bay

salary paid to the shareholder would be deducted on page one of the 1120S under officer salary- assuming it was actual w-2 income with payroll deductions, etc.

It has been a couple of years since I did the research on this issue for another client - but when I looked at this issue even if a shareholder personal guaranteed a loan such personal quarantee did not increase their basis in such corporation. Therefore I would say that based upon your facts, no the shareholder's basis does not increase by using the house as collateral.

Good Luck

I would attach a letter to the amendment and specifically request the IRS to apply the initial overpayment to the amended amount due.

Good Luck

I would send a letter to the 1040 clients asking if they want there files and that they must respond within 30 or 60 days and that if you do not hear back from them, then their files will be shredded.

good luck

I need to do some housekeeping this summer, how long do I need to keep old records, and what is your best advise, shreed old records or return to client , if I can find them.(some of the address may be out dated). I looked at c. 230 but couldn't find an answer to this. thanks

I do not believe that the IRS makes a distinction on whether or not you are a CPA or not. My policy is to keep client records (1040) for seven years - when I checked I recalled that the IRS said 6 years. If you are a CPA your should also check with your State Board. I checked with Ohio and they do not have any formal requirements. I have an engagement letter that each 1040 client signs that states among other items my record retention policy.

good luck

Brooklyn is part of NYC. If he moved from Manhattan to Brooklyn he would be considered a NYC resident for the whole year. Hope this helps. Rich.

Rich,

Yes it helps alot - THANK YOU SO MUCH -

I need help with a NY State Income Tax Return - Client lived in Manhattan then moved to Brooklyn, NY - Question: Is Brooklyn considered "New York City" I need to know this for the city income tax calculation.

THANK YOU TO ANYONE WHO RESPONDS

I also tell me clients to call their PC Insurance Person to make sure that if something happend to the babysitter in the house that they would be covered by their homeowner's policy -in regards to taxes - my clients usually complete the Schedule H

Good Luck

I just got off the phone with my better half and she said were having fish sticks also! I wonder who else is having fish sticks tonight?

Sounds right to me and the politicians can't figure out why the economy in NorthEast Ohio is in the tank (other than health care). I am in Cuyahoga County that has about 44 different municipalities and all with their different city ordinances in regards to taxes. I truely find completing city income tax returns the most problematic.

To make matters worse, these cities have a program with the State of Ohio whereby they (the cities) get a listing of every taxpayer that has filed an Ohio Tax Return. This one eldery client of mine is 90 in the nursing home and gets a letter with a subponea from the local suburb ordering her to a hearing as to why she did not file a city tax return. Of course the client is very scared and you explain to the city tax collectors that your client is "exempt" from city taxes because she is retired and has no "earned" income.

It is nothing but a waste of time and tax dollars. I normally am not one to rant and rave but I Hate city tax returns!

FYI - I know that the topic has come up before in regards to requesting an audit reconsideration. I had requested such a hearing in May 2007 and just had my hearing today with the IRS. Basically the IRS allowed about 80% of the issues or items that we were requesting. So instead of the taxpayer owing 12-k they will owe about 4-k. As I mentioned in a prior post it can take alot of time and effort to properly prepare but it is worth it if you believe that the facts are in your favor.

After I have completed a client's tax return -my secretary calls to see if they want to pick up their copy of the return and their original source documents. This year more clients (even those that are close with 5 mile radius in my suburb) are saying drop it in the mail. I am thinking of tacking on a $5 fee on top of my tax prep fee for "mailing fee"

Does anyone out there do this?

Again thank you in advance for your comments

I would not classify it as a personal loss - when your client "co-signed" they were equally legally liable for the debt. If your client loaned the other person money and had a note signed and then that person filed bankruptcy then you have a bad debt that I would deduct but not under the circumstances in your original post

I myself would not deduct anything for business use of the home.

I have 2 new clients that haven't filed in 10 years. I was just making sure which years are still open to file to get their refunds. I remember 3 years from the due date of the return. So I would say that 2005, 2006 and 2007 are still open to get refunds. Is that correct ? Since they haven't filed in 10 years how far back would you really file ? I know the one would of received refunds all those years and the other owes for the past 10 years. Any thought on how you would handle this. Thanks for any input.

As others have stated their is no statute limitations on returns that were never filed. In regards to refunds on a tax return; must be received three years from the due date - this also includes extensions. So if an extension was filed on the 2004; then the client will actually have until 8/15/08 for tax year 2004 or 10/15/08.

Good luck

Someone came to me today and asked me to validate the existence of his company so that he will an online certification. He wants to sell stuff over the internet and online company which secures sites asked him to have a letter from a CPA stating this business is in business. The internet company has listed some instructions for the CPA to follow such as:

1) Agree legal name to permanent audit file (if audit has been completed

2) Bank account: Request a letter from the bank confirming the existence of the account for the benefit of the client.

After performing these steps they want the CPA to state:

We have performed the procedures enumerated above which were agreed to by the management of the client, solely to assist you in evaluating the company's application for an premium certificate...This agreed-upon procedures engagement was conducted with attestation established by the AICPA.

Has anyone seen this kind of request? What is the reasonable fee to charge.

Thanks

Jeff

I would not do this!; In OHIO you can obtain online a Certificate of Exsitence from the Ohio Secretary of State's office that shows the name of the corporationl; charter number and when they were incorporated with a nominal fee. I do not know what state you are in, but either by internet or by sending in a written request your client can get this information for his company

In regards to the attestation "stuff" I always have to spend a few hours going over my "PPC" books to make sure wording, all steps are followed; In Ohio I have to go through a peer review every three years and they look at this stuff - too complicated and time consuming

good luck

Here is my two cents worth - I currently have two clients that I requested audit reconsideration for - the background is long and I will not get into the details; but with the one client the hearing is next week and the audit reconsideration was requested one year ago. With the second client I am waiting to have a hearing date scheduled.

1) I understand that your client is "new" but I suspect that there is more to the story then you have been told by your client.

2) It appears to me that your client's divorce attorney dropped the ball in not addressing this issue or the potential of this liability in the divorce settelment or proceedings.

3) You must understand that to properly request a hearing and have it accepted by the IRS, that it takes alot of time. You can not just spend 15 minutes on your word processer requesting an audit reconsideration. You must disclose and detail as much as possible each item you disagree with; and provide them with as much documentaiton as possible. This can easly take several hours of work. The last one I sent in to the IRS in September of 07, between my self and my secretary I spent about 12 to 15 hours preparing everything that I sent in to the IRS.

4.) I would have a sit down with your client and tell her that it can be very time consuming and that there is no guarantee of sucess; if she wants to move forward then I would get a nice size retainer up front.

5) If you do file for an audit request I would suggest sending in everything via certified mail; and then you HAVE TO BE PRO ACTIVE AND CALL THEM ONCE A MONTH UNTIL YOU get a date set.

Finally I have found then when I am professional and courteous to the IRS; they are professional back with me.

good luck

Client has rental properties that he bought in 2007. However, because of AGI, he cannot claim any passive activity losses. When I complete Schedule E, part of those losses are depreciation of the structures. Since he cannot benefit from the losses, do you still claim the depreciation? If you do, on the sale, you will recoop the decpreciation even though he never benefited from the depreciation. Seems unfair and illogical. Is there some way to prevent this?

Steve M

Yes, you are required to take depreciation and any passive activity loss is carryforward and is recouped when the property is sold.

My client has a distribution from a Qualified pension plan of $21,000 which was used as a down payment on his very first home. Since this came from a Qualified plan, can up to $10,000 be subtracted from the distribution and balance charged 10% tax? This is not an IRA, where I believe there is this allowance but does it also include 'qualified plans'? The tax programs are allowing the deduction.

Thanks for thoughts

Joey B

I would suggest looking at code section 72 to strart with.

I have never heard of this before. Teenage babysitter watched 3 kids for a family who paid her $3 per hour. Now they [evidently] want to claim the child care credit and are asking for her SSN.

That would be self-employment income to the teenager. My initial thought is to tell them to get lost - if the teenager had known this would become taxable income to her, she never would have accepted $3 per hour!!

She doesn't have to provide her SSN, does she?

Have the teenager tell the couple that she would be more than happy to give them her soc sec number provided they give her a copy of their Workers compensation coverage because if she trips over a transformer or a doll and breaks her arm she wants to make sure her medical expenses woudl be covered because otherwise she would have to file a LAWSUITE against the couple.

On a side note - I can't believe all the posts from a Sunday - I need a day off

Good luck

blaking out here, what is form when someone owes over $1000 the irs send a form that may be need to file for the nex year, need this in a hurry thanks greatly

Not sure what your question is? are you talking about estimated tax vouchers? please clarify

Is anyone familiar with this form?

I've clearly never seen this one before so I have to ask (maybe I'll seem naive). What is the ramification of how this form is completed? From reading the instructions, it appears that as long as the buyer and seller agree on an allocation, then all is good? is there something that I should be aware of or be looking out for?

(In my case, the seller seems to want to allocate a large portion to goodwill which is fine with the buyer (my client)).

Last year I had to file this form twice for a client - first you need to look to the purchase agreement to see how the price should be allocated among the assets. It is important that the filing of this form be cordinated between the buyer and the seller because the IRS matches up this information. About 4 years ago I completed this form for a client who sold a business. I used the numbers per the purchase agreement. Well the buyer did not properly complete the form and both parties where subsequently audited by the IRS. My client came out clean (no changes) but the buyer was not so lucky. When I have a client being audited, I always ask the agent what prompted the audited. This agent told me it was the sale of assets that triggerd the audit.

This is another important reason to remind your clients that when buying, or selling a business that they should consult you the tax advisor before closing on a deal.

Anyhow I have some more returns to finish up so good luck

I have tried to search for HOH and all I get is a message not enough characters.

I have a client that took in a homeless person (a niece of hers) in Sept of 2007, and wants to know if there is any way of claiming HOH.

To qualify the taxpayer must 1) be single (not married or a surviving spouse); 2)maintane a household for more than 1/2 the year is the principal place of abode for a person who is a member of the household and is a (a) qualifying child as defined in Sec 152© or any other person if they qualify under Sec 151.

BASED UPON YOUR POST I WOULD SAY NO SINCE THE NIECE DID NOT STAY WITH AUNT FOR AT LEAST 6 MONTHS

I have tried to search for HOH and all I get is a message not enough characters.

I have a client that took in a homeless person (a niece of hers) in Sept of 2007, and wants to know if there is any way of claiming HOH.

Not sure where you are searching - I assume you don't have Kleinrock or anyother research material? Did you try going to the IRS website under publications and entering in "head of household' in the search box.

So........couple comes into my little office asks me to do there taxes. Interestingly enough they had just left "A Nationally Advertised Firm" preparer didn't know how to handle overpaid FICA, tuition credit, limits on itemized deductions or anything else it appears. Total amounts refund on fed 9,000, amt due on state 3,000.

My calculations after taking the time to do the return correctly. Federal Refund 12,000 & state due 1,500.

Thankfully, they came to my office.

Can't wait to hear everyone's responses.

Regards,

Single Dad

I remember about 6 or 7 years ago - I received a call from a young woman who got my number out of the phone book - she had just left the local HRB office because they did not know "what forms to use" to report your "consulting income" - of course I told her to come to my office - turns out she was a "dancer" at a downtown "gentlemans club"

Prepared the Schedule "C" and she owed a ton of money (had her sign a release indicating that she disclosed all her income, etc. to me) - and she was still happy. She was more afraid of getting in trouble with the IRS than anything else.