samingeorgia

"No refund???? You must have done it wrong!!!!" Gotta love 'em. They think it's all a big game.

Now -- are you certain that the taxable amount is zero? A lot of annuity companies leave the taxable amount blank and it's up to you to determine the taxable amount. Amounts in excess of the investment in the contract are taxable as ordinary income (assuming that it was bought with after-tax money). However, since you said that this was a total distribution, maybe the surrender charges bring the distributed amount below the amount invested.... You mentioned that the trust was set up a long time ago. Check the grandmother's tax records to see what the investment in the contract was and how she was reporting the annuity. I really doubt that there's no taxable income.

I just completed a Form 1065-B for a partnership with over 200 partners. One of the partners had a 25% interest on January 1, 2010, but in June exchanged his partnership interest for another asset, so his end-of-year interest is zero percent. I was under the impression that you would use a weighted average and allocate January through June loss to this guy, but the program shows zero as his loss. I do not see a way to use some kind of weighted average on the K-1 input. Is that right? Does it make a difference that he divested himself of all his interest? Hypothetically -- what if he was a partner right up until December 30? Thanks in advance for helping me reason this out.

JRS: sounds like you have researched this. I would have thought that ETF's and SPDR's, being registered securities and not the actual precious metals, would be treated like other securities, i.e. regular capital assets. Isn't the 28% rate for "collectibles"?

I did a years' worth of entry for two companies on QuickBooks and instead of entering each deposit separately, I created an Excel spreadsheet with totals for each month and entered 12 totals instead of hundreds of deposits. Example: Total deposits for June = $ 17,468.90, credited as "Sales" $ 10,950.83; "Loan from Bank" $ 6,000.00; "Sales Tax Liability" $ 518.07. I think it saved me time. Of course, I didn't have to go back and forth with the client as to "What was this deposit for?" because it was pretty clear-cut. However, the client can't add worth a hoot, so the bank is always running deposit adjustments, debit or credit, and I adjusted for this on the spreadsheet.

A local church did the pastor's W-2 wrong. The secretary caught it -- after the W-3 went out, naturally. I have the corrections on the system (Creative Solutions accounting software, so I can walk to IRS in D.C. and ask them in the time I can find it on the help section of the software), but I'm not sure if I can efile it or not. This is at the office where I do contract work. Thought I'd lean on the brains here. Yes, I'm rambling. Seven day weeks are getting to me.

I would give her the $ 35.00 and a "Fired Client Letter". Let her take her illegal activities elsewhere. In Georgia, you cannot take a warrant for somebody who gave you a post-dated check; it's considered to be similar to a promissory note.

Catherine: You got it!

Catherine, they do the same here in Georgia. Either the banks are afraid to make a decision or Uncle Sugar is going to take care of whatever they lose.

OK, let's think this through. Say I owe $ 150,000 on a piece of real estate that has a basis of $ 120,000. The bank forecloses and I get a 1099-A for $ 150,000. I report the sale on my tax return for 2010, showing the gain. In 2011, the bank sends me a 1099-C for $ 20,000 because they sold it for $ 130,000? How do I have any gain? It seems to me that the 1099-A completes the transaction between me and the bank and there is no need for the 1099-C. If they sold it for some amount less than the debt, so what? If they sold it for $ 160,000 would they send me the $ 10,000 profit? I had a similar situation about two weeks ago with a client on a piece of rental property. The sale was reported on 4797. In my client's case, the gain was offset by capital loss carryovers. The 1099-A had an entry in the block for FMV of about $ 115,000. The client has an appraisal for more than that; close to what he owed. Should I have reported the sale amount at the FMV, showing an artificial loss? In that case, I can see the applicability of the 1099-C. My reasoning is that recognized income creates basis. So if they send my client a 1099-C in 2011, I'll show an amount of basis equal to whatever is on the 1099-C, hence zero gain in 2011. What say you?

Marilyn, we are talking about real property here, aren't we? Even if they used a thirty year depreciation schedule for an asset placed in service in 1974, the building is fully depreciated, whether they used SL or an accelerated method. Wouldn't the ordinary income recapture be the excess of depreciation above the straight line amount? If so, it seems to me that there is no ordinary income recapture, since the accumulated depreciation would be the same regardless of method. Maybe I'm wrong; these seven day work weeks are getting to me....

Since the LLC is a disregarded entity for tax purposes, I don't see how a second Schedule C would have any impact on liability protection.

"You may have noticed that the government's budget is not particularly based on revenue." Well, there's the problem. All this borrowing is not sustainable. Taxes, at all levels and for everybody, would need to be doubled to avert long-term exponential growth of government debt. The only alternative is cutting expenditures -- all of them -- and that's not likely to happen because everybody wants to cut the other guy's program. Both political parties have sold this country down the river for the past forty years. All we can do now is watch the wreck.

I'm trying something new this year, but haven't gotten it to work yet. I want to bill by the form (using prices from the NSA) and use a discount to arrive at a figure about what it was last year. I put the prices in at the apropriate place (I think) in Return Manager, but when I call up an invoice and check price by form, nothing. Maybe the update that came in yesterday will help.

Thanks, guys and gals!!

The error message gave me the option to proceed to the website, risky as it was. I clicked on it and the computer did nothing, just stayed on the error message page. This morning I spent about 30-40 minutes on the phone with IRS. The lady, who was very nice and helpful, said that it was a "cookies" problem. So I deleted all my cookies and still no luck. I changed the security setting and tried to add the URL into the "trusted" sites section on IE tools. Still no go. Later, I went to a colleague's office and got him to try it. Same message. Same message on my granddaughter's computer. I hate being stumped by a mechanical object -- that's why I never took flying lessons. OK, just on a whim I went back and tried again. Worked like a charm. What a relief!

Minimum $ 30 per week here.

Yesterday I got an email from IRS stating that I need to reset my e-services password. Sure enough, according to my secret file, hidden in my office, I changed the password on July 1, 2010. So here it is about six months later, and I type in www.irs.gov into the machine. I go to "Tax Professionals" and there's a link for e-services. When I go to log in, I get some stupid message that the site I'm trying to go to doesn't have a "Trusted Certificate" or some such BS. I re-tried and still can't get in. "Trusted Certificate" my ***. Any ideas?

Mine just went through without a hitch. My application number was 9667 and, miraculously, they gave me my old PTIN number. It pays to do stuff between 10PM and 6AM.

Wouldn't the taxpayer have been better off to execute a parallel note to his parents? Then he could show the interest on Schedule A under the parent's names. They would report the interest, offset by investment interest on the bank loan. This, of course, assumes that they can itemize and that their itemized deductions are not limited by AGI.

OK, I have a client who operates his Schedule C business under an LLC. Another LLC, owned by him, holds the real estate and rents it to the business LLC. The auditor is proposing moving the operating expenses of the rental to Schedule C and disallowing the rent expense. In effect, the item on Schedule E will drop off. I maintain that since the property and business is in separate LLC's, this adjustment is not needed. The LLC's are disregarded entities. What say the sages of the ATX community?

In early March, I mailed in some 7004's on paper, then, after receiving the info from the clients, e-filed the returns before April 15 (S Corps). Now, I'm getting penalty notices for late filing! Of course, I'm writing letters and attaching copies of the 7004, but this is a big hassle. I just efiled two extensions for a couple of tax exempt orgs. IRS has been a real pain on recognizing extensions paper filed for these organizations for last year and in 2004 (!!!!!), so I'm figuring that if I can get these extensions accepted by Monday I can print out the confirmation from the efile center if/when IRS decides to demand money from these folks. Anybody else having issues with paper filed extensions?

I've been reflecting on the tax season just past; thinking about what went right, what went wrong, and how to improve for next year. I'd like everyone's input. I'll start: What went right: 1. The program performed flawlessly for me this year. I did a partnership return with over 200 partners -- of course entering the info was a major pain, but the program worked like a charm. Likewise, E-filing was very trouble free. I laugh when I think that I swore I'd retire before getting into e-filing! 2. The best decision I've made in the past couple of years is to look at tax return production like manufacturing. I have reserved physical space in my home for returns that have come in (raw materials), returns that are waiting for info (work in process), waiting on 8879's (quality control?), and returns waiting to be picked up (finished goods). The only thing that's on my desk is what I'm actually working on. No more files of crap on my desk. The downside is that I have tax stuff all over my house. Well, it's just me, so that's OK. What went wrong: 1. As some may recall, I had real issues with computers this year. I had a lightning strike that put me out of commission for one week. I have sworn a blood oath to have complete redundancy with regard to technology next year. That means that TWO computers will have all miision-critical programs installed and updated at all times. Thank heaven I didn't lose any data - just time - but back up stuff regularly is the best solution. Computer repair techs don't give a crap, either. 2. Clients are coming in later and later. What's up with that? I'm going to write the slowpokes a letter next January and lay down the law. A realtor with a big schedule C, an attorney with a Schedule C and a K-1 and multi-states, a couple with lots of capital transactions (among others) just cannot waltz in here after April 10th and expect service. 3. Increasing complexity of the tax law, an increasingly hostile IRS, and states becoming more desperate for cash are going to be the big issues we are going to face for the foreseeable future. "Health Care Reform" that hires zero doctors and nurses, but adds 16,000 new IRS agents is going to affect all of us. What say you?

One of my clients brings his eighty-eight year-old mother's info to me. She writes comments in the "memo" section of most of the checks she writes to the local hospital; these checks are for trifling amounts because of Medicare. Usually she writes "nothing" or "no reason" on the line, but this year she put "no reason at all" and "the crooks" on two of her checks. Also - bear in mind she's eighty-eight years old - she has a check to the USPS for the 44 cent forever stamps in the amount of $ 220.00!!!! That's 500 stamps! How many letters can she send? Another older lady in her eighties did not receive her 2008 Georgia refund. She told me that she had planned to give the refund to a charity and asked me, "Sam, does the State of Georgia realize they are stealing from the Lord?" "Mrs. X", I replied, "they don't care."

Lots of questions about this -- what if you are a professional services C corp. and try to show zero net income each year using bonuses in order to avoid the 34% rate? Similarly, does this credit flow through in a partnership or S corp.? What about the restrictions on health insurance for S corp. shareholders? No wonder they need another 16,000 IRS agents to handle this "healthcare reform".