BulldogTom

1 hour ago, Abby Normal said:

Might be better to amend all of those years, to come up with the passive loss carryovers. Since the older refunds will be lost, I probably wouldn't bother filing those. Just file the last 3 years.

How about putting the 481(a) adjustment on each respective Sch. E which will create the suspended passive losses you are trying to get to?   Actually, this was my first thought, but I believe the IRS is looking for the 481(a) adjustment on the Schedule 2 - Adjustments to Income.   If I put it on the Sch. E, I get the expense where the expense was meant to be.   I like the symmetry of this approach, but I think the IRS prescribes otherwise and I can't nail it down for certain in my research.   

On the other hand, if I put it on 1040 Schedule 2, I can generate an NOL and still use it to offset gains if she sells the rentals.   Something just seems icky about doing it this way....

Tom
Longview, TX

I picked up a new client a couple weeks ago.  Not complicated, so I thought.   Interest, dividends, cap gains and a couple rental properties.   I ask for the prior year return and I notice there is almost no depreciation on the rentals, just a washer and dryer on the schedule.   She digs up her information on the purchase dates (2008 and 2013).   No depreciation taken for all those years.   I calculate the missed depreciation over the years at approx. $170K.   Client income is in the $20K region.  

It seems to me that this will generate an NOL, but had it gone on the Sch E all those years, some of it would have been suspended passive losses.   

Am I looking at this correctly?

Tom
Longview, CA

how much do you want to bet that the IRS needs to outsource the processing...because...like... the scanners will be in the IRS offices and the workers...well...they will be working from home.

Tom
Longview, TX

off topic a little bit - frustrating as all get out...

My brother has custody of his granddaughter.   She is the cutest thing.   My wife made a dress and a skirt/top for her 2 weeks ago and shipped USPS box.   Was supposed to arrive on Monday.   Got there on Thursday minus the skirt/top.

Why would someone do that?

Tom
Longview, TX

I prefer live.   I like meeting other tax geeks at lunch and dinner and networking events.   I like to talk to the vendors.

I try to find seminars in places I like to visit (San Diego, Las Vegas, Orlando), it is like a vacation.   And it is tax deductible.   

I find that when I do webinars, I lose focus.  I don't like posting questions and hope they answer them.   I don't like not being able to ask a follow up question. 

I agree the prices are getting very high.   I have done more free IRS webinars in the last two years than I have done my entire carreer.

Tom
Longview, TX 

You have asked the greatest question in financial planning.   

I have a Christian financial series that I teach (drawn mostly from Ron Blue and Larry Burkett books) and I always ask the question "How does the story end for you?  We all die, what do you want the people at your funeral to say about your life?"   

So, what do you want to do that work kept you from doing.  Is there a cause you wish you had been more involved in?   Is there a hobby that you really want to pursue more?   Is there a place you want to see or an event you want to experience?

When you answer those questions, you can start planning for your post work life.  You can start looking at what resources you will have to pursue those opportunities. 

Good Luck.

Tom
Longview, TX

Putting the employee vs contractor conversation aside... even though I think it is the most important issue for the mom and son --

For the presentation of the financials to back up the tax return, I would have an expense account for the fuels and insurance costs and an offsetting expense account called reimbursed costs from customer to zero out the amounts.   This is what the taxpayer presented, this is what the accounting records should show.   

I think you open a can of worms when you mess with the 1099NEC and it does not match what was sent to the IRS.

Did mom also help pay for the truck?   Please say no.

Going forward, there are a lot of issues to work out.   Hopefully you can get them on the right track.

Tom
Longview, TX

2 hours ago, jklcpa said:

Because he died in 2021 and this was a 2022 distribution reported under his SSN on the 2022 1099R.

i got my he's and her's mixed up.....sorry

Tom
Longview, TX

On 6/27/2023 at 6:30 PM, Sara EA said:

they were deposited into their joint account, so they go on her 2022 return.  

Why do they go on HER return when they were deposited to an account that he owns?  

I think you are overthinking this.   He received the money, the Fiduciary indicated they were paid to him and issued the 1099Rs to him.  The 1099R shows a tax withholding reducing the money that was paid to him.

Put it on his return, claim the withholding, and if the IRS questions, show them the 1099R.  

Tom
Longview, TX

Another option is to put a Tax Matters Representative form in front of them and make them designate the TMR.   Both must sign.   No tax work until the letter is signed by both.   

Don't get into the middle of their dispute.

Tom
Longview, TX

I don't think so, as you never borrowed anything from them.   I would consider it a refund of prep fees and not send a 1099 at all....unless you are pissed at the client and want to mess with them as they go out the door.

JMHO.

Tom
Longview, TX

26 minutes ago, cbslee said:

I can just imagine several stoners cruising around hacking traffic signals just for fun.

You don't have to be stoned to want your commute shortened by having all green lights on your way to work....    Not that I have the skill to do that, but this is one very useful feature of the tool.   

Tom
Longview, TX

Can she afford the tax bill?   Does she still have an income?   If she can't work and is living off savings, you may be able to get her into currently uncollectible due to severe financial hardship.   

If she can pay the tax bill, have her pay that but not the penalty, but you need to request the abatement right away.  Communication with the IRS is key.

Tom
Longview, TX

Double check that the Schedule SE has been in her SSN.   Other than that I don't think it is an issue.

Tom
Longview, TX

17 hours ago, schirallicpa said:

(You-all:  not really southern, but occasionally talk to someone from the south.)

A "you-all" is a trailer Californians haul their stuff to Texas and Florida in.

Y'all is how you spell and say the word .....  Look at me, a Texan for less than 2 years and schoolin' y'all on y'all's grammer.

Tom
Longview, TX

All states, individual and business including payroll with unlimited e-file.   Getting price increases every year.  Still not terrible for the product you get.   Customer Support ain't what it used to be, but compared to other industries it is on par or slightly better, just not as sharp, attentive or quick as the team from Caribou used to be.

Tom
Longview, TX

There are so many variables that conversion decisions are just speculative in my opinion.   There are some circumstances when it makes a lot of sense (i.e. one off business loss that drives income negative, so you have room to covert for free) but if you are looking at a linear income stream, you are just making educated guesses about tax rates, inflation rates and investment growth rates.   Any of these items can make the best thought out projection look silly a couple of years from now. 

Tom
Longview, TX 

2 hours ago, BrewOne said:

If you think a 1040-X may help clarify the situation, you can write on the top of it "DO NOT PROCESS--FOR COMPARISON PURPOSES ONLY"

Back 20 years ago when we had competent IRS processing agents and an effective PPL, I would have agreed with you.   I would rather get a Notice of Deficiency and file a tax court petition than to send in a tax form that I don't want them to process...

Tom
Longview, TX

Isn't there a spot on the response form for "agree in part"?   

What I would do if it was my client is prepare the X to calculate the amount due.   Send in the amount you calculated with the response form and an explanation of what you calculated.   Don't send in the X as it will cross paths with collections.   You may have to wait for the final assessment to appeal if they don't accept your explanation.  

Get your POA in as soon as you can (make sure you mark the box to be copied on correspondence) and attach the signed copy of it to your response form when you send it in.

Others may disagree with this approach, but I think it is quicker than mucking up the works with an X.  They are waiting for a response, not an amended return.

Tom
Longview, TX

@GLGACCT  If I could bother you for one more question?

How do I show the amount paid with the originally filed return.   I keep going in circles in my mind on how to make that happen (I know, small mind, small circles).

Thanks for your help.   It is very much appreciated.

Tom
Longview, TX

36 minutes ago, cbslee said:

It will be interesting to see if Intuit can filter out the creative garbage that AI creates in addition to the useful information?

It will be interesting to see if Intuit can filter out the creative garbage that our CLIENTS create so we can get useful information from QB.....

Tom
Longview, TX

1 hour ago, GLGACCT said:

Tom, see instructions on the bottom of page 33 of the NJ 1040 NR instructions.  Use the 1040 NR and check Amended on the top of the return.

https://www.state.nj.us/treasury/taxation/pdf/current/1040nri.pdf

 

Thank you!

Paper file or try to e-file?

Tom
Longview, TX

We made a Boo-Boo on our client's NJ Non-Resident return for 2021 and just discovered the mistake when we were filing the 2022 return.   Can anyone give me a few tips on Amending?   Looks like I have to use a NJ 1040X as I don't see an NR that I can amend.   Can I e-file it or is it better to mail in with the attachments?

Client is a CA resident who has an interest in a partnership from NJ.  We made an error on the NJ K-1 entry screen.

Thanks in advance.

Tom
Longview, TX

1 hour ago, BrewOne said:

The 2210 was missing the 2nd quarter interest amount--if that (7%) was not filled in, might have created an underpayment.  But could well be software glitch.

I noticed that as well.   You have to manually check the input form for the interest rate.   I have found in many cases the software has not updated the current quarter.

Tom
Longview, TX

15 hours ago, joanmcq said:

Since prepared tax returns list the address of the firm preparing it, going after out of state tax preparers is low hanging fruit. 

I always celebrate whenever one of my clients moves out of CA.

Out of state preparer penalties will also be low hanging fruit for the FTB.   You must know all the CA rules, including those that apply to you.   

Adding penalties to the tax bill of out of state accountants (who don't vote in CA) may make the collections worth the effort.

Tom
Longview, TX