cred65

You have been in my daily prayers. BTW how's Elvis doing?

Business Bad Debt. See attached US Tax Court case. Business versus nonbusiness bad debt: Dagres, 136 T.C. No. 12 Filed 3/28/2011 “Section 166 distinguishes between business bad debts and nonbusiness bad debts. Sec. 166(d); sec. 1.166-5(, Income Tax Regs. Business bad debts may be deducted against ordinary income and are deductible whether such debts become wholly or partially worthless during the year. Nonbusiness bad debts may be deducted only as short-term capital losses and only if the debts become wholly worthless in the year claimed. Sec. 166(d). A bad debt is characterized as business rather than nonbusiness if the debt bears a proximate relationship to the taxpayer's trade or business. Sec. 1.166-5(, Income Tax Regs. In determining whether such relationship exists, the proper measure is the taxpayer's dominant motivation; a significant motivation is not sufficient. The business nexus required for deducting a bad debt under section 166(a) exists where the dominant motive in incurring the debt was protecting or enhancing the taxpayer’s trade or business.” Dominant motivation is the key in determining the classification of the bad debt. If loans to the business can be documented as to keeping the business alive, this factor should serve to justify a business bad debt. “Protecting and enhancing the business” is cited in the court cases as substantial reasons.

It the deceased had rental property (3) and the estate continued the rentals for 6 months before selling all properties, is the basis transferred to the estate the same as in the hands of the deceased, or is it adjusted to FMV?

My prayers are for Don and you.

Open Form 8453 and attach copies of broker transactions and MAIL to Austin, TX.

Amount rolled over correctly but the 1099 R issued by trustee showed amount taxable and Dist. Code 7. Beyond advising client to see if a corrected 1099R can be issued (which may be difficult since this was a total distribution) what is any other corrective action that can be taken? Attachments to e-file, specific Form, etc.? I have entered the amount in Box 2a to remove from taxable income. But my concern is what happens 2 or 3 years out (if I'm still alive) when the client gets a Future Shock notice. TIA

"Elvis and I have been having a great time, guys." KC, was that you hanging out with Amelia Erhart at McDonalds?

She made a post on 2/20/12 on Lyris list manager. Maybe Elvis will show up next!!!!

You're not referring to Hippy Lettuce, are you?

MyATX under shipments informs me that it will be shipped on 11/22/11.

I have forgotten the rules to amend returns to convert from one method to another. Help? TIA

Thought I read somewhere that it is 3. What about multiple locations? TIA

The IRS will continue to accept efiles after Oct 17th, but they may not be considered timely filed. Thanks Jack; when all else fails read the instructions.

Yes, I receive many signed F8879's by e-mail or fax.

Two separate clients (both flakes) took it down to the wire for e-filing deadline which was supposed to be 10/17 12AM. I never received 8879 from a client to whom I had delivered tax return 5 weeks ago (also tried followup contact), so I did not e-file return. Yesterday (10/19) I received an e-mail from him and a picture of him at a mail box in Denver sending me the form (I'm in Cinti, OH and received it today), So I went ahead and transmitted the e-file yesterday. Today I get a confirmation of acceptance for the fed return. So the feds are not following their posted rules. Go figure. The other flake calls my office on 10/17 @ around 8PM and tells me to e-file. So I LogMeIn from home and was able to transmit her e-file. She had in her possession Form 8879 but did e-mail it to me. I followed up with repeat e-mails but no response. If I do not receive it my e-mail or snail mail what would be the proper course of action. TIA

There was a discussion on this topic a while back. The accountancy journal has recommended a "Comfort Letter" format.

On the task bar (right side) click on Carbonite. On the pop-up click on Info Center. There you can view your files backed up, and you can Restore from there.

Her Stock was probably Sch D. Was the father who invested in son's business active in the trade or business? Ownership %? Did he receive a salary? Was the investment classfied as a loan or for equity? There are a number of US tax court cases and generally the court finds for nonbusiness bad debt depending on the circumstances. Also review Lykins, T.C. Memo. 1996-273 filed 6/12/96

Possibly a business bad debt depending on the circumstances. It would be an ordinary loss on Sch 4797. The business nexus required for deducting a bad debt under section 166(a) exists where the dominant motive in incurring the debt was protecting or enhancing the taxpayer’s trade or business. Dagres, 136 T.C. No. 12 Filed 3/28/2011

Thanks KC & Taxbilly. That was my first choice.

The shareholders (3) of an S corp. (which I did not represent) had $400K in accumulated suspended losses for 2000-2006. The assets of the company were sold and the tax preparer sent final K-1’s to the shareholders (I represent 2) reporting $765K in Sec. 1231 capital gains. Q. How are the suspended losses treated on the individual’s returns; As ordinary loss on Sch. E pg 2, or as capital loss on Sch. D? TIA

There is an option tab called Post Notes where you can attach a pdf. This is under the 1040 EF tab where you can attach a file. I have never used it. Why don't be the Crash Dummy?

Add Form 8453, check Box on form for D-1, attach broker statement, mail to Austin TX, get a bottle of vodka! Be sure to preform in ascending order

If you are not using the same year as client accountants copy will not work.

Bet those commies will cry about this. http://politics.blogs.foxnews.com/2011/04/05/congress-repeals-unpopular-tax-reporting-requirement-businesses?test=latestnews