NECPA in NEBRASKA

I have a married couple that began an S Corp on the advice of their now deceased, non-tax attorney many years ago. The only property that this S Corp holds is investments in Real Estate LLCS. It's all passive income, they are not active, just investors. It's been a pain for a long time, mainly because of the losses carryforwards and the basis computations. It just gets more difficult as they add more state K1s. 

I have never seen anyone else hold investments this way, but I have always worked for small companies and have been on my own for years. I was just wondering if this is a normal way to hold investments and maybe I need a more powerful tax program just for theirs. It is so time consuming and I spend a lot of time worrying that I am not preparing the corporate and individual returns correctly. The K1s from the LLC are turning into books now with all of the new regs on 1065s. I have gently tried to steer them to move to the much larger CPA firm that prepares the 1065s as their tax preparer, but they aren't willing yet. There won't be much choice for them soon when I retire. It just seems to me that it would be so much easier if they were held personally, but maybe the Corp is for some protection?

TIA

1 hour ago, Lion EA said:

If she makes more money, she'll pay more taxes. If she wants to make more money, she can depreciate everything possible over the longest life possible. She can raise rents.

Usually landlords want to make as little money as possible or, better yet, have losses. Then they make money when they sell, and have suspended losses to release in the year of sale. Some of that sale income can be long-term capital gains.

You're her tax advisor. Maybe she needs a life coach.

I have told her these things, she listens to other realtors that tell her they are making a killing with their rentals. After my responses to her today, she said that she is tired of paying so much in taxes. I replied that then she would have to make less money. It is an endless circle. She agreed that maybe some of the people that she was listening to weren't exactly truthful, had the additional earned income that they have, or have few expenses or debt. 

I don't know what more that I can do to help this client. I love her to death, but I'm not a real estate advisor and I'm not going to go take one of those seminars to tell me how much money that I can make by getting rental houses.

Between her spouse and she they make from $180K-$250K in earned income. She is a realtor (Sch C) and they both make good money. They have three rental houses and think that they should have more deductions and make more money like other people tell them that they make. I can't pull expenses or income out of the air. LOL Much of the money that they have spent since buying them less than three years ago were for improvements, no they are really improvements. I try to expense anything that is legitimate expense. All three of the houses are mortgaged which probably doesn't help their cash flow. 

She has prepared a spreadsheet to qualify for real estate professional, but she wants to slow down. That will not help her when the expenses aren't deductible. 

I don't want her to feel like I'm not doing my job, but I don't know what more I can tell her to help them. She has already made 3 times as much gross income on her commissions in 2022 as all of 2021. That will probably slow down the last 6 months, but everyone loves her and she works hard, so she may still increase. I've mentioned way more money into retirement, but she does not want to tie it up. 

Does anyone have any ideas that would help since my crystal ball does not seem to be helpful?

Thanks!

Bonnie

On 5/2/2022 at 3:05 PM, jklcpa said:

Thank you for the birthday and well-wishes.  Birthday was low-key, relaxed at home, and made some delicious strawberry shortcake.  I'm pretty much recovered and feeling back to my old self again already.

I'm certainly not overworked because of my workload as I am probably one of the few here that is definitely underutilized.  I've purposely not taken on any new clients in the last 3 years and a few of my business clients have either sold or retired, so that is also less work during tax season and the rest of the year too.  I did take one new referral in early April but that is the first in a while for me.

The reason I end up working into the wee hours is because I now spend a total of 2-2.5 hours a day on mom's lunch, dinner, and bedtime routine each day and doctor's appts, etc., and then there is my husband's health issues. Read on if you'd like to know more.

There are only a handful here that are aware of husband's health issues, but for the rest that aren't, he is battling TCC bladder cancer that was discovered in early 2019 during the pretesting leading up to treatment for prostate cancer (PSA well below 1.0 now).  At that same time those tests also revealed that his heart was skipping 30K beats a day (1/3 of normal beats were missing or erratic), and he also had an abdominal aortic aneurysm.  The moral of his story is if a doctor tells you that you have cancer and can "wait, watch it and see...," please consider a second opinion or think long and hard on that choice!  If he'd listened to those first 2 doctors about the prostate cancer, then his heart, aneurysm, and TCC may have been discovered too late to treat, as is often the case.

So in a little over the last year or so he's had corrective surgeries for the heart and aneurysms plus the ongoing bladder treatments, biopsies, and followups for that. He's doing really well overall but had a major reaction to the BCG bladder treatment on 3/16/22 and ended up in the ER that night and hospitalized for 4 days with a major fever, the cause of which has yet to be determined. The ER visit and subsequent admittance cost me an entire night's sleep being there with him and where I then went from there straight to 3 client appointments, and just the extra time spent each day with him in a hospital that was 1.5 hrs away round trip in the days that followed. 

All of that left me that much shorter of time that I have had to devote to tax preparation this year, but I got it done with only 2 clients on extension; 4 in total but one of those individuals also has 2 small partnerships along with the individual return.

So, worry not, I'm feeling better now and have mostly caught up on my sleep.  And for those that would say I was here too much in light of all of that, helping others here is actually a break from my own reality at times.  If you made it this far and read all of this, thanks also for listening!

Judy,

My thoughts and prayers are with you. It takes a toll to be a caregiver to one person, let alone multiple persons. My mother disliked her BDG treatments with a passion. I am looking forward to turning 65 this year so that I can get Medicare. It is pathetic to want to get older to have better health insurance. 

You need to try to find time for yourself. I know that I fell behind in working out during this tax season, from being overworked, exhausted and taking care of my husband. Between his heart, COPD and constant pain, I never feel like I should complain. I am so glad that I am not taking on more work. 

I am finally leaving tomorrow for a few days to see our son in Littleton. My husband has orders to do nothing but hang out. His daughters and neighbors are watching out for him. Hopefully, we can both drive out later this summer. 

I will be here all year if you are looking for someone to talk to. I felt like I didn't get much done this year with not extended due date, but then I compared the number of returns to last year and was thrilled to find that I had pumped out a lot more returns, even if so many were a pain.

I received that, also, but thought that since I am already a 

21 hours ago, b#tax said:

I received this email on 5/2/2022 does look like Desktop was just moved to life support:

Updates: QuickBooks Desktop Payroll

 

 

We are reaching out to provide advance notice of availability to QuickBooks Desktop Payroll products.

QuickBooks Desktop Payroll is simplifying its product lineup. These changes allow us to sharpen our focus on delivering what we believe to be the best online payroll products going forward.

Product changes impacting accountants:
As of June 1, 2022, we will no longer be offering new purchases of Enhanced Payroll for Accountants, and it will no longer be offered as part of the QuickBooks Desktop ProAdvisor Software Bundle. This change only impacts new purchases and does not impact current subscription and renewal. Existing users will be able to continue their active subscription, and this change will not affect their ability to use the product or get support.

If one of your accountant colleagues is looking for a new payroll service to support their clients, they may consider QuickBooks Online Payroll.1

Product changes impacting your clients:
Effective June 1, 2022, we will no longer be offering new purchases of QuickBooks Desktop Assisted Payroll, unless it's part of the QuickBooks Enterprise Diamond bundle which includes Assisted Payroll. Existing Assisted Payroll users will continue their active subscription and this change will not affect their ability to use the product or get support.

Share your feedback
Please take a moment to tell us what you think of these changes and what you would like to see included in future versions of QuickBooks Payroll products.

Thank you for your partnership and for your dedication to your clients.

The QuickBooks Payroll Team

 

This change only impacts new purchases and does not impact current subscription and renewal. Existing users will be able to continue their active subscription, and this change will not affect their ability to use the product or get support.

I received that email and hope that I will still receive it, since I am already a Pro Advisor. I just need access to the different versions. I look forward to never doing payroll or dealing with QuickBooks again.

I finally got an email from a retention specialist this week and then a call. I just emailed back and said that I would touch base next week. I'm leaving for 4 days and don't even want to think about anything. I should bounce my emails and calls, because my clients seem to have ESP and know when I'm out of town to have some kind of emergency.

I have not heard anything from my sales rep or any ATX mail this year. I did have the same sales rep for the last two years, but maybe he's gone. He was actually helpful.

I had three random "clients" that just said "Sharing this IRS letter with you". Uh no! This is why I use a different email address on my website and with government agencies. I can catch scammers pretty easily, because very few of my clients have ever found that email. I keep asking myself why I have a website, when only a handful of clients will actually look at it. 

43 years for me. I'm hoping to make it to 45 and then try something else part time. It's getting more difficult to take care of my husband and work this hard. I'm just thankful that we could move my office home. Thank you again for all of your help. 

Get some rest, Judy. I still have way too many returns to finish and extensions to compute.

I have had so many that are supposedly new clients and want me to open attachments. I don't care if they are legit or not, I'm not biting. The ridiculous text messages that we have been getting from banks or credit cards that we don't have are scary. Some people would open them and not even think about it.

I'm so glad that nobody was hurt badly in any of these accidents. I am so grateful for all of you. I don't have any local tax preparer friends left after 43 years in this field. They are either dead, retired or decided to change careers. I learn tons from my classes, but this group and a few fb groups have taught me so much more and it seems to stick. I also have learned that my family comes first. I have great clients and they mostly feel the same as I do about families. Hugs!

Bonnie

Logic does not make a difference. As far as I have been able to tell, the dependent can received the $1,400, also.

7 hours ago, Possi said:

I can't say what exactly happens in the workshop. He's one hottie, I know that. 

The best thing that I've read all day.

If you have any income in Nebraska and have to file a federal return, you have to file here. That's why they call it the "tax me state". I can't wait to move somewhere more tax friendly for retirement. Lots of my clients have moved to retiree friendly states and send me their taxes.

What's the code in box 7 and is this an IRA distribution or something else? I normally see box 5 filled out for employer pensions.

She is beautiful! 

57 minutes ago, WITAXLADY said:

WI resident has W-2 from Neb for $265 and $4 withheld.

Neb form III takes $265 by % of gross total income of $80,000 and says his Neb total taxable income is $2,801 and his tax is $8

 

Does this sound correct? Did I miss a step?

thank you,

D

 

 

 

D,

That is correct. The NE taxable income should be coming from page 1 of the 1040N, line 14. Then Sch III figures out the rest. The tax is figured on the line 14 amount less the personal exemption credit. That amount is multiplied by the percentage of NE income to the gross on line 4. $8 should be the correct tax.

Thanks,

Bonnie

On 3/13/2022 at 1:26 PM, BulldogTom said:

@NECPA in NEBRASKA

Bonnie, I spoke to a friend (not a client) today who is an airline flight attendant domiciled in TX.  She confirmed what I thought...the airline assigns her wages to her home base assignment.   She was based out of CA for a portion of 2020 and 2021, and her W2 reflected earnings to CA for that period of time, even though her flight hours in CA were actually a small percentage of her total flight hours while she was based in CA.    I have a feeling this is what you will see when your son gets his W2.   

Not sure if this helps...

Tom
Longview, TX

Thanks, Tom. I guess we will be prepared for whatever shows up on the W2. He has heard both answers from other pilots.

20 hours ago, Lion EA said:

Will his tax home be CA?

Lion, If my reading about the Railway Labor Improvement Act is correct, his tax home should not be CA. It all depends on how much of his flight time is spent in CA air space.  He is expecting much longer flights, but air travel is unpredictable these days. I am hoping not to strain my brain for CA returns, since I have not prepared one for at least 10 years. I know that there are tax preparers that specialize in transportation clients, so when or if the rules change, they can pay to get their taxes done. 

1 minute ago, BulldogTom said:

Bonnie,

I have never had a client who was a transportation worker, so I am not familiar with those rules.  

You son will still be domiciled in Colorado.   Working in CA temporarily does not change that.   He will file a 540NR next year for the time he was "based" in CA.

What I have always done (right or wrong) is follow the W2 for state wages if the client is a non-resident CA taxpayer.    It is a powerful third party document for either side if there is a dispute.   Never had an issue using that method.  If audited, the State would have to prove that the employer improperly completed the forms, and that the taxpayer knew or should have known that the employer document was incorrect.   Pretty tough hurdle for the FTB to get over.

Make sure he keeps track of all his unreimbursed expenses.   CA never conformed to the 2017 Tax Act (something about never agreeing with anything a certain former POTUS advocated).   Those 2106 expenses are deductible on the CA return.   You will show them on the "state only" portion of the 2106 and they will be applied on the Schedule CA (California Adjustments).

Reach out if you have any specific questions.

Tom
Longview TX (56 prior years in CA)

Thanks, Tom. I will have to wrap my brain around unreimbursed employee expenses again. 

2 hours ago, cbslee said:

Is this similar to players of pro sports who have to file and pay taxes in every state where they play a game ?

I don't think that it is the same because they are transportation workers. I was hoping that California tax preparers would know if my research was correct. He says that most of his flying would be long distances and not inside of California. He expects his income inside of California to be less than 50% of his total. 

My son will be commuting to LAX as a pilot, but lives in Colorado. He will just be staying in a hotel when necessary. He will not be signing a lease on a crash pad. He told me yesterday that he was told that he will have to pay California income taxes, so that I had better learn the rules. He has flown in and out of California before, but this time it will be his base with the new airline until October.

I have been doing some research and I think that he should fall under the transportation worker rules and file in his home state. Am I looking this up incorrectly or has something changed?  

Thanks,

Bonnie

I rarely see any 1099S with any of our home sales in Nebraska or Iowa, but I don't have any clients with super expensive houses.

I always create the e-file before I get a signature to check for errors. I recreate it if it is signed later to make sure that there were not any form updates.