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ILLMAS

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About ILLMAS

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    ATX Supreme Guru

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    IL

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  1. I have a client that has not brought in their information since 2012, and they need their 2016 and 2017 corporate tax return to be prepared for a loan they are applying for, can I go ahead and skip 2012-2015 (screw retained earnings) and just prepare and file 2016 and 2017? I have never encounter this situation before.
  2. ILLMAS

    3115 help II

    Sounds good, just wanted to make sure I didn't have to breakdown the computation for future years for the IRS.
  3. ILLMAS

    3115 help II

    Just to double check, I have a TP that over reported about $18K in depreciation on a Sch E (prior preparer error $6K per year for 2015, 2016 & 2017), I prepared the necessary adjustment on paper, my question is, would I include the access deprecation on Sch E or line 21? Do I have to make a note that the TP would like to spread the amount over the four years on the workpaper that I will be submitting along with form 3115? Thanks Spread Periods for IRC 481(a) Adjustments A net positive IRC 481(a) adjustment increases income and is often referred to as a "government-favorable" adjustment. A net negative IRC 481(a) adjustment decreases income and may be referred to as a "taxpayer-favorable" adjustment. When a taxpayer uses the voluntary method change procedures or a regulation provision, it generally takes a net negative IRC 481(a) adjustment into account in the year of change. A taxpayer generally takes a net positive IRC 481(a) adjustment into account over four years (year of change and next three taxable years). See also IRM 4.11.6.6.4.1.
  4. Wow, I was able to lose over +20 lbs by cutting out doughnuts , but thank you anyways.
  5. ILLMAS

    Extra asset

    I was finally able to get a depreciation report (rental property, no SE) for 2015 to 2017 and the prior preparer did add an asset that doesn't exist, so I will be correcting it in 2018.
  6. ILLMAS

    Extra asset

    Former TP moved and was having their tax return by a preparer close to them, in 2015 somehow the new preparer put a $40K asset (7 yrs) retro to 2011. I prepared the clients returns from 2011 to 2014 and I don't have any record of that asset nor the client remembers making an improvement of that magnitude, so 2015 to 2017 each year has about $5,715 extra of depreciation and the TP took advantage of the deduction, I recommended for the client to have the prior preparer correct it (or prepare 3115) and made them aware they might charge them or that I can correct it for them and I would charge them XXX, TP thought about it and asked me if they can just include the excess (as income) depreciation in 2018, I was stumped with the question and I wanted to see if this is an option? I seen something like this before work for a TP that was treating himself as contractor, IRS auditor passed on converting the TP to an employee because the TP was reporting 100% of the earning without any expenses.
  7. I am getting the following message and wanted to see if someone knows how I can resolve it without calling tech support: There was an issue connecting this workstation to the configured database. Please ensure that the server is running and that the service is started and try again. FYI is problem was not caused by the resent shenanigans, I received this message a while ago. Thanks
  8. Just be patient in hearing back from someone, after filing Form 911, we received a call 4-5 months afterwards, I know some of you are lucky here and didn't experience the same issue as I did.
  9. This was not a ponzi scheme and the U.S government that found these culprits guilty of fraud was the U.S Department of Justice. According to TP, the department will be checking for the next 20yrs to see if the culprits have any money to pay back the investors. TP in their heart know they will never get paid I believe I found my answer to question 1: Year of discovery with no reasonable prospect of recovery. Determining the correct year in which to take the theft loss deduction may be the most troublesome aspect of the deduction. A taxpayer with an allowable theft loss who takes the deduction in an inappropriate year can face not only the disallowance of the deduction, but also substantial penalties and interest. IRC section 165(e) states that any loss arising from theft shall be treated as sustained in the taxable year the taxpayer discovers the loss and is thus deductible in that year. The Treasury Regulations specifically note that the loss is not deductible in the year the theft actually occurs unless that is also the year in which the loss is discovered. The troublesome caveat, however, is found in Treasury Regulations section 1.165-8(a)(2); if in the year of discovery there exists a reasonable prospect of recovery or reimbursement, that portion of the loss may not be deducted until it can be determined that recovery or reimbursement will not occur. Furthermore, if it is “unknowable” if recovery will occur, the entire deduction must be postponed until it can be determined with reasonable certainty whether such reimbursement will be received. A reasonable prospect of recovery exists when the taxpayer has a bona fide claim for recovery or reimbursement and there is a substantial possibility that such claims will be decided in the taxpayer’s favor. The Tax Court has explained that a taxpayer does not have to be an “incorrigible optimist,” and claims for recovery whose potential for success are remote or nebulous will not cause a postponement of the deduction. Furthermore, the court does not look at facts whose existence was not reasonably foreseeable as of the end of the year in which the loss was discovered. In other words, the fact that the taxpayer subsequently succeeded in a legal action on the claim does not necessarily mean that no reasonable prospect of recovery existed in the year the deduction was taken [Ramsay Scarlett & Co. v. Comm’r, 521 F.2d 786 (4th Cir. 1974)]. This standard presents important considerations for taxpayers who are determining whether there is a reasonable prospect for recovery in a given year. If a taxpayer files suit against the perpetrator or joins in an existing suit, a prospect for recovery is usually deemed to exist. The lengthy process of lawsuits and receiverships can, however, delay the allowance of the claim. A similar delay in deductibility may occur when the taxpayer files bankruptcy claims against the perpetrator of the investment theft. In Bunch v. Comm’r (TC Memo 2014-177 2014), the Tax Court ruled that the taxpayers had a reasonable prospect of recovery at the end of the discovery year because they had filed a claim in connection with the perpetrator’s bankruptcy proceeding and it had not yet been proven that there would be no assets with which to pay the claims. Another consideration for taxpayers is the cost of litigation. Because “reasonable prospect of recovery” is a factual determination, it is usually not resolved by a motion for summary judgment. This means that a full trial may be needed to win against an IRS action. The cost is often prohibitive for many taxpayers. Source: https://www.cpajournal.com/2016/10/01/the-defrauded-investors-solace/
  10. TP invested $$$ thinking it was a legitimate investment, turns out it wasn't and the U.S government prosecuted the culprits, and they are now required to pay back restitution when they get out of the slammer. This happened in 2016, but in early 2019 the U.S government closed the case. I have a couple of questions: 1. Can the TP go back to 2016 and start reporting the loss on the investment even though it was fraud? Or 2019 when the case was closed. 2. Just from the information I have, it doesn't seem it was a ponzi scheme, so would it be reported on Sch D or form 4864? I don't believe this falls under the new declared disaster area circumstances.
  11. I am thinking it's a goof on the SSA side, I have a long time payroll client, same employees for many years and they received a letter, never before did they have an issue with information not matching.
  12. How do you handle clients that do their own books, but you are using an old accounting software version?
  13. Please swap the 1TB HDD to a SSD drive
  14. I hate it when a client is always busy, but close to April 15 they call expecting you not to be busy and prepare their tax return WT#
  15. I have, problem was solved by sending a copy of the RE bill only, try calling on behalf of your client
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