Art

I poseted this a few days ago, but I could not find it back so pardon me if you have replied and I missed this. 1. Are attorney fees paid by an estate fully deductible on the 1041 line 14? Estate consisted mostly of farm property in which the decedent had a partial ownership. Farm was actively operated on crop share basis, but decedent was not active in the business. The other assets consisted of small bank account and some savings. Ownership of the assets were transferred to children from the estate. From reading past posts there seems to be a disagreement on deductibility of legal fees. Deductibility allowed for preservation of income producing property vs transfer of title/ownership of personal assets. Is this the proper framework for determining deductibility? In this case fully deductible? 2. Second issue is deductibility of appraisal fees, title work and transfer on death fees. Deductible, subject to 2% of income? Fully deductible? Non-deductible? This issue is always troublesome. I would appreciate response from those with experience on these issues.

State issued 1099G in 2009 for 2008 refund for decedent's final 2008 1040 (taxpayer died 10/15/08). Estate 1041 is on extension. Taxpayer itemized on final 1040 and received a tax benefit for the full amount of the state income tax. Normal rule for individual 1040 would be that the state refund is taxable on the 1040 for the following year (TTB 21-10 says "gross income for an estate or trust is determined in the same manner as gross income for an individual". So I assume the refund is taxable on the estate's 1041 ? Any 1041 prepares have other thoughts?

To clarify in 2009 the director fees were reported in box 7; the insurance premiums in box 6. For 2010 there will be no directors fees, just the insurance premiums which will be show in box 6.

A director who retired in May 2009 continues to have a portion of his medical insurance premiums paid by the cooperative. In 2009 he receives $ 750 in director fess. The coop pays his medical insurance premiums and he reimburses them for his 25% portion (same as in prior years). In prior years he paid SE tax on the director's fess and the unreimbursed portion of his medical insurance premiums. Now that he is retired and no longer provides any services to the coop is his unreimbursed medical insurance premiums paid after May 2009 still subject to SE tax for 2009? What about 2010?

Thanks for the quick reply. I may try your suggestion, since I have just one to send for this client.

Soory, to post this, but I can not remember. I need to file 1099-MISC Copy A and 1096 paper copies. Do both of these still need to be printed on "red" copy or can we now send in the copies printed off of our software? Thanks, Art

Yes, I did unfortunately. I have since got the program to recognize the folder where my 2008 returns reside. The only problem was that the program did not update the forms so I had to go back and update all of the forms manually.

I did NOT install ATX on a net work drive. The original installation from the CD went to the default directory on the C drive. When I got the Archive CD the instructions said to install the archive CD and then keep it with my original install disk,ect. When I installed the archive CD it asked for the install codes and proceeded to install to the default directory on the C drive. I am not follwing your instructions below. Can you please contact me directly at [email protected]. thank you

I received & installed the 2008 Archive release. I then went back to open the program and none of my returns came up. I followed the instructions to restore my files the start menu. The restore function seemed to work fine, but the files still are not there. Any ideas what to do?

Curious, which version of GruntWorx did you choose? When I looked on line it seemed that the $20/return option was rather expensive, but the only option that would be effective if you wanted to automatically populate your tax software. I take it that you are using ATX and it works for you? Did you find the time you saved was worth the cost? As an alternative for just having the ablility to rename the image documents, I understand that the Acrobat Standard or perhaps Pro would do the job. Prices seem to vary all over the place. Has anyone found Acrobat a good alternative?

I guess I was not clear when I posted by queston. I can change the NAME of the pdf file. That is not the problem. I want to change the identification of the individual documents. Adobe just uses a numerical sequence such as 0000001, 0000002, ect. I want to name the individual document images so that when I look a the bookmarks I can easily indenity the document such as W-2, 1099,ect.

I am new to scanning as I just purchased a Kodak i1120. I am saving the documents as pdf using Adobe Acrobat 7.0. I set up separate folders for each tax client. My problem is that the images are only identified by a number such as 0000001, ect. I would like to give each image a descriptive name (W-2, 1099,ect) so that when using the bookmark view I could easily identify and find the particular document I am looking for. Any suggestions how to do this? Is there a better alternative? Suggestions for experienced users is appreciated.

Thanks for all the input. I have always had good luck with HP printers so I was leaning that way for my scanner. The 8250 is meant for heavy office use as I understand it, but I do not have any experience with scanners execpt for the flat bed scan feature on my Epson Stylus RX620. It scans OK, but is single sheet only so will not be useful for large volume scanning. I have had a multifuction Brother machine in the past, but was not pleased with it at all, so I have reservations going that route for a scanner. May need to rethink that in light of the good comments posted here. Also the Fujitsu may be worth looking into. And maybe the Kodak as well. While I am at it, a general thanks to all of you who posted replies to my inquiries this year. This is a truly great source of shared knowledge and professional assistance to me.

I realize that everyone is really pushing for time...but could you give me quick feedback. I just found a new HP 8250 scanner that I can pick up for <$300.00 if I move quickly. I am wanting to scan all my client docs and avoid copying cost for future. Small practice (150 returns) + small business write up & payroll. Wanted to get automatic document feed. Does this sound like a good deal? Do not want to buy more scanner than I need, but the newer HP, Epson, ect that I have looked at all seem to be close to this price. Any suggestions? Thanks.

I was contacted by TRX and was quoted the same prices ($ 299 and $ 699). They claim that the $ 699 package is the same as ATX total office so it includes the MAX program plus accounting/client write-up, payroll, W-2/1099 payroll compliance, fixed asset manager and Scan & fill with Document Mangaer - all for $ 699 + $ 29.95 shipping. IF this is all true and the programs are exactly the same as what we are getting now from ATX directly, it sounds like a great deal. Support would be through TRX, but that may not be bad since ATX support is spotty at best. I would like get input from other ATX users and TRX users who purchased the ATX software from TRX. I am very seriously considering the scan & fill with document manager to eliminate copying client documents and putting everything in pdf. For those who have gone that route what scanner do you recommend? I assume it would be sheet fed for speed, but do you also need a flat bed feature for odd size documents? Any brands that you especially like? Price range? I know everyone is pushing hard to get finished with the season, but when you have opportunity, please post. Thanks!! Only about 20 returns to go and I (think) I will be done!

Thanks, that did the trick. Art

for Indiana, Kentucy and WV for non resident individual returns. The federal and IL (where most of my clients are) work fine. The letter omits the name of the state and says that there is neither a balance due nor refund when in fact a refund shows on the return. There are no error messages when I check the returns. Does anyone else have this problem? Tried tech support, but could not get thru to them.

Retired taxpayer started a small business (Sch C) in 2008 transporting the Amish. He purchased a used van in 2008. Is he limited to actual cost method or can he take standard mileage? TTB page10-5 list useage such as car for hire ie taxi as not eligible for standard mileage methond. Any thoughts to the contrary in my situation?

I am using IE 7.0 and xP professional. I just changed to a new Dell Optiplex 760 at home. Here at the office I do not have a problem with the resolution. I will check it out further when I get home tonight. Thanks.

Same here. IRS cleared only.

KC, Thanks for the reply. The rollover itself is not the triggering event as I understand it. However, the fact that the funds were put in an IRA via the rollover, tainted the money as IRA money which apparently does not qualify for exception 2 treatment. When she started taking distributions in Jan 2008 before she was 59 and 1/2 is what I believe caused the insurance company to code all of the payments received in 2008 with a code 1-"no known exception" even though they should clearly have known that she was over 59 and 1/2 after the Sept payment. I realize that we can rectify the latter payments by filing the 5329 and use the code 12 to remove them from penalty treatment, but they really should have issued 2 1099Rs, one for payments before 59 and 1/2 and a second for the payments made after 59 and 1/2. The real rub in all of this is the employer's plan administrator who refused to allow the annuity payment directly from the 457B plan and worse yet would not allow the money to stay in the plan until the taxpayer turned 59 and 1/2. To add insult to injury the financial adviser who worked for the 457B plan told the taxpayer that none of the payments that she was to receive would be subject to the 10% penalty. Taxpayer is calling the insurance company to see what can be done. We are waiting for their response.

Taxpayer received a 1099R for $ 38000 (100%) taxable shown in box 1 and 2a) in 2008 with code 1 in box 7 and an X in box for IRA. The distribution was an immediate 5 yr annuity from a Sec 457B plan that was rollover to an IRA when the employee terminated service in Oct 2007 at age 58 and ½. The employer refused to allow the terminated employee to do the 5 yr annuity directly from within the 457 plan and would not allow the employee to leave the funds in the plan until she reached 59 and ½. The payments began in Jan 2008. Was the 1099R prepared correctly? Does exception 2 for a Sec 457 plan not apply when the funds are rolled over to an IRA under the circumstances described above? At a minimum would not the taxpayer be able to exclude the payments received after age 59 and ½ by filing Form 5329 and using a code 12 exception with the excluded amount reported on line 2 of the 5329? Is there any way to avoid the 10% penalty completely? I would appreciate input on this. Thanks in advance.

The font size on this forum is much smaller than any of my other websites. It is very difficult to view. Is there an adjustment that can be made to correct this? My normal display resolutions is 1152 x 864 on a 22 inch moniter. art

a prior executed purchase agreement has been revealed and I need to bring this up again. Sorry for the long post. Two brothers A & B have an executed written agreement dated in 2002 setting forth a purchase agreement in which the first brother A will exchange his farm ground and his personal residence located on his farm for the second brothers B farm property plus the receipt of $ 30,000. The agreement formalized A’s previous written request made over 15 years ago and accepted by B. This purchase was to take place upon the death of the A. A is now confined to a nursing home with no expectation of returning to his home (since 18 months ago). His daughter has power of attorney for all his affairs and she and B now wish to do a 1031 exchange of the farm parcels. B wishes to acquire the residence for investment. Before the exchange takes place the residence can be deeded separately and purchased by B for the agreed price of $ 30,000 ( which will be much less than FMV) as stated in A’s letter and the 2002 written agreement. We are getting current appraisals for both farm parcels and the residence. However, it appears that there will be a large disparity in current FMV between the two parcels with brother A giving up greater value than he would receive. There are no mortgages on any of the properties and no other considerations to be given or received. A's initent is to "repay" B for his personal assistance in helping him acquire the farm property over 40 years ago. No monies were ever expended by B, but he was instrumental in acquiring the farm for A. Question 1: Can we do a valid 1031 exchange were the TOTAL consideration given and received are not equal? Ie the value of the qualified property, other property, cash, ect given are not equal to the values received. The examples I have seen in tax school materials have always included cash, non qualified property or assumption of liabilities to make the total values equal. I have looked, but I can not find a specfic site to answere this question. Question 2: If the residence is included as part of a valid 1031 with unequal FMVs, it would be considered non-qualifying property for A since it was his personal residence and any gain that would be realized on the transfer could be excluded under Sec 121. Right? What is the proper measurement for the "sales price", FMV of the residence from the appraisal, purchase price in the contract, or some allocation of total FMV of the property received from B? Question 3: If the residence is sold in a separate transaction for $ 30,000 is this considered a "bargain sale" ? partial gift? How do you measure the gain to be realized? Cash price or FMV vs cost basis? Again, Sec 121 should be avaiable to exclude the gain, but what is the proper amount to be reported on his 1040? Question 4: If not a valid 1031, again do we have a bargain sale? or gift ? ie Would B have to recognize taxable income for the excess of FMV received vs FMV given up over the cost basis in his farm parcel? If this is a bargain sale, again how do we measure the gain to be reported, FMV of the property or actual cash price? For a gift, does there need to be a clear verbal or written expressed intent by A or does the simple fact that cash price is much less than FMV make it a gift transaction? A’s attorney (who says he has done many 1031 exchanges) is taking the position that if the residence is removed from the farm parcel and sold separately for the $ 30,000 stated price, that the 1031 exchange can be done with no adverse tax consequences to either party. He insists that the FMV at the time of the original agreement is controlling and that they were essentially equal at that time. I asked him for support for that position, but he has not provided any. I do not see how we can use those values on the 8824. Correct? I had previously suggested that written documentation of gifts might be made for: 1. the excess of FMV for the residence over the cash price of $ 30,000 and for 2. any excess of FMV of A's farm parcel prior to 1031 land exchange, but the attorney did not want to use any of the gift tax credits at this time. I admit that I am very concerned as to how the properties can be exchanged without adverse tax consequences if the gift approach can not be used. I would sincerely appreciate input from others on this forum.

Jainen Sorry, I should have stated more clearly that I was wanting a response to my conclusion that Oray would have a recognized gain to report of $ 30,000 if this were treated as a single transaction as first outlined above. I agree, the sale, then gift approcach is more complex and I would be seeking advice from an experienced real estate professional or attorney who specialzes in real estate law. It would appear to avoid the income tax problem to Oray and treat the residence in a separate transaction. Also, the 2 year waiting period for related party transactions in a 1031 exchange might be avoided?