ILLMAS

anyone know how to get this deduction in the program without overriding? I see how to make the election statement but i can't get the deduction on the 4562.

-thanks

Did you select the proper codes when you capitalized the asset? e.g Amort, ### Organizational Cost, 5 yrs .......

yes you can and i can't remember where but there is a schedule somewhere to allocate any estimated payments between the spouses

I prepared an innocent spouse form once for a couple, the wife was making ES payments to cover the taxes on her federal pension and the husband had a levy because of child support. Even dough they filed MFS, they applied the ES payments to the husband accounts since the prior they filed MFJ and his named appeared as the main taxpayer. Anyway I had to file an innocent spouse form and the IRS released the ES payment from the husband and applied it to the wife account. She then recieved a refund after a while.

If an extension was filed with both the husband and wife on the extension, can they still file MFS vs MFJ.

I know you can't amend to MFS once you file a return MFJ, but I wasn't sure if the extension locks you into MFJ.

Thanks

I would just send a copy of the extension for both returns, I really haven't seen an extension declined in a while. The last one I remember that was declined was because it was filed over 6 months and the client wanted a payment plan. I usually send a copy of the extension even though the six months have passed.

I am wondering if anyone has tried using a mac (running windows) with ATX....comments and concerns are welcome.

That is how I run my ATX, I have had no problems what so ever. I run different versions of QuickBooks, Office, Outlook etc.. and everything works the same as a PC. Now if I could go back, I would just buy a PC, I invested too much time setting it up, unfortunetly there isn't any tech support from Apple for the setup and the instructions from bootcamp are not very helpful. And you don't want to ask a Mac user about installing windows on a Mac, they don't take this very litely and will tell you to buy a PC instead of a Mac, why would you want to ruin a Mac? :-) Let me know if you need help setting it up, I have my notes somewhere. FYI you need XP with SP2 or Vista for bootcamp, I don't know what are the requirement for virtual PC and the others.

I have not dealt with this yet, but would I be correct to say that debt forgiveness under the short sale of as house be forgiven under the debt relief act of 2007. The entire mortgage is acquisition debt. -Mike-

Yes, however there are restrictions, I guess this the most important one: "The loan also must have been taken out to buy or build a primary residence, not a second or vacation home. If debt is forgiven on those additional properties, the owner will owe cancellation of debt income as usual." Many people think their investment properties fall under this act, but that not the case, it's only for a primary residence. Here is an example I like to give to my clients that call me:

For example, let's say you bought the house for $200,000 but took out a $195,000 mortgage. By now the mortgage has been paid down to $193,000. However, the house is now only worth $160,000 so that is how much you do a short sale for. So the amount of debt forgiven would be $193,000 minus the $160,000 the bank received, or $33,000

Hello, I have a question in regards to pizza delivery charge and tips. One of my client bought a pizza business from someone and kept the delivery personel, but I am not to sure they are addressing the delivery charge and tips properly, here is an example of how they are doing business:

Pizza + Tax $17.00

Delivery Chrg$ 2.00

Total $19.00

Once the pizza is delivery, the driver returns the $17 and keeps $2 + tip, on top of that my client give each driver around $30 for fuel a week, my client does not report delivery charge as revenue, but they do report the fuel charge as an expense. I told them that this didn't seem right, they should be giving the drivers a 1099 at the end of the year with the delivery charge + tip + fuel stipend, is this correct? FYI the drivers are not employees.

Thanks,

I'm still waiting for a call from my insurance company, so I'm throwing this out there, because I am totally stressed about this. The subpoena came from an attorney for an employee of a corporation that I fired two years ago for non payment. The subpoena requests tax returns for the corporation, the owner's personal returns and partnership returns for a partnership that the husband and wife owned. It just says tax returns, so I don't know if it includes payroll tax returns for the corporation. I have no idea what the lawsuit is about, probably because they shut the doors on the corporation well after I fired them. I lost way too much money in the first place, because they had been good friends, just slow pay that turned to no pay. I just don't see why I should have to provide an employee with tax returns that weren't paid for in the first place. I wish that CNA would call me back and let me know if this is even legal. Does anyone know if someone will have to reimburse me for all of the copies and do I have to have the pwners' permission to divulge this information. If anyone has any thoughts, please let me know. Thank you.

Bonnie

This the best time for you to get paid for your work, I would notify the attorney that you will not release any information until your former client pays off his/her outstanding balance No EXCEPTIONS and that you would gladly comply once you have been paid in FULL. I wouldn't sweat it if the subpoena is coming from the attorney. Unfortunetly, there is always non-paying clients, I used to work for a CPA firm and clients just didn't want to pay for the services, so the services stopped until they liquidated their balance, then there were others who would go to another accountant, some accountants acted like lawyers demanding information because they are now working with them, but we would informed them that no information was going to be released (client original documents only, no documents prepared by firm, computer files ect...) until the balance was paid off. Sometimes they would ask, well how much do they owe but we wouldn't tell them unless it was client calling for the information, most of the time they never called back.

I just got off the phone with tech support and I was told there is glitch in ATX 2007, what happens it doesn't save any new returns you put in, I lost 3 returns between today and yesterday. To correct this make sure you have the lastest updates and under PREFERENCES, OPEN RETURN make sure the AUTO-SAVE AFTER 5 MIN is check marked, then hit apply and close. You should be okay after that procedure.

If someone does a short sale on a multi-unit can they exclude the cancelled debt from ordinary income? Does it fall under the "Qualified Real Property Business Indebtedness" clause shown in Pub 4681? Note: They are not insolvent nor filing bankruptcy under Title 11.

Clent paid $400,000 each for 3 separate 4-plexes in 2005. Can not continue to make payments so he wants to list them for sale but they're only worhth around $250,000 now. The bank would have to aprove a short sale. If he still owes $350,000 on his loans and the bank accepts a contract for $250,000, will the bank issue a 1099-C for the difference?

What would be the tax consequence of this action?

I.E. Cancelled debt taxable as ordinarry income and / or Adjustment of Cost Basis?

We have many clients facing real estate problems with this market. With the Personal Residence I believe the Cancelled Debt can be excluded as long as it does not exceed the amount that was used to either purchase or improve the home. But Not sure how the Investment properties are handled.

If the bank approves the short sale for the 250K, your client will definetly recieve a 1099C for the differnce of the outstanding balance. Since these properties are probably rental properties, he will have to report the 1099-C amount as rental income and not on line 21 of 1040. From the quickfinder book, there are some exceptions:

Generally, debt forgiveness is taxable, unless one of the exclusions from Section 108 applies - that is, debt forgiveness:

1) Occurs under Title 11 bankruptcy

2) Occurs when the taxpayer is insolvent

3) Is qualified farm indebtedness or

4) Is qualified real property business indebtness (other than C corporation)

If one the property would of been his personal residence, he would of qualified for the Mortgage Forgiveness Debt Relief Act of 2007.

Mortgage Forgiveness Debt Relief Act of 2007

In December 2007, President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007. It will rescue many families facing foreclosure on their personal residences (see H.R.3648 and S.1394, Mortgage Forgiveness Debt Relief Act of 2007). Referring to the House version that passed on October 4, 2007, House Ways and Means Committee Chair Charles B. Rangel (D-N.Y.) said:

It is just not right or fair that families struggling through a foreclosure would then face a tax bill in addition to losing their homes when they have seen no increase in their net worth. This bill rights that wrong and provides tax relief to millions of American families. [see Tax Analysts 2007 TNT 194-1.]

The new law excludes from gross income up to $2 million of COD income by reason of debt reduction of a qualified principal residence indebtedness for foreclosures between January 1, 2007, and December 31, 2009 [new IRC section 108(a)(1)(E)].

Other provisions of the law include:

Qualified principal residence indebtedness is defined as any indebtedness incurred in acquiring, constructing, or substantially improving the principal residence of a taxpayer if the debt is secured by the residence. In addition, committee reports state that any indebtedness secured by the principal residence resulting from refinancing is allowed if the refinanced debt does not exceed the debt immediately prior to refinancing. For example, qualified principal residence indebtedness refinanced to obtain a lower interest rate is allowed.

The basis of the individual’s principal residence is reduced by the amount excluded from income. This will increase the gain or decrease the loss on the foreclosure sale; however, because a personal loss is disallowed and the first $500,000 ($250,000 for single filers) gain is excluded, there will likely be no effect on the taxability of the foreclosure.

The new law does not eliminate all COD income for taxpayers. Home equity loan debt used for any purpose other than to substantially improve the principal residence is not excluded. Debt relief on mortgage debt not related to the home, such as educational, medical, and consumer debt, remains subject to COD income.

The new law is effective for discharges of indebtedness between January 1, 2007, and December 31, 2009. The sunset provision was included because Congress remains committed to the all-inclusive income concept stated in IRC section 61(a)(12), that cancellation of debt is income because it increases a taxpayer’s wealth. Senate Finance Committee Chair Max Baucus (D-Mont.) stated:

From a tax standpoint, a forgiven loan is income. Hopefully we’re in a temporary situation here [with the housing crisis], and that’s why in my judgment the exemption should be temporary. [see 2007 TNT 96-26, S.1394.]

The COD exemption applies to a taxpayer’s personal residence as defined in IRC section 121. Vacation homes or other real estate investments do not qualify for the exemption.

The COD exemption does not apply if the loan is discharged in exchange for services or if the taxpayer is in Title 11 bankruptcy. The exemption does apply if the taxpayer is insolvent, unless the individual elects to use the insolvency rules

From the IRS website:

Deduction for Discrimination Suit Costs — A new deduction is available for those who pay attorney's fees and court costs in

connection with discrimination suits. Taxpayers can take the new deduction whether they itemize or not. The deduction cannot exceed the amount includible in income for the year on account of a judgment or settlement resulting from the discrimination claim. Generally, personal legal expenses are not deductible, but an employee who incurs legal expenses related to doing or keeping his job could deduct these expenses on Schedule A as a miscellaneous

itemized deduction. However, under The American Jobs Creation Act of 2004, an individual with legal fees and court costs arising from a discrimination suit may deduct the costs directly from income on the front of the tax return; this is known as an above-the-line deduction.

Under this new deduction, amounts paid for attorney's fees and court costs are deductible in computing alternative minimum tax, and are not subject to the 2 percent floor on miscellaneous itemized deductions or the overall limitation on itemized deductions. The Act, signed into law on Oct. 22, 2004, describes the discrimination claims qualifying for this new deduction. Only costs paid after Oct. 22, 2004, for judgments or settlements occurring after that date qualify for this deduction.

The amount that may be deducted above-the-line may not exceed the amount includible in the taxpayer's gross income for the taxable year on account of a judgment or settlement (whether by suit or agreement and whether as a lump sum or periodic payments) resulting from the claim. Code Section 62(a)(20).

For purposes of the deduction, unlawful discrimination is an act that is unlawful under:

(5) Section 4 or 15 of the Age Discrimination in Employment Act of 1967

Thanks, this helps out a lot.

>>a client of mine won a lawsuit of 18K,<<

Must we not first determine that this is in fact taxable income????

Zeke

Ok here are the facts, it is kind of a tricky case, that is why I am asking for advice on how to account for this transaction. Ok my client got involved in helping a coworker with a harassment complaint, once the manager found out, he/she was giving him a difficult time and gave him a very bad annual performance review, he was working for the company for over 7 years and until the new manager came in + plus his involvement on the harassment complaint, things got bad for him. Well he challenged his performances review and hired an attorney to remove his awful performance review from his personnel records. The process started back in 2005 and in 2007 they finally settled. In one way it relates to his job, although there were no criminal charges against him nor was he fighting to keep his job. He eventually left that job, but still kept the lawsuit until it was finally settled in 2007.

Your thoughts on reporting the settlement & expenses.

Anyone??? Also, I forgot to mention that he didn't recieve 1099 from the settlement.

Thanks

Hello, I have a question, a client of mine won a lawsuit of 18K, however he had a cost of 10K for attorney and 4K for court cost so he only recieved 4K. Do I report the net amount on line 21 of 1040 or report the gross amount on line 21 of 1040 and the attorney and court cost on line 22 of Sch A?

Thanks,

If I double click on the preparer it gives me a message that the information has been enter into the open return, then if I click view it is still blank. After many attempts I just manually input the information (override) however not all information transfer from the federal return to the states.

Problem solved, I had an apostrophe in the address information, I guess I might put in by accident recently, and now the info transfer to all the states.

I am not sure what you mean by 'tried to override it'? The thing to do is to hit the F3 key, select your name there, and it should then input you as the preparer on all the returns.

If I double click on the preparer it gives me a message that the information has been enter into the open return, then if I click view it is still blank. After many attempts I just manually input the information (override) however not all information transfer from the federal return to the states.

A new client of mine brought a backup of his prior tax return, I transfered it to 2007 and I cannot get my information to appear as the preparer? I tried to override it, however it only passess the company name to the state, and not my address, federal number, PTIN etc... Does anyone know how to fix this? This return has over 30 states, so I wouldn't want to enter the information manually on each state.

My client recieved a letter from the IRS claiming they didn't file form 7004 for December 31, 2006, however the corporate return was filed back in 2007? This is the first time I have ever seen a notice like this requesting a copy of the extension after the return was filed. Has anybody encounter this?

Good point, I will definetly look into amending the last 3 years or I will recommend for him to speak to the previous tax preparer. Again, thanks for your advice.

To capitalize the "Carrying Charges" on the property he needed to make an election on the initial return in the year he purchased the property. Or in any year that he wanted to start capitalizing these expenses going forward from that year. I usually attach that election each year as a safety net.

Thanks, I forgot to mention that, he did not make no elections for the 8 years he owned it. I will talk my client and see he wants to take a chance.

Need help with this situation, my client bought a empty lot back in 1999, the previous tax preparer advice him not to deduct any expenses until he builds something on the lot. Well 8 years later he gave up and sold the lot, apparently he was having issues with the town and it was impossible for him to get a permit to build a house to sell or rent. His biggiest expenses are property taxes, architech fees and attorney fees, my question is if it would be okay to capitalize the property taxes, architech fees and attorney fees even though the expenses are for various years? No depreciation was calculated for the 8 years he owned it.

Thanks,

Hello to all, I have a question, I have client that bought a property that qualifies for the GO Zone deduction, the property is being rented, it was bought in 2007. She previously had sold a house in IL so she has a capital gain on the sale, ATX is calculating 50% of depreciation for the property under the GO Zone. Since my client is not a real estate prof., shouldn't it be limited to 25K and not take 50% depreciation of 161K?

Hello, for some reason, ATX is not generating the ES voucher for a corporate return, I was able to get the state's, however I see the worksheet 1120W but no vouchers? Did I forget to click on something to automatically generate them?

Thanks,

Add the form 4868 Multiple to a blank return. Very easy to use.

I am printing out extension for corporations, I see a 7004 mulitple, how exactly do I proceed? I am new at ATX for 2007.

Thanks,

Hello, to all, is there a way of printing various client extension without opening one by one? I know proseries does that.

Thanks,

Yes...Line 21....The Line 21 worksheet has an area just for this just above the subtotal

Thanks, that is exactly, where I put the amount.