Jake

I was at Costco today and decided to pick up some candy to refill the candy jar at the office. After this week Dum Dums seemed most appropriate. Hopefully my clients won't catch on to my inside joke.

I agree with the other posters use the F 5329 and have your client document his disability so that you can respond to the correspondence that will almost certainly be coming from the IRS.

I know in my State the corporation neeeds to be closed with the Division of Corporations before a corporate officer/owner can be considered for unemployment.

I started scanning a couple of years ago. This year we are scanning almost everything that comes into the office. We use the Document Manager program from ATX. It is not perfect but I certainly wouldn't go back to the old filing system.

If any of it is taxable (which I doubt) it would go on line 21 of the 1040.

I am going to jump back in here. As I outlined in a previous post I believe that a correct way, and in most cases a benificial way to report gambling activity is to net winnings and losses from a single gambling session on line 21 of the 1040. As KC and Tom have pointed out, this treatment is gauranteed to result in a CP2000 notice because line 21 will not match the W2-Gs that have been issued by the casinos. In addition it would be a difficult CP2000 issue to resolve. So my question is from a practical standpoint, how to report this correctly without having problems with IRS in the future. My thought would be on the detail schedule for line 21 is to report the gambling income like we normally do and then on a seperate line on the same schedule report the losses and title it something like "Netted Gambling Activity". I don't know if this would work because I don't know how much detail is trasmitted to the IRS. Any other thoughts?

When I read the case I understood that the taxpayer could net winnings and losses on line 21 of the 1040 for each time a taxpayer "settles" with the casino (i.e. cashes in his chips). I do not think that limits the taxpayers ability to deduct other unrelated gambling losses on the Schedule A to extent of all netted gambling winnings. For example if a taxpayer goes to the casino with $500 and he wins a $5,000 jackpot and continues to gamble but only goes home with $2,500 his net winnings would be $2,000 for the day and that is what should be reported on line 21 of the 1040. If the taxpayer goes to the casino two more times during the year and looses $1,000 each time then I believe that the taxpayer would be entitled to an additional $2,000 deduction on Sch. A of the tax return. I have several clients that are on SS and typically have W-2G's from the casino's if we can use the new rules to reduce AGI it will be very benificial to them.

Ok 2010 can arrive I just finished my last hour of CPE that I have been procrastinating for weeks.

Depending on the circumstances maybe a casualty or theft loss in 2006. Or if the other CPA determined that your client was in the devolpment business then perhaps there could be a deductible loss for 2006. But I am with you it sounds like the expenses probably should be capitalized and added to the basis of the property.

Thanks I did have a happy 40th birthday.

Have you renewed your subscription for the upcoming taxyear? I lost my access to to the online research a couple of years ago at this time of the year when I was slow to renew.

Tom, I have had three impatient clients contact me this morning regarding the availability of the cedit to them. I read the amended legislation and in regards to your questions it says: Special Rule for Long-time Residents of Same Principal Residence.—Subsection © of section 36 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: “(6) Exception for long-time residents of same principal residence .—In the case of an individual (and, if married, such individual's spouse) who has owned and used the same residence as such individual's principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.”. It does go on to say that the credit is reduced to $6,500 for this class of homebuyer. Lots of question still need to be answered.

When we had our new office built a couple of years ago we purposely designed it with very little storage space and this forced us to implement a document retention policy. We scan or print to a PDF all documents (tax returns and supporting documents)as well as payroll information and we will keep these documents in an electronic format indefinetly. We use the Document Manger program that comes with ATX and a Ricoh 2550 Scanner/Printer. Keep an eye open for free shred "events" they are usually sponsered by banks or credit unions our local city goverment even sponsered one a few months ago. good luck

I agree with KC having a good scanner will save you a lot of time and frustration in implementing a paperless system. Make sure you get one that can scan both sides of a document for all of the IRS Notices. We also do about a thousand returns every year and started using Document Manager two years ago. What I like about the program is the fact that it is intergrated with ATX so if I select the print to PDF button in the print menu it automaticly files the return in document manager under the clients name and SS#. What I don't like about the program is that it takes forever to open the program and access client files (2-3 minutes sometimes) and that the program is bit tempremental in that it freezes up or stops working more than it should. It works well but not perfectly for us. Good Luck

I used it yesterday and liked it much better than the old system. I reccomend that you go through the short tutorial but it seems to be fairly intuitive and easy to navigate.

The form you may want to file is W-7A which is an application for an ATIN. You can use the ATIN to claim the dependancy exemption, the child tax credit and the adoption credit but not the EIC. I also learned that for 2008 an ATIN does not qualify a child as a dependent for the additional recovery rebate credit. Sometimes I recomend to clients that we wait until we get the SS# and then amend returns. Also keep in mind that with foreign adoptions it can take along time to get a SS# even after the adoption becomes final. I just amended three years worth of returns for an adoption that was final in 2006. I doubt that you would receive the ATIN by the 10/15 deadline. Good Luck

I agree Maribeth I really like Western CPE in fact I participated in two free webinars yesterday. I do prefer the live seminar format for the year end tax update and I will be attending that seminar again this year. I toyed with idea of attending the Jennings seminar but my assistant informed me that I was already registered for the Western CPE course. (maybe I will go to both I need lots of CPE this year)

I can't specifically comment on the DVD program but I have participated in Mr. Jennings live seminars when he presented for Western CPE and it always seemed as though his material was current and timely (as well as informative and entertaining). However, I can see were it might be problematic to keep a prerecorded program current and timely. As a side note I received a mailing from Jennings Seminars yesterday and I may switch from Western CPE to Mr. Jennings' seminar for my year end tax update because it is a little less expensive and includes lunch.

I have a new client that died in 2008 she had a Living Trust that bequested contributions totaling $75,000 to a variety of charitable organizations. The contributions were made from the trust soon after her death. The issue that I have is that the Trust only had about $10,000 of income during 2008 so it appears to me that these contributions are mostly lost. We could have used them on her final return (she had a tax liability) or the benificiaries could have used the deductions. Is there any way to get these contributions to flow through to the benificiaries. I don't think so but I hate to see such a large contribution go to waste. Thanks for any ideas. Jake

I do have the occasional client that is affected by the estate tax but I worry more about the loss of the step up in basis for inherited property. This is going to certainly increase the tax burden for many "average" taxpayers not to mention the additional work load in tracking down basis for us poor accountants.

If a taxpayer rents property to an activity in which he materially participates, a portion of the gross rental income equal to the taxpayer's net rental income from the activity is recharacterized as income that is neither passive nor portfolio income. Reg. Section 1.469-2(f)(6). The self rental rule does not prohibit a taxpayer from "self renting" it only prohibits them from creating passive income by "self-renting". The purpose behind the rule is to prevent people from "creating" passive income to off set passive losses that would otherwise be suspended. In my opinion the rental income income would still be exempt from the SE Tax. Jake

Are the withdrawls misclassified as an expense item on the P&L? I see that on occasion with clients that "do their own bookeeping". If not, the cash for the distributions had to come from somewhere probably loans that may or may not be added to s/h basis. Sounds like a fun one to handle during the off season. Good Luck

A couple of things to keep in mind - the rollover is limited to her annual contribution and it will also proclude her from making additional contributions to her HSA for the year

I will echo John H's reccomendation to at least explore the HSA option. If you are an infrequent user of medical and pharmaceutical services an HSA coupled with a high deductible insurance plan may be the way to go. I personally have an HSA and I have recommended them to several clients and though they are not a perfect solution for everyone they can work very well for some people if they are managed properly. Good Luck Jake

We have used the document manager system for two years now and generally speaking I like the system. I would suggest that you purchase a good scanner we use two different scanners one is a Xerox documate desk top scanner that works good with Document Manager. We also use the scan function on on our copier/ printer (Ricoh MP 2550) which also works well. I like the look and the feel of the program and it is very nice to have all of the files right on the desktop. I also like how easy it is to "print" the tax return directly to the document manager. We have also saved on printing and storage costs because we no longer print and file copies of the tax returns. Last year when we built our new office I purposely designed it without a lot of storage space to force us towards a paperless office. My major complaint is that the program is a little (sometimes alot) slow and clunky and sometimes the program can be a little temperamental. We run the program as a network application and I wonder if would run better as a stand alone application. I would also suggest that you not wait until tax season to get the program up and running.