ILLMAS

One of my client does tax return for her family members and friends and I prepare thiers. Any she passed a tax return that involved a sale of property, but she wasn't too comfortable finalizing it, I said if the client pays my hourly fees I will take on it, I would just look over the sale of the property. Scenario: Husband and wife bought a home 11 years ago, however both had bad credit so they bought house under the husband sister and husband name who report the house on her tax return as a rental property, they were putting some bogus rent for 11 years and were deducting all the expenses you can think of and I only see one year, I don't want to know more. The house was sold in 2008 and there was a gain on the sale, another tax preparer had prepared the return but the tax on the sale was a refund (considering losses from rental properties and very low wages) huh??? I interviewed client via phone first and I told her, based on what you are telling me there has to be something wrong, based on the cost of the home and the sales price, there is a significant gain, so they faxed over the tax return prepared by other tax prep. I had to re-enter everything based on what they gave me and I also came out with a the same refund, so I called the TP let them I got the same results but there is something wrong with the accumulated depreciation, the report you gave is only for one year, so I prepared a depreciation schedule to estimate the depreciation for 11yrs, you wouldn't believe this but their gain grew by a lot. Now for breaking the news: Me: So you lived in this house for 11 years and your sister-in-law was reporting it her taxes a rental property? TP: Yeah Me: Don't get offended but why in 11yrs you didn't changed the title to you and your husband? TP: We were not planning on staying here long Me: Ok, well as I mention to you I estimated the accum. depreciation and your gain was so much $$$, and your tax due is $$$ for the fed and $$$ for the state TP: What @#&!@!!! the other tax preparer said there was a refund due and you even said that too. Me: Wait a minute, I right of way told you even without seeing the tax return prepared by the other tax preparer and based on the numbers you gave it would be impossible not to owe taxes for that type of gain. TP: So you are saying the other preparer doesn't know what they are doing? I was calmed when I said this Me: I never said anything about the prior tax preparer, don't put words in my mouth. TP: I already paid the taxes Me: Oh yes, when TP: At the closing Me: Are you referring to the property taxes? TP: Yes, I paid a lot Me: You are responsible for that anyways. TP: I should sue my attorney and real estate agent for lieing to me. Me: How did they lie to you TP: They told me I wouldn't pay taxes because it was my residence Me: But that is true, that's not a lie, were they aware of how the home is reported on your sister-in-law return as a rental property, probably not. TP: But I do have a personal residence so I shouldn't be taxes, I took the proceeds for the sale bought another one. As most of you are tired of this never ending crap, I wanted to shoot myself by now. Me: So did you leave some money aside to cover the tax due. TP: No, I was desperat to sell the house so I gave the buyers a 8K credit towards their down payment from the proceeds, rest was used towards the down payment. Lady you have to be kidding me, I wanted to smack her over the phone Me: Borrow the money to pay the tax, refiance your house, sell your house, do you have a 401k, you need to pay taxes (I was pissed off by now) TP: But is there help, I seen some commercials on TV that if you owe money to the IRS they can help you Me: Give them a call Me: You know that you are in a situation where your sister-in-law is liable for this, so it is now up to you however you want to resolve this. This call lasted more the 1 hour, TP was accusing everyone of lieing to her and wants for me to feel bad for her, giving me more BS, she had the nerve to ask me not to charge her that much, I don't think so. This can be considered a rant too

Are they itemizing? I find many non-profit agency that take cars as donation are not that clear when can someone take the deduction (Itemizing). My client donated a car and didn't get a benefit since he was not itemzing, so upset he called the agency to complain he was not able to deduct the donation, they told him, you should always check with your tax advisor, before making the decision LOL. From Sch A, go to non-cash donations, or add form 8283, you would need the date the car was purchased, cost and FMV of vehicle at time of donation.

It seems most here don't efile until form 8879 is signed, I usually get the consent of the taxpayer if I can efile return and then for them to sign the form once they come to pick it up. Most of my client drop off their return and pick them in a week, others take longer but the form is printed out the day it was efiled.

My client received a 1099A, I will use different figures for my question: Box 1 10/02/08 Date of Lender acquisition Box 2 $180,000 Balance of principal out Box 4 $233,000 FMV of property Box 5 Yes Was borrower personally liable for repayment of debt? YES This was his personal residence for +10yrs This is a recourse debt, however the canceled debt is less then the FMV (180,000 - 233,000 = -53,000), so using Tabe 1.2 (Worksheet for Foreclosure and Repossessions) Part 1, -53,000 is less then zero, so my client does not have to report the lose? He would he it was the other way around? I would appreciated if someone can help me on this one. Thanks

Does anybody know if one can create bulk extensions in ATX? Proseries would allow you to print out extension without adding the form, for my corp extension, I had to open each client individaully and add the form. I am just wonder if there is a way around this. Thanks

Is anyone else getting a error message when trying to efile or receive acknowledements?

Everyone tries to write-off as much as possible http://www.youtube.com/watch?v=Q7UVNH73eBY

If she is excepting a refund and the refund was already mailed out, it can take a couple of months before the IRS and re-issue her a new check. Have her submit the change of address as soon as possible or even try speaking to an agent to over the phone. I had this happened once before, client closed bank account and changed address and didn't tell me, until he notice his direct deposit didn't go through, I told him okay, the IRS shoud send you a paper check if your account was closed, and he asked me, do you know if they are going to send it to me to my new address? Anyway, the IRS had to wait for the check 3 months before they could issue a new check to the right address. Did your client inform you about the address change, if not let the take care of it and go through all the hassle.

I have a new TP that create a partnership (1065) with his brother, they are buying houses, rehabing them and selling them, however the houses are not selling, so they are renting them. Since there business is to buy, fix and sell, can the properties be setup as inventory? And how would the rental income be classified if they are considered inventory? No hurries on the response, this baby is going on extentsion.

Anyone??

The same thing has happened in IL, 20yrs cases were opened again because of a new computer system they put in place in Jan. 09, read the following article and see if something can be done. Sorry I didn't have time to go through the whole article. MAS http://www.thetelegraph.com/news/tax_24374...stem_state.html

Client recieved a 1009-A for his home he gave up in foreclosure, since this was his personal home for more the 6yrs and the FMV is under 250K, do I need to include it on his tax return? If so, what form to use 4797, even though it's not an investment property? Thanks,

Sorry, it's a 1120S and not a partnership.

I have a partnership return that is composed of 4 brothers, they didn't take a salary but decided just to take money as owner's draw. The only problem is the retained earnings is negative and tax year is a lose. I recommended for them to take it as a loan and repay it, get back on the payroll and to withdrawal something in relation to their salary when profitable. The fact that they are not taking a paycheck and taking money from the business, would it be ideal to reclassify it was other compensation to officer and issue them a 1099? Thanks,

Amen to that, I haven't been spending anytime with my 5 month daughter and I feel so guilty. Marco

Just wondering when do you quit doing tax returns?? I find myself receiving tons of calls just days before the deadline, but I think this year I might disconnect my phone April 13 - 15, I'd rather lose these clients than work my butt off, then have them pay me months later. What are other tactics do you use, share your story.

I thought had bought a good HP all-in-one printer, but I hate the damm scanner, it creates a new file for everypage, maybe I am missing something, but I went back to making copies. I will definetly give up on making copies of my client info next year. I will let them keep track of it, and you are right my cabinet is ready to explode.

I am just curious, do you make copies of all of your client info for your copy? I am getting fustrated with so much copying that it takes me longer to assemble a tax return then doing the actual tax return. I am just wondering what other tax prof. do? p.s. I don't make copies of all the receipts of anything, I just write the total on one receipt and copy it. I timed myself for one just one tax return for today, simple return 1040, Sch A and state return: 10 minutes entering data 5 minutes reviewed and double checked numbers 20 minutes making copies of the info, making a copy for my file and assembling the tax return.

This a good place, I wouldn't want to see it go. I use to post at the TaxAlmanac but there are a couple of schmucks just waiting to see who misspells words and plus sometimes people are not helpful.

TP has recieved two 1099-A for the same property, one is for the mortgage and the other from the line of credit. Amounts for the Balance of principal out (Box 3) and FMV (Box 4) are different?? The difference on box 3 is $5,208.08 and box 4 is $45,059.74 Do I need to enter both 1099-A and use the lower FMV and principal out? Thanks,

If a politician gets married and receives gifts from his employees, is this considered (presents & cash) additional income? If so, how would it be reported?

Duhh!! I should of thought about that, thanks that worked. It was too many assests to delete and re-enter, plus client is thinking of selling business, I don't like the double work.

I have TP that a business, but it had no activity in 2008, there is no income and expenses and no depreciation ZERO, he does have a couple of fixed assets, I cannot efile his return because it's telling line 1 of Sch C has to be greater then 0, I wanted to delete the Sch C but I will lose all the fixed assets. Is there a way around this? Thanks,

A client of mine was building a home to sell, the house was finished and put on the market in 2007, in mid 2008 they decided to move in to stage the house and see if they can sell now that it has furniture. They moved out their primary residence and decided to rehab it. Well since the new home was not going any where they decided to rent thier primary house in late 2008, someone gave a security deposit to start renting in December 2008, however they decided not to rent because the lease was going to be on a month to month basis (client was going to return to home if new construction sold). Now here is where the headache starts: 1. Client took out a construction loan of $795,000, $150,000 of equity from his primary residence and another $150,000 from a rental property, however the contractor swindled $300,000. I asked the client for a copy of the title and he said there isn't one, the $795,000 is now a mortgage loan. My poor client doesen't know what was the true cost of the property because there was a lot of fraud with the contractor, contractor made checks to his family and forged my client signature, the bank investigated but could not do anything because the contractor left the country. This was going to be an investment property, but because of the real estate fall, property might go into foreclosure along with his other two properties. My question is, since in 2008 it was a considered a personal residence, there is no need to capitalize it?, I would just itemize for the mortgage interest and property taxes, the same for his primary residence? In short client had to personal residence in 2008. 2. If things are not bad enough already, client has two other condos, both were unoccupied in 2008, not because he didn't want to rent, but because the area they are in, there are another 500 condo to choose from (new and for rent), he contiuned to pay the mortgage, property taxes and assestment fees, but no rent was coming in, in 2009 he was able to rent one only, would it be wise to report both of them with zero rent, he has proof he tried to rent them, he hired a R/E agent and put ads in the paper. Unfortunetly, he is not a R/E professional, so he would be limited to the 25K, he paid more that in just one condo. 3. Client has a dauther that got married in 2007, however she left the country to study medicine, I filed her 2007 return as married, now in 2008 she is a dependent of her parents because they are the ones paying for her education, and her husband is going to file for divorce in 2009, the daughter meets the test of dependency, my only concern is that she is not officialy divorce yet, and her husband probably filed single for 2008, then she would qualify was a dependent. Parents paid a lot in education, she is older the 24yrs, would the parents be able to claim the education credit? I am also venting, this probably the worst case I have seen related to taxes. Thanks,

Does anyone remember the motivational speaker Matt Foley "I live in a van down by the river" played by Chris Farley? My client is the real Matt Foley and was good friends with Chris Farley. Fr. Foley will be leaving to Iraq to serve as a chaplain in a couple of days, he has finished his military training and is ready to go. I have included a link to a video of him, please keep in him your prayers: http://www.youtube.com/watch?v=vDICmcxrIEM Marco