ILLMAS

Chapter 7 – Tax Home/Travel/Meals The fishing industry has many crewmembers that live in one location and then travel to various ports where they obtain seasonal jobs on one or more fishing vessels. For example, a crewmember may live in Idaho, fly to Alaska during various fishing seasons and then fly back to his residence after the season is over, or until he works again. It is common for a fisher to deduct the cost of traveling from her personal residence to the port or boat as a business expense. The location of a fisher’s principal or regular post of employment (tax home) serves as the point of origin for computing allowable travel expenses as well as meals and lodging incurred while "away from home." An individual is considered to be "away from home" if his duties require him to be away from the general area of his tax home (defined later) substantially longer than an ordinary day’s work, and sleep or rest is necessary to meet the demands of work while away from home. A taxpayer’s "tax home" is the taxpayer’s principal or regular post of employment during the taxable year regardless of the physical location of his or her residence. If a taxpayer has more than one regular place of business, then his tax home is his main place of business. Factors to be considered are: the time spent in each location; the level of activity in each location; and whether the income from each location is significant or insignificant If fishing is the major source of income for the taxpayer, and the fisher does not maintain a personal residence at the same location as the home port of the fishing vessel, travel expense from a fisher's personal residence to the home port of the fishing vessel are personal commuting expenses that are not deductible under IRC § 162(a)(2). The Tax Court held in Tucker v. Commissioner, 55 T.C. 783 (1971), that &quot… if a taxpayer chooses for personal reasons to maintain a family then his additional traveling and living expenses are incurred as a result of that personal choice and are therefore not deductible.&quot Crewmembers who annually return to the same boat to fish may also be denied the travel expense deduction. A fisher’s principal or regular post of employment may be regarded as being aboard the fishing vessel or at the port where voyages are ordinarily begun and ended, depending on the volume of business activity conducted on the vessel as compared to business conducted at the port. Thus the &quottax home&quot of a fisher may be the vessel itself or the home port of the fishing vessel. Rev. Rul. 55-235, 1955-1 C.B. 274, holds that the tax home of commercial fishers is their home port. Evidently, the crewmembers of the fishing vessel at issue in the revenue ruling made frequent trips to their home port, where a large portion of their commercial activities (that is, selling fish) took place. The business locus of these fishers was, therefore, more their home port than their vessel. By contrast, Rev. Rul. 67-438, 1967-2 C.B. 82, holds that a naval officer assigned to permanent duty aboard a ship having regular eating and living facilities has his or her permanent post of duty, and thus his or her tax home, aboard the moving vessel. The revenue ruling reasons that a ship is a naval officer's regular post of duty, much like a land base is the regular post of duty of an officer in any of the military services permanently assigned to such a base. Such a ship combines the place where a naval officer performs occupational duties with many of the attributes of a home in the ordinary sense. If the commercial fishers perform the majority of their occupational duties away from their home port while aboard their vessel, and if the vessels have regular eating and sleeping facilities, the fact that the crewmembers do their eating and sleeping in regularly provided facilities makes their situation analogous to that of the naval officer in Rev. Rul. 67-438. In contrast to the fishers described in Rev. Rul. 55-235, the fishers sell most of their catch at points other than their home port, their vessels are outfitted initially at their home port, and they do not, after embarking, return frequently to their home port. Therefore, the tax home for the commercial fishers will be the location where their major source of income is derived based on all of the facts and circumstances. Their tax home may be where their personal residence is located, it may be where their home port is, or it may be their vessel. No deduction should be allowed for meals provided for crewmembers whose tax home is their vessel because the expenses are not incurred &quotaway from home.&quot In addition, whenever the vessel is the taxpayer’s tax home and the vessel is at port, whether at home port or another shore point, the area in the vicinity of the vessel is considered part of the fisherman's tax home. An individual's tax home is not a particular place, but it includes the general locality in which he or she is customarily employed. See Rev. Rul. 55-109, 1955-1 C.B. 261, 263, modified by Rev. Rul.90-23, 1990-1 C.B. 28, and Kroll v. Commissioner, 49 T.C. 557, 561-562 (1968). Some taxpayers do not have a regular or main place of business and there is no place where they regularly live. In this case, they would be considered itinerant (transient), which would not entitle them to travel expense deductions because they are never considered to be traveling away from home. Once the fisher’s tax home has been determined, then the amount of the allowable expenses and limitations can be determined. IRC § 162(a) provides, in part, that a deduction shall be allowed for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business. IRC § 274(d) provides, in part, that no deduction shall be allowed under section 162 for any expenditure with respect to traveling away from home unless the taxpayer substantiates the amount, time, place, and business purpose of such expenditure by: (1) adequate records; or (2) sufficient evidence corroborating his own statement. IRC § 262 provides that no deduction shall be allowed for personal, living, or family expenses. Traveling expenses include travel fares, meals and lodging, and expenses incident to travel. Treas. Reg. § 1.274-5 allows the Commissioner to create an optional method of computing travel expenses, including a per diem deduction for meals and incidental expenses, which satisfy the substantiation requirements. The optional method of substantiation is provided in a revenue procedure which is generally updated annually. Taxpayers are not require to use the optional method of substantiation. A taxpayer may deduct actual allowable expenses if the taxpayer substantiates by adequate records or other sufficient evidence. In general, most fishers are not reimbursed for meals. In computing their share of the catch for fishers, it is common that a set amount per day is deducted for meals or groceries. If the amount paid by the fisher in calculating his share of the catch is not included in income reported to and by the fisher, it must be added back to avoid a double tax benefit: an exclusion from income and a claim for per diem. The courts have held that no deduction may be claimed for meals if no expenses were paid or incurred by the individual. An employee or self-employed individual who pays or incurs incidental expenses, but not meal expenses, may claim either the actual expenses or an amount for incidental expenses as provided in the annual revenue procedure for per diem allowances. The per diem rate for 2010 is $5 per day. Where a set amount has been deducted for meals, a fisher, who is away from home, is entitled to use the optional method for computing meals and incidental expenses even if the amount paid is less than the federal per diem rate. Actual receipts are required to substantiate lodging. In general, whether a fisher substantiates his expenses by either the actual method or the optional method, only 50% of the business-related meals and entertainment expenses may be deducted. This applies to both employees and self-employed individuals. There are limited exceptions, such as amounts related to expenses that are required by Federal law to be provided to crewmembers of a commercial vessel. The legislative history and the courts have held, however, that this exception does not apply to fishing vessels. Detailed information on travel expenses and recordkeeping requirements are available in Publication 463, Travel, Entertainment, Gift and Car Expenses. For a self-employed fisher, these expenses would be deductible as a business expense on Schedule C. If the fisher is an employee, then the expenses are deductible as employee business expenses reportable on Form 2106, Employee Business Expenses or on Form 2106-EZ, Unreimbursed Employee Business Expenses. A fisher’s status as self-employed or employee can change from voyage to voyage. See Chapter 3, Employment Status. Examination Techniques Establish the location of the taxpayer’s residence. Establish the various locations of the taxpayer’s work during the year to determine the taxpayer’s "tax home." Determine if the taxpayer has "minor" or secondary work locations for which he may qualify for living expenses for work away from his tax home.

The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.

Anyone else received their installation code via email? Edit: Software is not available for download yet Edit II: Software will be released in late November 2014.

Try the "Where is my amended return" look up from the IRS: http://www.irs.gov/Filing/Individuals/Amended-Returns-%28Form-1040-X%29/Wheres-My-Amended-Return-1

He got the SSN 20 yrs ago, when he was on a student visa. Now he has a business visa, however the wages he earns while working in US are paid in his home country.

None of the above

Hopefully I can get a quick response back from someone that would know, TP lives in a foreign country, his work has different satellite offices in the US, so during one of his work visit he bought an investment property, that he rents for 8-10 months and he lives there when he comes and works in the U.S.. 20 years ago he came and studied in the U.S. through a student visa and a SS# was assigned to him, so the rental property loan is under his SS#. Fast forward, because of work, he has various investment accounts as a foreigner. Now that he has the investment property to report as a non-resident, should the U.S. investments (he reports in his home country) be reported on his personal tax return or only the rental property? In the past years he submits for W8-BEN to his broker and I would also like to know if it is necessary. Thanks MAS

Windows 10 just announced: SAN FRANCISCO — Sept. 30, 2014 — Microsoft Corp. on Tuesday unveiled its next Windows operating system, Windows 10, and gave a first look at an early technical preview for the PC available Oct. 1. The announcement highlighted advancements designed for business, including an updated user experience and enhanced security and management capabilities. The company also introduced the Windows Insider Program, kicking off its largest-ever open collaborative development effort to change the way Windows is built and delivered to best meet the needs of customers. Program participants will receive the technical preview of Windows 10 and a steady stream of builds through the development cycle to use and give feedback on. “Windows 10 represents the first step of a whole new generation of Windows, unlocking new experiences to give customers new ways to work, play and connect,” said Terry Myerson, executive vice president of the Operating Systems group at Microsoft. “This will be our most comprehensive operating system and the best release Microsoft has ever done for our business customers, and we look forward to working together with our broader Windows community to bring Windows 10 to life in the months ahead.” Windows 10: familiarity and consistency across devices Windows 10 adapts to the devices customers are using — from Xbox to PCs and phones to tablets and tiny gadgets — and what they’re doing with a consistent, familiar and compatible experience, enabling even greater productivity. Windows 10 will run across the broadest range of devices ever from the Internet of Things to enterprise datacenters worldwide. Microsoft is also delivering a converged application platform for developers on all devices with a unified app store. Developers will be able to write an application once and deploy it easily across multiple device types, making discovery, purchase and updating easier than ever for customers. Windows 10: designed for the challenges of modern business Windows 10 builds nearly everything that businesses need right into the core of the product — including enterprise-grade security, identity and information protection features — in ways that can reduce complexities and provide better experiences than other solutions. One area of advancement is in the work Microsoft has done with user identities to improve resistance to breach, theft or phishing. Windows 10 will also help advance data loss prevention by using containers and data separation at the application and file level, enabling protection that follows the data as it goes from a tablet or PC to a USB drive, email or the cloud. Management and deployment have been simplified to help lower costs, including in-place upgrades from Windows 7 or Windows 8 that are focused on making device wipe-and-reload scenarios obsolete. Businesses will also have the flexibility to choose how quickly they adopt the latest innovations and influence continued improvements. In addition, organizations will be able to customize an app store specific to their needs and environment. The intent is an app store that will allow for volume app licensing, flexible distribution, and the ability for organizations to reclaim or reuse licenses when necessary. Technical preview PC productivity The early technical preview of Windows 10 demonstrates new levels of flexibility, navigation and familiarity through the Windows experience. Features include these: Expanded Start menu. The familiar Start menu is back, providing quick one-click access to the functions and files that people use most, and it includes a new space to personalize with favorite apps, programs, people and websites. Apps that run in a window. Apps from the Windows Store now open in the same format that desktop programs do. They can be resized and moved around, and have title bars at the top allowing users to maximize, minimize and close with a click. Snap enhancements. Working in multiple apps at once is easier and more intuitive with snap improvements. A new quadrant layout allows up to four apps to be snapped on the same screen. Windows will also show other apps and programs running for additional snapping, and it will even make smart suggestions on filling available screen space with other open apps. New Task view button. The new Task view button on the task bar enables one view for all open apps and files, allowing for quick switching and one-touch access to any desktop created. Multiple desktops. Instead of too many apps and files overlapping on a single desktop, it’s easy to create and switch between distinct desktops for different purposes and projects — whether for work or personal use. Open and collaborative development The introduction of the Windows Insider Program demonstrates Microsoft’s continued commitment to working closely with customers to help shape the future of Windows. Windows Insiders will be able to give feedback on early builds of the product throughout the development cycle. The program will include various ways for Windows Insiders to engage in a two-way dialogue with Microsoft, including a Windows Feedback app for sharing suggestions and issues and a Windows Technical Preview Forum for interacting with Microsoft engineers and fellow Insiders. More information on the Windows Insider Program and the technical preview can be found at http://preview.windows.com. Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services, devices and solutions that help people and businesses realize their full potential. Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/news/contactpr.mspx.

Stuff happens, I had a similar issue not so long ago and the IRS took the liberty of moving a payroll tax payment to a different quarter to cover a balance due, why because of timing. TP had not filed the 1st and 2nd quarter 941's for 2013, the 3rd quarter was amended with a small balance of $4K, we submitted all the returns at the same time and paid the 3rd quarter balance in full via EFTPS, the IRS processed the 1st and 2nd quarter fast and it took almost three months for them to process the amended 941, in the mean while they applied the 3rd quarter payment to the 1st quarter. I was able to resolve it after the TP received a letter stating the 3rd had a $4K balance due.

I am restoring ATX2012 data to a new computer, I am getting a message saying "payer already exists" and have the option to replace, replace all, skip or cancel. What would happen if I click on replace or replace all? For 2012 filing season, I was using my computer as the mine efiling station, so I have a handful of returns that were transferred from 2011 to 2012, then backed up and restored on another workstation, then restored back to the main computer. Thanks MAS

I am currently working a payroll case, there is reasonable cause, but the IRS wants the liability to be paid first, then they'll consider it.

I have a new client and in 2011 the prior tax preparer prepared form 8903 and not in 2012, I asked the client and he doesn't know why it wasn't prepared since he still owns the plumbing company. Anyway I am not to familiar with the form, but from reading the instructions, it seems one can include the income that pertains to qualified construction or remodeling, but if their business is mostly fixing leaking faucets, then that income is excluded? I would appreciate the help from someone who has filled out this form before. Thanks

Do you make copies of your clients records?

Give us an update, did your client call already and straighten things out?

I would be more shocked if the man helped out a random homeless person and claimed their kids and won.

And it's free

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I do, 2 macbook pro's, 2 imac and other I have put together for friends.

Have the client sort it out with the IRS, get involve once they resolve it.

SSD drives are the best thing that's has happened since the invention of whipped cheese in a can.

Go with WIN7 Pro, avoid the home edition. A couple of months ago I bought a Dell XPS 8700 desktop with WIN8, I didn't even bother turning it on, pop in an oem Win7 Pro, formatted the drive to get rid of WIN8 and I am happy. Win7 Pro cost around $130.

No one else is working on last minute corporate tax returns?

I think everyone is just waiting to see if Hillary Clinton is going to run for office.

Our city cracked down on businesses/individuals that provided immigration services that were not in compliance with the City ordinance regulating immigration service providers.

New client, prior year corporate tax return is mark accrual, but when I compare the income to their QB file it seems it was reported on the cash basis, even the BS was does not reflect any A/R or A/P. I am at a bind here would hate to dig deeper into the mess, what would you do? Thanks MAS