ILLMAS

Tom I appreciate your help, I am working with the CPA, however he is not to familiar with the clients accounting software, we previously had attempted to credit retained earnings but no budge, system does not allow that to prevent any manipulation, that is why we were trying to go around retained earnings. But now it's been resolved, I spoke with the accounting system engineer and he changed the security temporary, so we are ok now. The CPA is going to disclose the change in the 2009 audit, we were waiting for the IRS auditor to finish before the 2008 audit was completed, but this client is regulated by different states, banks etc... and needed the audited financial statments by the end of the 1st quarter of every year. The IRS audit started in December 2008 and didn't finish to July 2009. Thanks

Thanks Tom, your entry would solve the problem, however I forgot to mention that I am working with audited financial statements for each year. So making that entry would require to reissue audited F/S, client won't be too happy sending out over 60 copies to different entities per year. The goal is to make the adjustment in 2009 on the books to reflect the correct R/E. On the 2008 tax return I am going to adjust the beginning R/E and I am going to have difference in my depreciation between books and tax, but that would be adjust on the M-1. So my concern for 2009 is proposing an adjustment to the books to reduce A/D and depreciation by debiting A/D and crediting depreciation, then making another adjustment to debit depreciation and crediting an income account. But by doing this I over state the income by 200k, unless I create an opening equity account credit it instead of the income account, does this sound correct? Thanks

This is not directly my client, but this client was audited for 2006 and 2007 and the IRS found they were not consistant with the life of a couple of assets. IRS proposed an adjustment to reduce depreciation by around 200K, 100K for 2006 and another 100K for 2007, client since now has paid the additional tax + interest. I had the client adjust their depreciation schedule to match the auditors finding, now the retain earnings is going to be off because depreciation and accumulated depreciation have been adjusted. The 2008 tax return has not been prepared yet, because we were waiting for the IRS to finish the prior year audit and for him not to look at 2008. We know the 2008 is next, but my associate is going to appeal it becuase they have now been audited 2004 - 2007. Anyway, I need to think of a way to adjust retain earnings in a way we don't pay taxes again for the depreciation finding. Here is what I am working with: 2006 Retain Earings before audit $500,000 Retain Earings after audit 600,000 Diff 100,000 Change in depreciation and accumulated depreciation 2007 Retain Earings before audit $200,000 Retain Earings after audit 300,000 Diff 100,000 Change in depreciation and accumulated depreciation 2008 Retain Earnings $300,000 Plus audit adjustment 200,000 Ending Retain Earnings 500,000 My question is, how can I adjust retain earnings and not cause additional tax (adjustment for books and tax)? Any help will be greatly appreciated Thanks in advance

Okay, a TP has his accounting very well organized (don't see many like this), and he is capitalizing 100% the cost of the building, I in turn, I am allocating 10% of land use for tax purposes. ATX is giving me a warning that the amount entered on Sch L for land does not match the amount on Form 4562. I am entering the BS per books, so I am not entering anything under land, however in the cost of building I lowered it by 10% in ATX. I know it's just a warning and not an error, but my BS balances per books, I know if I lower the cost of building on Sch L and put the amount under land, I still balance, but I would like to match it to the financial statements, do you see any potential problems with this. Thanks

I am stuck, my client has a loss in 2008 and he can benefit from using it in 2007 or even 2005 (client just dropped off his paperwork recently), I cannot find the form to make the election. Also, is the election for carryback for 2yrs or 3yrs? Thanks in advance

Hello to all, would someone know if receiving government help disqualifies someone from getting the first time home buyer credit? A potential new TP called me to ask me if she recieves down payment assistance or a special interest rate because she is a school teacher, would she still qualifiy for the first time home credit? Apparently the school district she works has various packages to help out teachers buy a home.

My client properties are currently all under his name and reports them on Sch E, lets say he creates 12 LLC's (single member), he would still report them on Sch E and his tax implication would remain the same? "The tax implications of an LLC are not as beneficial when it comes to losses. You may not be able to deduct all losses for your business because you have chosen to limit your personal liability in the company." By him being a real estate professional, his losses should not be limited, in his case? (Correct me if I am wrong).

Thanks everyone, agree 100% I should let his lawyer handle all this. Again, thank you MAS

Howdy. A client of mine ownes various properties under his name and wants to setup 2 LLC's (per his attorney request) to put the properties under the LLC's. I have a couple of questions regarding this, he can still report the properties on Sch E of the 1040 and would the attorney have to file a quit claim deed to add the LLC to the title of each property? Also, if he has 12 properties can he put 6 properties in one LLC and the other 6 in the other LLC? Any help on this matter would be greatly appreciated. Thanks

I am just wondering if the tax preparer took the client word and not verified if he really was a first time home buyer. I love the R/E agents who advertise the 8K credit, they make it sound like everyone who buys a house qualifies for it.

Howdy, does anybody know if one can invest in companies like Zipcar or lease your car to them? I want to buy an eco-friendly car and would like to rent it out, since I have other means of transportation. Just throwing this question out there to see if someone knows. Thanks

This past tax season I processed 2 tax return with W-7 applications for dependents, both clients received a letter stating the W-7 were file without the 1040, therefore they were rejected. BS both applications were mailed with all the necessary documentation and the original 1040 with the W-2s. So I wrote a letter and attached copies of everything again, everything was stapled together to make sure the client didn't leave any out of the package, clients recieved the letters about two weeks apart. I got a call for the first client letting me know he already recieved the refund but it seems it didn't include the new dependents, so I called the IRS and yes they accepted the original return but denied the W-7 (different department BS), two weeks later the second client calls me for the same thing. Now both have recieved the same letter stating the W-7's have been rejected because the 1040 was not attached and both recieved a refund already. One client asked me not to follow up with the IRS anymore but the other really needs the additional refund, can someone direct me to a department in the IRS that will be able to resolve this issue? Thanks

If you are thinking of taking your old PC those those recycling you better think twice. Just watch this program from PBS's Frontline World. http://www.pbs.org/frontlineworld/stories/ghana804/

What happens to your personal home if you include it in with your bankruptcy filing? Does the bankruptcy cancel the debt or does the bank take the house? Thanks

Client bought brothers business that is a Texas corporation with a NOL, and merge the business with his Illinois corporation. The type of business is the same, but it was just in different states. The Illinois corporation has been profitable and it took part of the federal NOL from the Texas corp (IRS accepted the NOL)., now my question, can he also take the state's NOL and apply to either a carryback or carry forward NOL for IL (different states)? Thanks,

Just wondering if anyone has every dealt with a executive bonus plan before? I read over some material, but it seems its basically a bonus (with tax deductions) and using that money to fund life insurance with cash value at end of term. I want to know the pro and cons, if anyone knows. Thanks,

I have a client that owns two company's let say A and B, company A is a construction company and company B owns the building that company A rents. Company B has no employees, all the employees including the officer/owner are paid through company A, health insurance is offered but no retirement plan is offered. My client personal banker suggested to move the officer/owner salary to company B to take advantage of the company contributing up to 25% to his retirement (SEP). I mention to him, that is it's obivious the plan will only benefit the owner, but the rest of the employees are being left out, which is discrimination to the rest, even though it's two separate companies. I'm I somewhat correct not to agree with the personal banker? Thanks

I have a TP that actively participates in his rental properties, he has a loss of about 50K, but nothing is following to the 1040, shouldn't a max of 25K flow as a loss? His income is about 115K. What should I check in ATX to see why it's not flowing through or what else do I need to review. Thanks

The check was made to the church right? So the only thing they would need is an acknowledgement letter, they can reference the family it helped out, an acknowledgement letter from the church could be support incase of an audit.

Hello, for anyone that has taken the EA exam, which study material do you recommend? I am looking into a used set if possible, so if someone has one I will be interested in it. I have seen a couple on ebay and craigslist, but don't which one to go with. Thanks The only CON I see in buying the used material is that I won't have access to their online exam??

Howdy, one of my client informed that she recieved an inheritance from a family member, I have not had a class like this before, so my question are: Is the estate taxed first then the money is distributed to the family members or the inheritance is distributed to each family member and they are resposible for claiming it to the IRS? Also, for people that recieve an inheritance and have a pension, can the pension be adjusted because of the inheritance, my client is afraid she might lose part of her pension and insurance. Any help is appreciated. Thanks

So the credit would be 2K, 10% of the purchase price? If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. The total amount allocated cannot exceed the smaller of $7,500 ($8,000 if you purchased your home in 2009) or 10% of the purchase price. See Purchase price on page 3.

I also think he will qualify if it's going to be his main home, in this case it is an apartment and he should only take 1/6 of the credit. From the IRS form 5405 instructions: Main home. Your main home is the one you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence.

Around the area I reside and work, RE agents are marketing the 8K credit, "Get 8K with the purchase of this home". I just love it when the R/E say "you should of consulted with your accountant first" after the damage is done. They simply wash their hands and now it's your problem.

I just wanted to share this with everyone in IL, one of my client recieved a letter that is a scam. Here is the alert from the IL Secretary of State: WARNING! A non-governmental firm called "Illinois Corporate Compliance" is contacting Illinois businesses in an attempt to collect a $150 fee to file corporate meeting minutes. Please be aware that corporations are NOT required by law to file minutes with ANY government or private entity. It is recommended that corporations do NOT reply to the solicitation