ILLMAS

I have a client that the IRS indirectly suggested to report as a sole-propiertor because of the way they were handling cash. Basically, they were not depositing all the cash they received and paid about 80% of their vendors cash, this was suggested about 10 years ago, now the state is questioning why they continue to keep the Corp active, but haven't filed corp tax returns in the past 10 years. To this day, they still continue to operate in the same manner, and the client needs to explain to the state why? The problem I see in this is that the IRS agent suggested, not recommended or put in writing if the client didn't change the way they handled cash, has anyone else ever encounter a situation like this before?

I don't think it should be a problem at all correcting it, just make sure you use the most recent figures (IRS corrected figures) as orginally filed. Then you will need to prepare two 1040X, one for each taxpayer as single, this can look a little tricky because you are going to be using "as orginally filed (IRS corrected)" figures for each taxpayer, but once you report "as corrected" for each taxpayer, everything should balance out and there is a chance they will owe money ontop of what they paid already. I see this way, the changes to 2106 deductions was a problem that was resolved already, the only thing you have to do is allocated the expenses to the proper taxpayer. I would do this, I would recreated the MFJ tax return with the IRS figures, then I would prepare two single returns and just make sure 2106 figures match with the IRS, hopefully it's only one of the taxpayer that has 2106 expenses, would make it a lot easier. MAS

Greeting, I have a NFP client, and just recently I notice that the executive director cobra payment is being paid by the agency? I want to ask the question here first before asking the exec. director, shouldn't he have to pay it out his pocket or take the health insurance offered by the agency? Also, since the angency is paying for an employee cobra, should that be part of his compensation too? Thanks

I think your scenario is right on the money as they say, client employees are not on strike, it the machine operator who are on strike. My client delivers (trucking businsess) asphalt and the machine operator laid it down, so there is no work for the employees because of the strike, so now I believe they are able to go and cliam unemployment. Thanks

Just to confirm, no employee can go on unemployment if there is a union strike, the union will pay a small amount to the employeees. Thanks

A new client of mine came to amend a couple of years of tax return, because they never reported her husband W-2 wages. It turns out the husband has an ITIN, but uses a SS# for work. An immigration attorney suggested the returns be corrected to reflect the wages. I am not going to mention any names, but one of the big seasonal tax business advice them not to report the W-2, so I am trying to give an explanation as to why the return is being amended. I was thinking something along the line: The tax return is being amended to reflect addition income previously not reported, under SS# XXXXX..... for husband that uses ITIN# XXXXX..... I just want keep it short and to the point, and wondering if they will give him credit for Social Security if they tie the SS# to the ITIN? Thanks MAS

I can't figure how to input the income per books Sch M-1 (bottom of balance sheet page), the only way to input the amount is by over riding it, but would prefer not to. Can some please help me. Thanks ps I do have Sch B, line 6d mark off as "YES"

Found it, http://www.visualwebcaster.com/IRS/68828/reg.asp?id=68828 I am off to see client, so won't have time to view. MAS

"Note however that any costs or interest payable to or on behalf of the brother would not be deductible as rental expenses, because the loan proceeds were used elsewhere." Thanks Jainen, if understand the the above, any payment made by the brother will not be deductible on the partnership return correct? At this point, the TP is making all payments related to the property sold (including the mortgage), the brother doesn't pay for anything. Something else that has me concern is the depreciation expenses, who gets to deducts it???

Thanks everyone, this sure looks like a sham, I guess the TP was thinking it was going to be treated as it was a refinance. I contacted an associated of mine, he mention having the brother coming in as a partner in the business, and the amount he didn't finance, to put down as a capital contribution, and of course putting all this down in writing or going through an attorney draft something up.

TP had a bought a house back in 2008 cash, renovated the house, his total cost was 100K (cost of home + improvements), he wanted to refiance it however no bank wanted to help him, so he sold it to a brother for 95K in order to take out money. Basically he just sold it to the brother in order to get money to finance other projects, he still contines to collect rent, pays the mortgage and other expenses. I don't know if this would cause a red flag, sells the home and contines to report it as if it was his???? FYI there is a sales contract. Thanks MAS

Hello I have a TP that has varios rental properties that I report on form 8825, however in 2009 they had expenses not related to the properties (office supplies, telephone, meals etc...) not necessarly linked to a spescific property. So I just wanted to make sure it was okay to report those expenses on page 1 of the 1065, even though there was no revenue to offset those expenses. Thanks

+1 Quickbooks, I don't remember the DOS version, but I've been using QB since 95/96 and before that it was One-Write-Plus which was DOS based. If your clients cannot afford it, have them use excel, create a template and train them how to enter the data, like that at the end of the year you can focus on the tax return preparation. MAS

From the Chicago Tribune: Sentence for tax cheat: Provide free prom dresses May 19, 2010 8:28 AM | 4 Comments | UPDATED STORY A bridal shop owner has been ordered to play fairy godmother to hundreds of teenage girls as restitution for cheating on his company's sales tax returns. Dale Buziecki, 64, president and owner of House of Brides Inc., pleaded guilty Monday in Cook County to filing fraudulent sales tax returns for his stores in Glen Ellyn, Norridge, Schaumburg, Oak Lawn and Chicago. As part of his punishment, the Wheaton man was ordered to donate 500 formal dresses a year for the next three years to the Glass Slipper Project, a nonprofit that collects and distributes prom outfits for Chicago-area high school students who can't afford them. "The state will recover the sales tax owed and, through the required community service, many young women who want to attend their high school prom will have that opportunity," Illinois Attorney General Lisa Madigan said in a written statement. Criminal investigators with the Illinois Department of Revenue estimate that the tax scofflaw overstated deductions and underreported more than $5 million in sales from November 2005 through June 2006. Buziecki could not be reached for comment. The court also ordered him to serve 30 months probation, pay a roughly $280,000 fine and perform 250 hours of community service. Duh!!! My wife got her wedding dress from this joint, that I paid for. LOL

>>I will answer my own question<< Wasn't your question about bringing money into the country, rather than about selling property? Well I thought it was a simple process of just declaring the money brought in to US with the US Customs, but after speaking to a retired IRS agent, he was telling me since she is a U.S. resident, the sale of the property has to be declared also in the U.S. (Sch D or Sch E + 4797, depending on the us in the forgien country), therefore paying and tax due. By declaring the sale, she can bring in the money and pay the tax, then invest on how she pleases. Any thoughts?

agree 100%, I notified TP about this and for him to consult with his agent.

WOW I was not aware, thanks for sharing. MAS

I use Quickbooks, the newer verions allows to you email invoices and statements to your clients. I highly recommend it, simple to use and simple to maintain (unless clients don't pay you LOL).

TP owes 13K, he has has a business but is not on the payroll because he is just able to cover the operating expenses, he has a rental property (worth $250K) that is paid off and has another on a short salen (worth 150K). Also, TP had an installment agreement back in 2008, but stopped making payments after the 1st one. From your experience, will the IRS accept an OIC for this TP?

I will answer my own question, after doing some research, the sale of foreign property and the TP is a US residence, then it treated exactly if the sale occurred in the US. TP gets credit for foreign taxes paid.

TP is going to sell property and land in another country and she wants to bring in the profit of sale into the U.S. to invest. Is there a form I will need to prepare to declare the money she brings in?

Tom: There this online service called Gotomeetings, you can send invites to selected individuals, chat online, have a conference call via telephone or internet (requires mic and speakers).

I think it's a great idea for socializing, but not for tax purpose. Usually chat rooms work for people that are online all day long, and I think most of us have work to do during the day and peek in here every so often. I participate in a motorcycle forum, they setup a chat room, but discontiued it because of lack of use :)

TP has a tax lien, he has a investment property going on a short sale, TP wants for the IRS to take the money owed to them from the property if it sell. Will this happen once the property sells, I am afraid the bank will even lose more money + add on more taxes due from TP. Your thoughts. FYI TP has no money to pay.