kcjenkins

Washington, D.C. (June 2, 2014) By Michael Cohn, Editor-in-Chief, AccountingToday.com The Internal Revenue Service has introduced an online tool that will allow users to check on whether a foreign financial institution has registered for the Foreign Account Tax Compliance Act, or FATCA. The FFI List Search and Download Tool is located on the IRS's FATCA Website. The tool can be used to search for the name of a specific foreign financial institution and find out if it has registered under FATCA. Users can also download an entire list of financial institutions with the tool. It is expected to be used primarily by other financial institutions. FATCA was included as part of the HIRE Act of 2010 and requires foreign financial institutions to provide information on their U.S. account holders to the Internal Revenue Service or else face stiff penalties. The law has attracted controversy abroad amid concerns that it violates other countries’ banking secrecy laws. However, after delays, some changes in regulations by the IRS and the Treasury Department, and a series of intergovernmental agreements between the Treasury and tax authorities in other nations, the requirements are beginning to take effect this year. Among them is one requiring foreign banks, hedge funds and other financial institutions to register and receive Global Intermediary Identification Numbers (see Multiple FATCA Deadlines Approaching). Foreign financial institutions were required to register by April 25, and the results were expected to be available to the public on June 2.

Top Regulatory Changes for Businesses in 2014 Paychex has a list of the top regulatory issues facing small businesses this year. http://www.accountingtoday.com/gallery/top-10-regulatory-changes-for-businesses-in-2014-70738-1.html?utm_campaign=smb%20finance-jun%205%202014&utm_medium=email&utm_source=newsletter&ET=webcpa%3Ae2715251%3A2799966a%3A&st=email

Good idea. If you work through the IRS worksheet and get a different result, it will most likely highlight for you the difference. And if not, you can then use that to show the IRS their error. Remember, the GAO says that almost half of all IRS error notices are incorrect, at least in part.

Important thing is to list it for sale, and try to get the best deal he can. If he makes a private sale significantly below appraised value, without listing it, the IRS might question it, but unlikely if the buyer is truly an unrelated buyer.

I'm glad for the good news, but have to smile at that group name. Only a government agency would ever name a group the "Human Capital Officer Workforce Relations’ Automated Labor and Employee Relations Tracking System". Wonder what the nickname is? ​HCOWRALERTS is an interesting acronym.

In an annual review, only two IRS violations of Fair Tax Collection Practices were discovered, according to a recent report. The annual report by the Treasury Inspector General for Tax Administration was mandated by the IRS Restructuring and Reform Act of 1998, which also established the FTCPs, which attempt to ensure that taxpayers receive fair and balanced treatment from government collection agents. In its review of cases opened after July 22, 1988, and closed during fiscal 2013, TIGTA identified two FTCP violations on the IRS Human Capital Officer Workforce Relations’ Automated Labor and Employee Relations Tracking System. Both involved revenue officers who contacted taxpayers directly, instead of contacting the taxpayers’ power of attorney. The IRS admonished both employees. TIGTA made no recommendations, but key IRS management officials reviewed the report and agreed with its facts and conclusions.

The IRS issued final regulations in March designed to simplify the employer reporting requirements imposed by the Affordable Care Act. Most importantly, the regulations permit combined reporting for the multiple requirements and simplify reporting where a large employer provides affordable group health coverage, which is of minimum value to almost all of its employees. This Q&A explains the new regulations and how they impact both small and large employers. What are the reporting requirements? The ACA added two sections to the Internal Revenue Code related to reporting. First, Section 6055 requires health insurers and employers sponsoring self-funded group health plans to annually report to the IRS and to responsible individuals (the enrolled employees), whether the coverage constitutes minimum essential coverage under the ACA. This reporting requirement will help the IRS to enforce the individual mandate penalty. We refer to this as “individual mandate reporting.” Second, Section 6056 requires large employers with 50 or more full-time and full-time equivalent employees to report to the IRS and to full-time employees for two purposes: To assist the IRS with enforcing the employer pay-or-play penalty; and To assist full-time employees with determining their eligibility for a premium credit. It should be noted that even though mid-size employers with 50 to 99 full-time employees are not subject to pay or play for 2015, these employers are still subject to Section 6056 reporting for 2015 (and later years). We refer to this as “pay or play reporting.” Both reporting requirements were initially required under the ACA with respect to the 2014 calendar year. However, the effective date was delayed last year. Now, the first year for which reporting is required is 2015, with the reporting for 2015 due during the first quarter of 2016. Are small employers subject to the reporting requirements? Generally, no. Small employers with less than 50 full-time employees are not subject to pay-or-play reporting. And only small employers that sponsor self-funded group health plans are subject to individual mandate reporting. For small employers that sponsor fully insured plans, it is the insurer that is responsible for the individual mandate reporting. What are the basic rules for large employers? As with small employers, if a large employer’s group health plan is fully insured, the insurer will be responsible for the individual mandate reporting. The large employer will only be responsible for pay-or-play reporting. On the other hand, if the large employer sponsors a self-funded group health plan, the employer will be responsible for both the individual mandate and pay-or-play reporting. Under the new regulations, a large employer can satisfy both reporting requirements on a combined basis by using IRS Form 1095–C (the employee statements), along with IRS Form 1094-C (the transmittal form). The IRS is planning to release a draft version of the reporting forms in the near future. For individual mandate reporting, the reports must include the Social Security number, or a shortened version of it, for the responsible individuals (the enrolled employees) and their enrolled dependents. However, if, after reasonable efforts, the Social Security number of an individual cannot be obtained (for example, in the case of a dependent), the individual’s date of birth may be used. The individual mandate reports must also include the months for which the individual is enrolled for at least one day during the month. Pay-or-play reporting focuses on the employer’s full-time employees. All of the following information must be reported: A certification as to whether the large employer offered its full-time employees and their dependents the opportunity to enroll in coverage (by calendar month). The number of full-time employees for each calendar month. For each full-time employee, the months for which coverage was available and the employee-only premium for the lowest cost medical option providing minimum value. The name, address and Social Security number of each full-time employee. The months during which the employee was covered under the employer’s group health plan.

Did he move to a different part of the property? Or to a different location entirely? If he's been living somewhere else for 5 years I don't see how you could call it his home now.

I just KNEW that would get a reaction from you, Cat! Amazing, isn't it, how gullible people can be? I have a brother-in-law who truly believes his friend invented a 'perpetual motion' machine.

Sure, Joan, these were seasonal workers, and I agree that ALL businesses with multiple employees have some level of crooked employees. What upset me about this story was the SENTENCE they got. This 'plea deal' makes a mockery of the law.

Me, too, Gail.

The "punishment" really infuriates me. Based on the amounts involved, NONE of these simply got an extra check or two before they remembered to notify the UI office. This was deliberate and long-term theft. At least some jail time, plus a fine, needed to be added to the 'restitution'.

O. Henry Pun-Off competition

Gee, if someone robbed a bank, do you think they could get away with just giving the money back once they were caught ? What message does this send?

Kansas City, Mo. (May 30, 2014) By Michael Cohn, Editor-in-Chief, AccountingToday.com Six former Internal Revenue Service employees have pleaded guilty to receiving unemployment benefits while they worked at the agency. Michelle Glavin, 32, and Christopher Castillo, 34, both of Kansas City, Mo., pleaded guilty Wednesday in separate appearances before U.S. District Judge Dean Whipple to the charge contained in a Dec. 10, 2013 federal indictment. Their co-defendants, Jesse Love, 61, and Tiffani Harding, 27, both of Kansas City, Mo., Shalonda Bradley, 41, of Grandview, Mo., and Berneta Weedin, 59, of Platte Woods, Mo., pleaded guilty on Tuesday. By pleading guilty, each of the defendants admitted they claimed unemployment benefits while employed by the IRS. The defendants are no longer employed at the agency. Each defendant also pleaded guilty to stealing government property by fraudulently claiming unemployment benefits to which they were not entitled. Under the terms of their plea agreements, the defendants must pay restitution for the amount of benefits illegally received. Glavin received $5,144 in Missouri unemployment benefits, plus $16,204 in federal benefits while employed at the IRS, for a total of $21,348. Castillo obtained $6,365 in Missouri benefits and $4,727.80 in federal benefits, totaling $11,093. Love got $8,214 in Missouri benefits and$1,404 in federal benefits, for a total of $9,618. Harding received $2,664 in Missouri benefits, plus $8,650 in federal benefits, for a total of $11,315. Bradley obtained $6,279 in Missouri benefits, plus $250 in federal benefits, totaling $6,529. Weedin got $3,014 in Missouri benefits, plus $3,113 in federal benefits, for a total of $6,127. The IRS often hires seasonal employees to help out during busy season who can legally claim unemployment benefits during the parts of the year when they are not working or being paid.

AGREED, JACK, I REALIZED I WAS NOT CLEAR, AND EDITED MY ANSWER ACCORDINGLY.

Assets contributed are entered at their book value, not FMV, on the fixed assets schedule. For the books, you enter at FMV. This might be more or less than BV of the contributor, but does not affect depreciation. If you contribute $10,000 FMV and you set par at $1.00 you would issue 10,000 shares, but if you set par at $100 you'd issue 1000 shares. And yes, this is 'contributed capital'.

I hoped it might be useful to someone. It's good to know it did.

What did he do before that job? It could be a temp assignment IF he was teaching in NY before.

Qualifying as a real estate professional is going to become even more important in 2013 than it ever was. The IRS is pretty tough about it and as the recent decision in the case of Sherry Hudzik shows the Tax Court tends to back them up. Up till now, the issue has been important to people who have real estate rental losses they don’t want suspended. The 3.8% Obamacare tax on net investment income will make it relevant to a much larger group. The Big Picture The Tax Reform Act of 1986 gave us the seemingly oxymoronic concept of “passive activities”. Collecting interest and dividends is not a “passive activity” even though interest and dividends are considered “passive income” in other areas of tax law, such as the sting tax on S Corporations. There has to be an activity, such as a trade or business, for you to not materially participate in, in order for you to have passive income or losses under Code Section 469. If you have net passive losses, they are suspended to be released if you have passive income in the future or when the associated activities are entirely disposed of. Rental activities are “per se” passive. This seemed to be a hardship for people who were generally active in real estate, so an exception to the “per se” passive rule was carved out for them. A lot of trade or business income is subject to self-employment tax. Not all of it though. Flow-through income from an S Corporation is not subject to self-employment income, although the IRS will get on you if your salary is unreasonably low (As a practical matter it seems that the lowness has to be extermely unreasonable.) Whether the trade or business income flowed through to a limited partner or an LLC member is subject to self-employment tax is a really sticky issue. Real estate rental income is specifically excluded from the self-employment base. Trade or business income that is not subject to self-employment tax will be subject to the tax on net investment income. There is a very big exception, though. Income that is considered non-passive under Code Section 469 will not be subject to net investment income tax. This means that the income from rental real estate, including gain on dispostion, might be exempt from the 3.8% tax in the case of real estate professionals. Someone who is below the AGI threshold for net investment income tax might not think this is all that exciting until they reflect on how high AGI might be in the year that their ship comes in and they sell the property. If somebody decides then that they want to establish themself as a real estate professional, it will be very challenging, which is why cases like that of Sherry Hudzik are worth watching. It Is Not Easy Before we get into the really hard part, there is an easy thing that people often miss. Getting the real estate pro status just relieves you of the “per se” passive rule. You still have to materially participate in each of the activities. If you have several properties this can be virturally impossible. You are allowed to elect to aggregate all your properties together, but many people miss that election, as did Ms. Hudzik, although she did not get far enough for that to matter. In order to qualify as a real estate professional you must spend at least 750 hours on your real estate trades or businesses in which you are an owner. As an accidental landlord of one condo, I would never get there. On the other hand,if I actually found the experience rewarding, I can see how getting just a couple more and not relying on someobody else to deal with the tenants would turn the activity into a time sink nearly as catastrophic as tax blogging. 750 hours is not the sole requirement. You also have to spend more time on the real estate acitivites than you do on anything else. This generally proves to be an insurmountable obstacle for amateur landlords with day jobs, particularly since there is a much harder unstated requirement. You Have To Be Able To Prove It How much time you spend on your day job is generally not that contoversial. There was no argument that Ms. Hudzik spent 1,650 hours each year as a “treaty manager” for Swiss Reinsurance America Corp. You might envy those short hours, but you sure would not envy her commute. Watchung, NJ to Armonk, NY. According to Mapquest it is about an hour and a half each way, but it involves crossing the Hudson River either at the George Washington Bridge or the Tappan Zee. Yikes. So she needed to show that she spent quite a bit of time on her real estate. Here is what she had: To substantiate her claim that she was a real estate professional, petitioner introduced three logs reflecting the amount of time she purportedly spent on rental real estate activities during each of the years at issue. ……..Of those hours, petitioner contends that she worked 1,270.25 hours on real estate activities related to the Florida property and 660 hours related to the New Jersey property and the Florida property combined. For 2007 petitioner contends that she spent a total of 1,790 hours on real estate activities. Of those hours, petitioner contends that she worked 1,525 hours on real estate activities related to the Florida property and 265 hours related to the New Jersey property and the Florida property combined. For 2008 petitioner contends that she spent a total of 1,680.75 hours on real estate activities. Of those hours, petitioner contends that she worked 1,511.25 hours on real estate activities related to the Florida property and 169.5 hours related to the New Jersey property and the Florida property combined. I thought the hours were kind of odd given that she owns a four unit building in New Jersey and a condominium in Florida. It made a little more sense when I realized Clearwater was the type of place where you might be doing a lot of short-term rentals. You should note that she would have had a material participation problem with the the New Jersey property due to her failure to make the election. The reason it never got there was simple. The Tax Court just did not believe her. Petitioner alleges that most of her real estate activity consisted of searching for prospective tenants for the New Jersey property and the Florida property on Craigslist. In addition to her Craigslist activity, petitioner asserts that her rental activity also included renting and managing the New Jersey property and the Florida property, paying bills, and doing whatever else was required by the State and the town. Petitioner did not specify any of these activities in the logs. The logs that petitioner provided, however, are suspect. Petitioner attempted to establish the hours she purportedly devoted to the rental properties with the logs and her testimony at trial. The logs list totals of 1,942.25 hours, 1,790 hours, and 1,680.75 hours that petitioner spent during taxable years 2006, 2007, and 2008, respectively, working on the rental properties. We consider the hours reflected in the logs implausible, given that petitioner already worked 1,650 hours per year at Swiss Re and would have had to spend almost all of her remaining time working on the rental properties. As these cases go it was pretty big money, nearly $60,000 in deficiencies plus accuracy related penalties. I find this case a little troubling. The Tax Court is more or less saying that people with day jobs will never be able to meet the standard . The lesson, if you are going to try anyway, is not only to keep logs, but to be specific about what you are doing.

No, you did not sell it, you contributed it in exchange for stock, at book.