ACS41

According to last week's NATP newsletter the head of Employment Tax from the SB/SE Specialty Programs stated IRS will continue and expand upon federal and state partnerships particularly in the QETP (Questionable Employment Tax Practices) Program. He specifically stated that 1120S salaries and the issue of reasonable compensation would be a target and that tax return preparer’s were exposed to penalty assertions if they prepared returns that reflected a “less-than-market” salary for services rendered by small business owners of Sub S corporations. Many business owners have been willing to "take the risk" of non compliance. I can certainly let clients know the choice of non compliance has been taken out of their hands and will require the preparation of a W3, W2, 941, 940, state unemployment return, etc. Clients are certainly going to be mad at having to pay more taxes and preparation charges. To complicate matters, here in Florida once you file a state unemployment tax return you are required to file one every quarter (even if it is zero) or face an automatic penalty or tax lien which creates an additional business owner responsibility. The prospect of a large preparer penalty certainly is a big concern. What are your thoughts? Thank you.

Client is not a United States Citizen or resident. He formed a corporation in Trinidad and registered it as a foreign corporation with the Florida Secretary of State. All income and expenses from this corporation will be United States source income and expense. The bank account is in Florida and the office address is his brothers house (an officer). My understanding is that the corporation is subject to a 30% “branch tax.” Is this a flat tax, or there something we can do to reduce it? When the client takes money out does he treat it as a dividend and file a 1040NR? Is this dividend subject to backup withholding? Payroll; Can this be an issue. He cannot pay himself a salary since he is not eligible to work in this country. It seems to me since all the income and expense are United States based it seems more straight forward to establish a corporation in the United States with a foreign shareholder and pay tax the on the corporate profits and the shareholder dividends. It looks like a 5472 needs to be filed. I will greatly appreciate if someone who has some experience in foreign corporations can provide some input. Thank you.

I'm a bit confused and will appreciate any help I can get. Individual taxpayer living in Florida has investment property that he stopped making payments on in 2006. Was issued a 1099-A in 2007. To my knowledge, the bank has not sold the property yet. Box 2: $279,282 Principal balance outstanding Box 4: $252,000 Box 5: Yes (personally responsible) The deed in Lieu is for $5,000. Does the taxpayer need to wait until receiving a 1099-C when the property is sold in 2008, or do they need to recognize income in 2007? If so in 2007, is it $32,882 (279,882-252,000+5,000)? Thank you.

No. He pretty much gave up and is waiting for the bank to take it in 2008.

My client has several rental properties he abandoned in 2007 that will be foreclosed in 2008. Do I depreciate the property in 2007? There were no renters in 2007.

I will do so. Thank you.

I have an S corp client with $4k worth of start up costs and want to take them in 2007. The program is amortizing them over 15 years. Since it is under $5K, I want to take the entire amount in 07. What am I missing in the asset entry section?

Just received 2 1099 ACKs. This is a start. Of course sent out more than 2.

I spoke with them today. They are "looking into my account and will call me back." Maybe? Not to underestimate the importance of the 1099s, but there is clearly more downside if a 940 or 941 does not get processed. Nevertheless, once my 940/941s are resolved, I'll move on to 1099s. It looks like paper filings for the 1st quarter are going to be the only way.

My program indicates I have 11 940/941 rejected by the agency. When I synronized with ATX and scrolled through the list, 5 of them show acceted in the log. When I go to the individual file, it indicates there is no rejection error to correct. BTW, these files have all been resubmitted. 3 hours on hold is a bit much for my limited patience. Does anyone have a clue what is going on with these. Thank god all of these taxes have been paid in full.

Thank you for your help. I hope he is here legally. In South Florida, you never know.

My client is a US citizen, her husband is not. She has a W2 and he does not work. Do I file MFJ or MFS? He does not have a tax ID #. Thank you.

As are many, I'm in the same boat. All of my clients have fully paid their 941 in full. Even if the returns are late, I never had a client pay a penalty for a late return if the tax is paid. Many times, clients forget to file their 941 and reecive a letter 6 months later. We provide them a copy and as long as the tax was paid, no late fees. Of course the idea of E-file is to avoid these types of issues.

Some very good information. My S corp (1 shareholder) client made very little in '07 from this business that he did not take any W-2 salary. He personally owns his car. How can he claim mileage? It seems it hard to have ann accountable plan when you are not technically an employee (no W-2). Seems the same issue with 2106. I appreciatte anyone's help.

In ATX, can you efile the GA G-1003 by just completing the required fields and clicking the efile button? Being in Florida, this is the only state W2 I file for a business. Thank you.

I just sent in $40 and hope others will follow. This people who use this board provide valuable information.

As of today, the Rep said the 23rd.

Thank you. This is very helpful.

They gave me the same song an and dance several days ago. On my ATX, there is no record of any 1099s. I'll hang loose a few more days before I call. The worst thing is if the returns are recreated and they are sent twice. This could cause someone receiving two 1099s. As of know, they may not even get one (which is the lesser of two evils). Both scenarios are bad.

The rep (today) told me "around 1/17/08."

The Peachtree W2 import now works fine for the Quantum edition.

I spoke to a Programmer at ATX today. There should be an update mid afternoon that will correct the problem.

I am not able to import the SS# and control #. The screen says to send the file to ATX and they will correct it. I did yesterday and have not received the acknowledgement email yet. Since most of my clients have few employees, I'll probably manually input. In past years changing the print margins in Peachtree solved the issue. I cannot recall the particulars. Acs