Jake

I signed up for this feature last year and used it two or three times and probably should have used it another time or two. Once a client requested to have her fees deducted from her refund and I passed the fee on to her. The other times I used it was when I felt that collection would be a signicant issue. Again I passed the cost onto the clients.

Julie is right. You should still report this as an installment sale. However, part of each payment needs to be allocated to interest. What I typically do when a client is recieving income from an installment sale with unstated or inadequate interest is to prepare an amortization schedule using the applicable federal rate (AFR) for the month of the contract. (The AFR can be found on the IRS website) Report the interest component on sch B and the rest on sch D.

Perhaps an alternative approach would be to show the balance of the loan as an equity item as opposed to a liability item on the S Corp's Balance Sheet. This would do away with all of the other entries (too complicated for me). The interest expense could still be deducted on the s/h return as follows according to IRS Notice 88-37: Interest expense allocated to a trade or business expenditure of a passthrough entity should be reported in Part II of Schedule E. This interest expense should be identified on a separate line in column (a) as "business interest," followed by the name of the passthrough entity to which the interest expense relates, and the amount of such interest expense should be entered in column (h). This interest expense is deductible without limitation and should not be entered on Form 8582, relating to passive activity loss limitations, or Form 4952, relating to investment interest. Hope that helps

I read an article the other day that stated that interest and fees on loans charged to members of the Millitary could not exceed 30% per annum. The slant in this paticular article was that these new rules were putting the pay check advance type lenders around Millitary Bases out of business. I suspect that the fees on most RAL's exceed 30% annually.

I just tried the new system for the first time. I chose LLC and then put in two members. I then got a message that the default entity would be a partnership and that I could elect 1120 treatement by filing F-8832 OR 1120S treatment by filing out F-2553. I have not used the Form 8832 for a couple of years and have succesfully elected S. Corp satus on dozens of LLC's. By the way I noticed that on the new system it will not allow you get an EIN for a single member LLC with employees even if you plan on electing out sole prop. treatment. Instead they require you to call and get two EIN numbers. That is just asking for problems.

File the SS4 with corporation box marked (S corp). In the space next to the other line put multi-memeber LLC. (Do not mark the other box). Once you have the EIN file the 2553 only. Do not file Form 8832 it is no longer required and could cause some confusion. Hope that helps Good luck

Thanks Eli that was very helpful

What is the best procedure to report a 1099-C when the taxpayer is insolvent. Is form 982 appropriate? Is an attached schedule showing insolvency required or recommended. Is an e-file possible? Thanks for any help.

One thing that you might want to look at for your clients is the new AMT partialy refundable credit. I was reviewing a couple of my clients returns and it appears that we might finally get some of that allusive AMT credit. This really applies to people who got burned on qualified ISO's over the past few years.

Thanks Jack. I will file the 1041. Thanks

Hi, I have a client that died in February 2006. Prior to his death he owned a home and had about $200,000 in stocks, mutual funds, and annuities. The home and the annuities were transferred over to his adult children and any applicable taxes have been paid. Some of the stocks and mutual funds were sold directly out of the decedent's account soon after his death. In addition he had a little bit of dividend and interest income after his death. Typically in a situation were the taxpayer has a small estate that is distributed within a few months of his death, I will report all of the "loose end" income on his final return. My question is - How do I handle the sale of the appreciated stocks and mutual funds that have been reported under the decedents social security number. An estate return? Assignment of income to the heirs? Any other ideas? Any help will be appreciated. Thanks

I too am a fan of the dual monitors. The only down side for me is that they take up so much space on my desk that I can't see my clients unless I slide one on the monitors over. However, I would not go back to a single monitor.

I don't remember if he implicitly told me that I would be able to receive the program early but he certainly led me to believe that I would. If I get some time in the next day or two I will call and get some confirmation.

The Total Tax Office Program this year includes a document management system. When I talked to a sales person at ATX he indicated that it would ready sometime in August. I renewed early this year primarily to get the document manager well before the begining of tax season. I hope it is as good as advertised.

If any of you ever have the unfortunate occasion to call AUR (1-800-829-3009) and would like to talk to an actual person the prompt sequence to use is as follows: 1 - for English- then- 2,1,2. This at least gets you into the que to speak to a real person (after a long wait on hold).

I have a client that adopted a child in 2006. The child was placed with the taxpayer on 8/9/06 and the taxpayer applied for and recieved a ATIN. The adoption was finalized in February of 2007. I filed the tax return and erroneusly used the adopted child as a qualifing child for the EITC. The taxpayer recieved a letter saying that we can't do that. My question is: Since the taxpayer can now get a SS no. for the child, can I go back and amend the 06 return and report the child under the SS No. as a qualifing child for the EITC. Thanks for any help.

If a partnership is terminated before the end of its tax year, the partnership is required to file a return on Form 1065 for the so-called short period. The short period is that period from the beginning of the tax year through the date of termination. The return will be due on the fifteenth day of the fourth month following the date of termination. IRS Publication 541, Partnerships. Hope that helps. Jake

Mike, On the W-2 be sure to indicate that it is to go to the 2555. Near the to of the W-2 entry screen there is place that says "Special Type" Just Select "To Form 2555" Hope that helps. Thanks jake