and expressed my displeasure with the IntelliForms product. I really only used Zillion Forms to do 1099s and W-2s, so the new product is really worthless to me. My rep indicated that they were aware of the problem, and they have a special deal this year, at least for Total Kleinrock Office subscribers. They were supposed to do a mass mailing about this, but I haven't seen it. If you buy the ATX W-2 and 1099 program, Kleinrock will refund the cost to you. I did do that, and just received the software. Haven't seen the refund of my cost yet, but I'm sure it will be coming. It is supposed to integrate with Zillion Forms, so your client data is supposed to pull over from the 2008 program. I'll find out later today when I install it.

I can't even pull up the W-2 form. It doesn't appear to me that the form is available on IntelliForms.

And what about two working spouses? Would they get double the amount of benefit, and then owe money when they file their return next year? It looks that way to me. Ken Weber Vancouver, WA