NECPA in NEBRASKA

I just researched this for two children that inherited IRA's from their grandmother. They took distributions in the first year and then nothing. They will have to take the remainder in year 5. If you find anything different, please post it here. I hadn't thought about trying to take the other distributions and paying the penalty. I'm not sure if it will work. I didn't see anything in the rules about a beneficiary trying to do that.

I'm in Omaha.

Monkeyman,

Thanks! They did get mine fixed today.

Bonnie

ATX is supposed to call me back in a couple of hours, regarding the Kleinrock website, so I have a question. I have a client that insists that his young daughters can rollover an inherited IRA from their grandmother and not have to withdraw the money this year. 2007 is the 5th year and they need to withdraw it now as far as I am concerned. They didn't pull it out using the youngest's age. They pulled the first amount out in 2002. He has some article telling him that he can roll it, but everything that I can find says that the law change only applies if they died after 2006 and it was from a retirement plan, not an IRA. I have read that Congress intended for it to apply earlier, but that the IRS applied the law incorrectly. I don't think that it would work in this case anyway, because they already had made a distribution in 2002 and nothing since. Does anyone know if the IRS has made a change recently in their interpretation? Thanks!

Bonnie

Kurt,

I am having the same problem. I have spoken to Diana at CCH and Andrea at Kleinrock. They both told me that I have to call ATX back and tell them that they have to do something on their end and to stop passing me off to other people. I am calling them again now. I really need to do some research.

Bonnie

It should be the 2007 software. They apparently sent to everyone from last year, without installation codes if you did not renew. There was also an archive disk for 06 a month or so ago.

I think that the paragraphs are overkill, but I tend to worry every time I read anything from my insurance company. Their seminars can be petrifying to a one person shop. If I did everything that they suggest, I would spend all of time doing administrative work and never anything billable. If I put this in all of my engagement letters, my clients would probably panic. I can't even think of when this would apply to my clients.

Here are the sample paragraphs. It doesn't say that it is copyrighted or anything, since it says that we can use it as an example.

The 2007 Small Business and Work Opportunity Act requires my firm as tax return preparer to conform to a higher standard than the taxpayer when an undisclosed tax position is being taken on your tax return. This higher standard requires the preparer to have a reasonable belief that the undisclosed tax position would more likely than not be sustained on it merits if challenged by the IRS, and that there be a reasonable basis for the tax treatment. Moreover, I may have to spend additional time preparing your return because of the extra research and analysis necessary to meet the standard. Accordingly, by signing this letter you acknowledge that you are aware of this difference in standards, and consent to my preparation of your federal income tax return in accordance with the standards applicable to my firm as tax preparer.

If I conclude as a result of my research that you are required to disclose a transaction on your tax return, you consent to attach a completed Form 8275 or 8275R to your tax return after we discuss the situation with you and agree to hold my firm harmless with respect to any and all actual and consequential damages (including but not limited to taxes, penalties, interest, and attorney fees and costs) that you incur as a result on including such disclosures with your filed tax returns.

I just received a risk alert from my AICPA insurance with example two paragraphs to insert in engagement letters regarding the new tax preparer standards. Then it says to explain this to clients before I present the engagement and start working on their returns. I have always mailed the engagement letters and they get them back to me with their information. I don't know how I'm going to find the time to discuss this with every one of my clients, especially the ones that I never see. Personally, I think that this will scare them. This whole thing has made me think about working for somebody else. I've been trying to read up on this and am confused as to if this means that I have to practically audit every return that I prepare. Am I worried needlessly? What are all of you planning to do about these changes? How will the H& R Blocks' and JHs' handle this? All opinions are welcome.

Thanks!

Bonnie

I just managed to get to the list of CPE courses finally. I don't know what the problem was. I tried on a couple computers.

KC,

I bought Total Tax Office, which used to include CPE. I guess that it doesn't anymore. When I used your link, it just gave me last year's info again. Thanks!

Bonnie

Thanks! It takes me to the same place. No new CPE, just my results from last year and a survey. Maybe they are only going to have CCH CPE now.

Does Kleinrock offer CPE at all now? When I go to CPE, all I get is the results from my prior years and can't get to any new courses.

Thanks!

Bonnie

That's Great! Congratulations.

I started taking them last year using Propay. I only had three takers and unfortunately, they weren't the ones that are normally slow pay. It didn't cost me much though and it made them happy.

KC,

You and your family are in my prayers. I will pray for a complete recovery.

Bonnie

Actually, he isn't reporting any income on schedule E. I don't know why he told the lender that it is investment property. Maybe the lender wanted it to be investment property. He is only deducting the interest and real estate taxes on schedule A. It's actually his old residence that he is letting his ex-fiancee and her kids live in and she's not paying rent. I blamed the insurance company so that I didn't have to preach to him about how he needs to use better judgment and not date again. This is wife or fiance #6 in the last 10-12 years and they have all taken him to the cleaners. I did call him back and tell him that he needed to tell the broker that it was not investment property for the last two years anyway. I'm his CPA, not his mommy. That's where he is living now, since he let himself be moved out of his own house.

Tom,

I really like what you put in your letters. I feel bad for the client, but I'm not putting my neck out because he is in financial trouble. I put a lot of the blame on my liability insurance company and told him that they don't want us to write letters for the lenders. I'm just sick of seeing so many of clients in over their heads with these stupid mortgages that they couldn't afford in the first place. I'm sorry that you probably lost a client because of greed.

Bonnie

A client called and his mortgage lender wants a letter from me stating that he has owned investment property for more than two years. This is the first time that I have had this request. I told him that the mortgage broker could verify that he owned it by checking with the county. Should I have given him the letter? It just looks like another way for the lender to try to hang something on me. They have the tax returns. Am I being too picky? This guy has more mortgages than he knows what to do with and I know that he's upside down. Thanks!

Bonnie

I don't think that they should have to identify themselves. Any help that I can get here will be truly appreciated. Being on my own, I really missed the old board.

I stayed with TTO. It works well for my practice.

I had to use the uni-forms last year when they discontinued Clicksend. They worked great. I used the program for all of my W-2s and 1099s.

Thanks, K.C. It may be a moot point anyway, with computers being so much more inexpensive. I don't know if they will hit the 7.5% for medical anyway. They were surprised yesterday when I told them about the threshhold.

I'm still looking for something that would tell me that I could deduct the computer. If I did, I would tell them that they could only use that computer for schoolwork, not play games, etc. This therapy has been recommended by their doctor, because the public school that she attends is not providing the kind of help that she needs to learn with the multiple learning disablilites that she has. Thanks!

I have done enough research to conclude that the actual therapy costs from the educational thereapist, specialized software and transportation expenses are deductible for my client's child. She has learning difficulties, including dyslexia. The mother would like to deduct a new computer for the children only to use for their home schooling software designed for dyslexics. I have not been able to find guidance for the computer, except for a computer paid out of an educational IRA. The mother already has a computer, and I don't feel that another would be deductible because it would be an inconvenince to her to share it. Am I being too picky? Thanks for any ideas.