LouD

I also have a new Win 7 64 bit that I purchased this summer with 8BG RAM and installation was smooth for me but slower speeds for rolling over and opening/savings returns compared to the prior year programs. Strange thing that I see when rolling over returns - the rollover seems to happen normally, but I have to close down and reopen the program in order to see the new rollover returns in the Return Manager.

I have been working on some S-Corp returns for my organized clients and everything seems to be going smoothly within the program - I'm not a big fan of the look and feel of the new program, but figure that is mostly because it's new and vastly different from all the previous years. Strangely enough, ATX has not finished updating and approving the Form 8879-S eFile authorization form for some reason - I'm guessing most tech employee hours have been allocated to the many bugs that have been all the buzz lately.

The new print module is extremely different, but I must say I love the option of "Print Preview" to see what forms will be included in the planned print - that's pretty handy.

The way Tom describes is correct - employer is hiring an employee and as such can set up the formal Sec 105 plan allowing for reimbursement of health insurance and medical expenses for the employee and all covered family members (which would include the business owner himself) which is a better deduction for the business owner as it reduces self-employment income by lowering Sch C earnings rather than the above the line SE insurance deduction.

I see that ATX estimates that the Forms 1065, 1120 & 1120S aren't due to be released until 1/24/13 even though the IRS had them revised by 12/31/12 (small dig at ATX). I always try and get as many of these returns done for my organized clients as I can in January to help manage the workflow in March. Does anyone know if I start entering info using the 2011 draft form ATX has in there right now, will that work all get erased when the revised 2012 form is updated? I want to get as much done as I can now, but don't want to create extra work if everything gets erased. Thanks for any insights.

If it's a rental property, in the 2009 program, you can enter the regular and AMT PY unnallowed losses on the Sch E pg1 input tab for the rental property. It's line 15 of the input tab (just below the ownership information questions) and that should carry to the Form 8582

New client for me this year that needs 2008, 2009 and 2010 returns filed – client self-prepared his returns for all previous years. Client is self-employed and has several rental properties as well.

In looking at prior year returns, no depreciation has ever been taken on any of the rental properties ( I know, shocking on a self-prepared return) – so usually a pretty easy fix by filing Form 3115 on the most recent tax return to catch up the depreciation to correct amounts and then properly depreciate everything going forward.

Monkey wrench on this case is that one of the rental properties was sold in 2008 at a gain (first year that I’m working on) and everything that I’m reading (IRS publication and most recent Rev Procs) state that Form 3115 can only be filed on a “timely” return. Obviously, the 2008 return is not being filed timely, so does that mean client is out of luck with catching up on the missed depreciation since 2003?

I’m hoping that I’m missing something that would allow for the 3115 to be part of the 2008 return so any help or guidance to get me to the correct answer would be much appreciated.

Turns out that my issue was that a fradulent return was filed using my clients social security numbers - both husband and wife. Someone in Florida filed a return with about $11k in wages and $2,500 in withholding to file for the full refund. Had just been done on 3/31/11 so my client had no idea and now is looking into his credit reports to see if anything else went south....

I just had the same thing happen to me - I electronically filed an extension last week so that we would have the option of reversing a Roth-IRA conversion all the way up to the 10/15 deadline, so I thought that might be the reason - but maybe not? I know the client did not file a return on his own or somewhere else, so could be sign of bigger problems?

Thanks JohnH for the comments - helps to have some positive stories on the extension. Good to know about the extension amounts being filled in correctly to avoid the invalidation of the extension.

Thanks again for the help - much appreciated!

Client currently pays past taxes on an installment agreement and did not save up enough to pay this year's amount due in full right now - will have the rest ready in June.

I think that if you are not current in your taxes owed, the installment agreement becomes void - so I'm wondering if we file an extension on this year's return until he has all the money ready to pay, would that avoid any problems with the existing installment agreement. We don't want to have to go thru the trouble of getting another installment agreement since it's over $25k.

Thanks for any insights!

SEP contribution and deduction happen at the S-Corp level

sent 8 returns out yesterday at 12:00 AZ time and got all 8 acks back this morning with approved - so that's good news. Now would love to see the 1040 planner come online soon!

New client has always filed returns themselves and now realize it has been a bad idea. 2006 return has been filed with plenty of deductions and asset purchases missing from the originally filed returns. With these new assets and deductions, an NOL is created for 2006, but they would receive no benefit by the 2-year carry back.

I can't find anything that shows we can now elect to waive the NOL carryback and carry these losses forward on the 2006 amended return - I'm thinking the client is out of luck with these missing deductions (other than the 5 & 7 year depreciation expenses) but hoping that I'm missing something?

Thanks in advance for any help!

New partners entered existing partnership and paid the existing partners outside of the partnership for their ownership interest. So I'm adding the new partners equity on the balance sheet thru a Section 754 election and will begin amortizing that ownership interest in 2009.

My question is how to handle the amortization expense - does it flow thru normal net income of the partnership and allocated specifically to the new partners, or is it an expense recorded on the books but not included in the net income and handled on Schedule M-1.

I believe I need to also create a special item on the K-1 in Box 20 for the new partners letting them know how much their special amortization was for the year - is that correct.

Thanks in advance for the help!

>>is there any other way or arguement to avoid the SE tax?<<

Yes, you can argue that the client is not in a trade or business but is simply helping a relative. Address the level of compensation, presumably including room & board, which suggests a profit motive unless there is some other means of support. There is precedent for this position in the tax court

Alternatively you could argue that the client is a household employee subject to employer-paid FICA rather than SE tax. Either way, be sure to follow instructions exactly in replying to the IRS letter. I recommend you attach documentation of your position, as well as an explanation.

Thanks for the help and guidance Jainen - much appreciated.

Hoping to find an angle to help a new client, and thought I would see if anyone had run into this situation before.

New client comes to me with her self-prepared 2008 return and a letter from the IRS asking for more money. 24-year old client helps take care of her 21-year old physically and mentally disabled sister at the home they both reside with their father. Disabled sister receives $15k per month in social security and untaxable annuity payments from a medical malpractce lawsuit. Father pays my client to help take care of the sister with the annuity proceeds and my client treated those payments in 2008 as "Other Income" as opposed to Schedule C - so the IRS would like to add SE tax to the $7,500 in payments in 2008.

This tax issue will be even bigger in 2009, as client received about $30k under the same arrangement which should continue in future years.

Looking from the viewpoint of the IRS, I can see why they would want to tax these payments with SE tax - the annuity income is tax-free, so the IRS would be missing out on the payroll tax when payments are made to my client if she treats the income as "Other Income", essentially taking the same route as the S-Corp shareholders that don't take a reasonable salary.

Other than having my client set up as an employee and having the sister pay 1/2 of the SE tax (which wouldn't help us for 2008 & 2009), is there any other way or arguement to avoid the SE tax?

Thanks for any help and suggestions!

Client has one employer with one W2, but has withholding for the 13 different states that he works in during the year and his employer breaks out the income for each state.

I'm having trouble with a couple states (MD, NY & IL) rejecting the state only eFile with the reject code stating the W2 state withholding amount doesn't match the state tax return withholding total. From what I've entered on the W2 which then flows to the state retur - the numbers match exactly, so not sure why I'm getting the error codes.

I figure it has something to do with the way I've entered the W2 information in ATX and I wanted to see if anyone out there had a client similar to mine and were they able to successfully eFile various states. Each W2 screen allows 4 different states and 4 differnet localities, but since I have 13 states, I've added 3 new "payee" screens with the same employer - no numbers in the wages boxes at the top, just the new state wage and withholding info at the bottom in order to get the withholding amounts entered and flowing to the various states.

I figured I would try the forum first before calling tech support and waiting on hold.....

Client has one employer with one W2, but has withholding for the 13 different states that he works in during the year and his employer breaks out the income for each state.

I'm having trouble with a couple states (MD, NY & IL) rejecting the state only eFile with the reject code stating the W2 state withholding amount doesn't match the state tax return withholding total. From what I've entered on the W2 which then flows to the state retur - the numbers match exactly, so not sure why I'm getting the error codes.

I figure it has something to do with the way I've entered the W2 information in ATX and I wanted to see if anyone out there had a client similar to mine and were they able to successfully eFile various states. Each W2 screen allows 4 different states and 4 differnet localities, but since I have 13 states, I've added 3 new "payee" screens with the same employer - no numbers in the wages boxes at the top, just the new state wage and withholding info at the bottom in order to get the withholding amounts entered and flowing to the various states.

I figured I would try the forum first before calling tech support and waiting on hold.....

New client has been paying down credit card debt that was incurred by his S-Corp that closed last year (1120S was marked "Final").

Is there any way to deduct this interest on his personal return this year?

Since it is a rental property, debt forgiveness will not be cancelled because he was insolvent. He will have debt forgiveness to report and a business loss.

I did not see anything in Publication 4681 for Cancelled Debts that excluded rental properties from any of the avaialable exclusions (bankruptcy, insolvency, qualified principal residence, etc.) - did I miss something that specifically excludes rental properties?

Thanks for your help - it's much appreciated.

Client's rental property has been in the short sale process for over 12 months (bank has been turning down potential buyers but has not proceeded with any foreclosure activities). Looks like an approved buyer has been found and house will close in 60 days.

Client was single when purchased the property and when short sale process began, but he's now married.

To qualify for the insolvency exception to the debt forgiveness, does the wife's assets and liabilities come into play even though it's just his name on the loan and title? Could make a difference with her 401k account, so thought I would ask the question here first before having them pull all the asset and debt information for her.

It took me about 2 reboots to figure out that it wasn't my computer causing the problems. I don't have the automatic update checked either - just extemely slow to open and very slow to connect and search for program updates.

Client has 2 100% owned S-Corps. In 2009, one of the S-Corps closed it's doors and it's only asset, a trailer, is now being used by the other S-Corp. Since the transfer happened between 2 corporations with the same ownership structure, can that be done on a tax-free basis without having to show a deemed sale on the closed S-Corp and corresponding asset contribution to the remaining S-Corp?

If it is possible, how do I handle it on the closing S-Corps final return?

Thanks for any help or guidance!

It sounds like if the contribution was maxed out before that he has now over-contributed and needs to have some returned to him as taxable income.

Client double counted some expenses on the original return (which we are now backing out on the amendment), so now his business profit has increased, allowing him to increase the profit sharing portion of the solo-401k

Working on a 2008 amended 1040 for a Schedule C client that realized he double counted some expense categories. Client maxed out his solo-401k contribution with the originally filed return.

Now that we're submitting the amended return, is there any chance he can increase his 401k contribution for 2008?

2 person LLC with commercial building rental as only asset. 25% partner agrees to sell her interest to 75% partner and I want to make sure I'm not missing anything.

I'll do a short-year return 1065 return thru date of sale for the LLC and check the Final Return box on page 1.

The LLC will live on and go on the remaining 100% partner's personal return as a Schedule E rental property - do I need to get a new EIN for the LLC or because it wasn't a technical termination (only 25% ownership changed hands) can the LLC keep the EIN or does checking the Final Return box mean the IRS cancels that EIN?

Also want to make sure I'm doing this correclty going forward - I'll be tracking the commercial building for the new 100% owner with 2 different cost basis - the original cost basis for her 75% intial ownership stake and a new cost basis for what she's paying for the remaining 25% stake.

Anything else I should be aware of? Thanks for the help!