BulldogTom

Absolutely. And thank your clients for their service and heroism. The argument is substance over form. The law clearly states that the money is tax free, regardless of what the paper from the payer says. It is no different than getting a 1099 for Misc Income that should have been coded to rents. Just because the amount is in the wrong box does not change the substance of the transaction. Just make sure you have your documentation solid and be ready to appeal if the IRS denies the claim. Tom Modesto, CA

I read that article. NY is checking to see where you go to the dentist, dog groomer, etc. They are even requiring t/p allow them to visit the NY home so they can look in the refrigerator and the cupboards to see if you have food that is not expired. If you leave for tax reasons, they are trying very hard to pull you back into their tax system. Tom Modesto, CA

@artp I think I told you domicile would make this return tricky. I hope you are getting paid handsomely for this? As for QBI - Yes if he is under the threshold because he is SSTB. Tom Modesto, CA

Me too. Tom Modesto, CA

All my LLC's pay $841 per year. $800 LLC fee and $41 for failure to make estimated payment. I don't know why I waste the paper and toner to print out the voucher every year. Tom Modesto, CA

Not a problem. I may need IL help one day. Let me know how you finally handle it if you don't mind. Tom Modesto, CA

Bingo! Tom Modesto, CA

You could make the argument that he was a full year CA resident, if his wife had no income. Report it all on CA and nothing to IL. Not sure how IL will react, that is not a state I am familiar with. You would know the answer better than I would. It would make your life easier to put it all in one state. And then IL would have to make the case that a person who moved to CA, worked for a company in CA, and moved his family after the school year ended was domiciled in IL. If you do decide to file the IL return and you pay taxes in that state, add a Sch S - Other State Tax Credit to your CA 540 return for credit for taxes paid to another state. But file as a full year resident on CA and a PY resident on the IL. I think, if this was my client, I might try that route. But again, I am not an expert in IL domicile, so take this advice with a grain (or full shaker) of salt. Tom Modesto, CA

I think you are on the right track in your analysis. Get your POA for CA and get registered at MyFTB so that you can represent them. CA will run a match on the W2's at some point and send a letter demanding payment. You will need to respond right away. CA is very aggressive with collections, especially when they think someone left the state with a tax bill due. Make sure you use an address for the tax return that the client will receive the mail. You want to get the notice and respond right away. Otherwise you will be trying to get the money back from the FTB after they levy. FYI - this is probably too much information, but California FTB has a bank reporting system called FIRE. All the banks doing business in CA have to report the SSN, account number and Balance of all account holders at the bank every month or so. If the state has an outstanding balance on the client's account, they will levy if they don't hear back when they send a notice.

I think Max missed the part of the post where the tp 78K made as an independent contractor after he got back from overseas. Looks to me like he was not working in CA for the first half of the year. His family and home were in IL and he was working outside the US. That income should be excluded from his PY return. Problem is, his employer coded those wages to CA, and of course CA is going to believe them, not the taxpayer. Does he want to be taxed in IL or CA on that income? Does he want to fight the FTB over that income, and does IL even know about that income. You have choices to make. After June, there is no question that the 78K is CA source income. He lived and worked here. But is he a non-resident on temporary assignment in the state or is he domiciled in CA? 2019 is now tricky and has bearing on 2018. Do they still own the home in IL? Where do they plan to vote? What state is their drivers license from? All of this will determine domicile for 2018 and 2019. You have to get the client to answer the question of where the are going after his assignment is up. Tom Modesto, CA

I got a referral this week that has me scratching my head. It is a former co-worker who called me. Her new boss does not like the preparer of the tax return for the corporation and tasked my friend to find someone to take it on. I tell her I will look at it but no guarantees. She sends me over the 2017 tax returns, and one corp states that they are a QSub of the other corp. But the other corp is not filing an 1120S, they are filing an 1120. Correct me if I am wrong please. Isn't a QSub election made so that an Scorp can own another corp? What am I missing in this scenario? Thanks Tom Modesto, CA

I was having a problem about 10 days ago. Complete shutdown of the computer, 15 minute wait, restart solved the problem. On Win10Pro. Tom Modesto, CA

Put a warm corona beer in your hand and people might mistake you for Chaz. Tom Modesto, CA

Lynn has it correct. Not all preparers do it this way, it is one of those kinda ignored rules in S Corps. But persons related to the shareholders are treated as if they are shareholders. Tom Modesto, CA

Preparing a return today for a new client. She wants to claim her grandson on her return and take HOH. Her son tells her he did not take the kid. She hands me his 2018 return because she does not trust the kid. So I open the return prepared by another firm, and what do my eyes behold.....a 1 page tax return! Someone has software that will print page 1 and page 2 of the 1040 on one page. I want it … I Want it...I Want IT...IWANTIT! Tom Modesto, CA

@jklcpa I think we need to ask Eric for a section in the site that allows for these questions to be answered for a fee. When these non-professionals come to the site, they could be required to put up a credit card, and then we could generate revenue for the site by answering questions. We could do bids to see who will do it for the least amount. Nice way to fund the site? What do you think? Oh, unodish, in about 20 minutes the moderator is going to post the terms of the site you agreed to and lock the thread. We are not a free advice service. This is a site for professionals who help each other, not the general public. You need a tax professional to answer your question. Tom Modesto, CA

Yeah, I had to do one of these last year. Sent in the 5498 from 2018 and the 1099R from 2017. Wrote a letter giving the date of the withdrawal and the date of the deposit into the new account. No change letter showed up about 3 months later. Even though the "Rollover" was on the tax return we still got the CP 2000. Tom Modesto, CA

I agree with cbslee. But I also would also make my decision on how to allocate based on the questions he posted. Tom Modesto, CA

But the politicians told us it would be a postcard. The whole idea of a postcard is it is one piece of paper. Don't tell me those people in DC lied to us about the PostCard 1040. It will shatter my faith in government! (dripping with sarcasm if you could not tell). Tom Modesto, CA

Do an insolvency calculation immediately before the sale to see if you can exclude when the 1099C comes. I think this is covered in one of the pubs. Something in the back of my head says the adjusted basis of the property may not exceed the amount of the debt cancelled. But don't quote me on that, I don't have time to make sure I am right. Tom Modesto, CA

I am ahead of last year. I thought I would have a slow start because of the 1 week delay in the IRS opening up efile this year, but it has actually been busier. Tom Modesto, CA

We try to get the 1095C from the client. It kills two birds with one stone. It shows the Health Insurance requirement was met, and it shows the dependent name, last 4 of the social, and the address of the taxpayer is on it as well. Not perfect, but I now can answer truthfully that I have seen a document that I relied on to prepare the 8867. Tom Modesto, CA

OMG! You are not perfect? My world just shattered. Take a look at my thread last year where I missed a quarter million dollar sale of stock on a client's return. When you get to my level of screw ups, I will buy you a drink and we can commiserate together. And I think you have 3 times the number of clients that I do. If we are keeping stats....your success rate puts you in the Hall of Fame. Fix it and move on. $h1t happens. Tom Modesto, CA

I think the reason to aggregate rentals is to get to the safe harbor of 250 hours. It is hard to do 5 hours per week per rental. But if you aggregate, you can hit the safe harbor. Tom Modesto, CA

So, I have been through the software, been through the threads, and I am not calling ATX support. But I have an idea of how to do the aggregation for my client with multiple rental properties. Tell me if you think this will work. In the Form Schedule E, I will create a 6th property and call it "Aggregation". I will put $1 of income and $1 of expense to it. Voila, it shows up on the 199A worksheet. Select it, put in the combined income of the 5 rentals I am aggregating as well as the unadjusted basis of the combined fixed assets and I get a QBI deduction to flow through to the return. I will then go to the blank election page on the elections form and indicate the TP is electing to aggregate the 5 properties per IRS regulations. Anyone see a problem with doing this? Please tell me if I am being stupid (or if ATX has a method of aggregation in the software that I have not found yet). Thanks Tom Modesto, CA