Hanover Jim

Client won a customized car. Received 1099 Misc with a $50K value indicated for this prize. He knew that it was not worth this amount. Had no need to keep the car so they sold it and were only able to get $28K. How would you handle this? Would/could this be a Sched transaction?; with $50K reported as Line 21 other income and Schedule D showing a $22 loss on the sale. I want the net result to be the amount ($28K) that they actually netted on this car.

If a client converts a Roth and wants to pay the taxes on his 2010 return are there any exceptions to the Underpayment Penalty? In other words if they convert in December must they pay a January estimated payment to avoid any penalty? They will not be using any of the converted amount to satisfy the tax liability.

Several clients have asked me about the change in the law that removes the cap on income levels that allows anyone to convert their Traditional IRA into a Roth IRA in 2010. I know that any money converted in 2010 can have its taxes paid over the 2011 and 2012 tax years( or choose to pay it all in 2010). But I can't find a clear explanation how this will be handled on the tax form. Will any amount that is converted have its taxes set at the rate that is in effect on the 2010 tax return; or will will half of the amount converted in 2010 show up on each of the 2011 and 2012 tax returns thus effectively set at the rates that are in effect in those years? I haven't found any information,that is clear to me, on how this conversion will calculate the taxes generated.

In ATX go to PA40,page 1....find Bottom Tab that shows 1099R.. then where it says "Select for PA Purposes" choose Not Taxable in PA. I've found that many times retirement income shows up on PA's form as taxable income when I know it isn't and this is how to remove it from the Compensation line of the PA40.

I have a question about this new Schedule(M) for the upcoming tax year. Items 10 and 11 on that form are Yes & No questions. #10 asks about receiving $250 through SS and #11 about receiving a pension from a Federal or local govt that was not subject to Social Security. Asking clients a "Did you receive...." type question gets all types of responses. I didn't see anything on the SS input screen that addresses it. Are we to assume that if they received SS that the $250 was included? How about if SS only began in the last 2 or 3 months of the year? With question #11 ...will most people know that response? Thanks.

I was too. But can you get it to pass the ERROR Check when you enter the $8000. I can't . Jim

IRS' website has a new version of 5405(First Time Home Buyers) . It includes the newly included amount of $8000 for home bought in 2009. ATX current version only includes the $7500 credit. How is everyone handling this situation? Are you overiding figures on our current form or waiting until we get an updated 5405? Jim

Universities that employ students very often do not withhold SS or Medicare. This is all reflected on the W2. There are simply Wages(Box 1) and Fed Tx WH(Box 2). Is this a situation where we need to complete Form 8919 (or some other form) or do we simply ignore it.

A client made me aware (embarrassing) of a new provision provided by the Pension protection Act of 2006. Retired police and firefighters can exclude(not deduct) premiums paid out of their monthly pension checks. This provision is described in a 4 paragraph section of Pub. 575. If you scroll down the 1099R input screen you will see the necessary sections to input the data. Our software puts the letters PSO next to the entry on the 1st page of the 1040.

I've been using ATX for several years and here's a problem I've always had but never bothered to inquire about. In the Billing program is there an automatic way for Schedule D's charges to be based upon the number of SELL entries: right now my program bills the same $ amount whether Sched D has 1 entry or 20. I know that I can always adjust the return's fee manually. I'm looking for an automatic way. Second question while I'm here.... the billing program is not yet functional on my 2007 software. Is this the case with everyone's?