BulldogTom

Sorry to come in so late to the party, but I think Catherine is right on the money. I see it as two different possible explanations: 1. The bank did not sell the home, listed the FMV and issued the 1099 in error 2. The bank did sell the home for 200K and issued the 1099 in error. If this were my client, I would ask them to call the lender and get an explanation, and try to get them to correct the 1099 (yeah, I know, good luck with that and let me know how that works out for you). But it is part of the due dillegence process before you advise your client to take a position on a tax return. If the lender is not taking calls or is uncooperative, then a call to a congressman up for re-election might help. If it was my client and they could not get a clear explanation from the bank, I would show the home sold for 200K as per the 1099A, and include the 1099C on Line 21, and then zero it out on line 21 as well with an explanation "incorrect 1099 issued by bank". Document the position, wait for the letter, and explain it to the IRS in 2 years. It seems very strange to me that the dollar amounts were exactly round numbers? Is that you just making up numbers for illustrative purposes or was the exact FMV listed as $200,000.00? Just my take on this. Tom Hollister, CA

Margaret, I am doing this from memory right now, but I am pretty certain that the reduction of tax attributes from exclusion of cancelled debts only takes place on the first day of the next tax year for the taxpayer. I will need to go back and read the text on Qualified Business Property to see if that exclusion requires the reduction of basis before the debt is excluded. That does not sound correct to me, as it would negate the use of the exclusion. If you have to increase your basis by the amount of discharged debt, you just shift the discharged amount to gain on the disposition. I don't think that is how the mechanics of the exclusion works. I think that the only time you have to reduce the basis of the property which is subject to cancelled debt is when you keep the property. In his case, the property is gone, so there is nothing to reduce basis against. Let me look at this again tonight when I have my source material in front of me. Tom Hollister, CA

Margaret, You need to slow down and take this one step at a time. The 982 is the last step in the process. First, you have a sale of a rental property. Run the sale in the normal way. Put a bulk sale together in ATX and sell the property with a sales price of 92,000. The result is going to be a loss on the 4797. Do not do anything with the basis, as the 982 reduction in tax attributes does not take effect until the first day of the new tax year for the client. DO NOTHING WITH THE BASIS AS A RESULT OF THE CANCELLED DEBT IN 2013. You should have a loss of about 40K flowing to the front of the 1040. Second step is to work with the cancelled debt. Enter in the 1099C information and put it on line 21. Third step is to work with the 982. I forget the ordering rules, but I think it goes bankruptcy, insolvency and then qualified business property. Was the client insolvent immediately before the cancellation of the debt? Most likely he was, because he had a condo with a FMV of 92K and mortgage debt of 87K. If he was in as bad of shape as you say he was, I am guessing he was insolvent. Go through the worksheet on insolvency and see to what degree he was insolvent. If he was not insolvent, then look at the rules for Qualified Businss Property. I know there is a lot of disagreement about wether a rental activity rises to the level of a business. Especially given the circumstances under which he started renting the property. This may or may not be a viable option. Does this make sense on how to attack this problem? Tom Hollister, CA

No, and they will not this year. I asked the question on the other board and ATX Kristen said they would not support 541 e-file this year. No reason given. It has to be mailed. Tom Hollister, CA

I think I found it. It looks like there is an extra space in the name. How it got there I have no clue. But apparently, that is enough to make ATX think it is a different file. I still want to blame ATX...but it looks like it was operator error. Now if I could just figure out how an extra space got in there. Tom Hollister, CA

Jack, Not sure what is going on with my return, but I have 2 returns with the same name and nothing that says "copy of". I thought that was what used to happen. I am sure there is something that is different, but right now I just can't see it. 2 returns, same name. Thanks. Tom Hollister, CA

Makes me wonder about ATX. I just did a return with that form in it. Never thought much about it, reviewed the numbers and they looked reasonable. Did not give it much thought. Just reviewed the entry for the AGI, Investment income, and looked at the tax amount added. Seemed right so I never thought twice about it. I did not even know that there were rules still in the works from IRS. Anyone hear of this issue and do you think ATX has it right with the form? Kinda scary. Tom Hollister, CA

We use a laptop for our seasonal office, and last week my spouse/employee began working on a tax return from hell (wanna be day trader - pages of brokerage statements). She could not finish it at the time and brought it back to the office and transferred it to the main office computer. She worked on it for a couple more days, then exported it back to the laptop. She met with the client today and finished up the return. Then she e-mailed me the export so I could e-file it from the main computer. This is a normal operation for us. But I did not check to see that the return had been removed from the main computer after it was exported to the laptop. And then I imported it and had 2 copies. And I e-filed the wrong one!!!!!!!! So, I know I am an idiot.....BUT..... The returns were named exactly the same, but they did not show up side by side in the return manager list. One was on top of the "D" last names and the other was at the bottom of the "D" last names. Why would ATX allow an exact duplicate of a tax return name to be imported? I seem to remember that in past years, it would warn you that there was already a return named whatever you were trying to import (yes Jack, I know, "Forget everything you knew about prior versions of ATX"). Am I crazy to think that the software should warn of a duplicate named return? Go ahead, kick me, I deserve it. I should have checked. Tom Hollister, CA

You should see a 1099R with a code G. Perhaps it got lost in the mail. I would not worry much about it. Having the 5498 certainly would prove that the funds were re-deposited into an eligible account. Just hold onto that piece of paper if there is ever correspondence from the IRS. Tom Hollister, CA

I know. I guess my remark wasn't funny. I thought it was. Tom Hollister, CA

Are you going to keep rubbing it in. Give it up already. I said I was a dufus, what more do you want? Tom Hollister, CA

Because I so distrust everything that comes from CCH that I never read anything from them. I hate that company. I only believe what I read on this board. Sometimes I am such a dufus. Tom Hollister, CA

perfect. Thanks Tom Hollister, CA

It used to be a tab on the Sch. D. Now I can't find it. Any help appreciated. Tom Hollister, CA

Sweet, Thank you. That is something we have been looking to get for years. One more question if you don't mind. I have a client that is a partner and a shareholder in an S Corp. I do both entities, plus her personal. Can I import both of the k-1's? Thanks Tom Hollister, Ca

Whoa! Explain this again? Are you saying that I can now import the K-1 that I created in the Corp or Partnership return and have it pull directly into the partner or shareholder 1040? This is a big deal. How do you do it, step by step please? Thanks. Tom Hollister, CA

That seems to be the biggest change from prior years on the backup (I know Jack - forget everything you know about prior versions of ATX). But you will see the green bar showing you the progress of the backup. I don't really understand all the techie terms for what is going on, but selecting returns to backup is not how it is done anymore. Tom Hollister, CA

Normally, these are re-assessments by the county for property taxes and should be included on the schedule A for property taxes. Make sure it is based on the value of the land and not bond payments. It happens all the time when a property on the county books for X dollars of value is sold for a higher amount. The property taxes go up, and the county issues a special assessment to get the difference in the amount of taxes from the day of the sale to the date that the regular assessment is made by the county. Hope this helps. Tom Hollister, CA

Jack, Please help me understand what is going on, because I am clueless about how the technology works. What I understood was that only the returns that changed since the previous backup would be backed up to the external source. When my backup got done, it says it backed up 134 items. I did not do that many returns, nor did I do any combination of adding that many new payers and returns and form rates since the last backup. So, is it backing up everything every time or just what changed? I am very confused, but it may just be that the days of the 5 minute backup are over and 30 minutes is the norm. Tom Hollister, CA

So at church this morning, the Pastor says in his sermon that we are going to get audited by God some day. On the way home, my 18 year old son says he isn't worried about that audit because he will have a mileage log and his receipts when he gets there. He must be listening more than my wife and I think when we talk about clients at home. Tom Hollister, CA

Or at least I think it is not working as advertised. I only have about 75 returns in the software, and it took about 30 minutes to back up to my flash drive. If it is only backing up what has changed since the last time, it is very slow. I think there is still a problem in the backups, but I don't know enough about the technology to know what I don't know, which means that I don't know what I know either. But I know that this doesn't feel right. Anyone else get that feeling? Tom Hollister, CA

I think I see him on other tax boards using Ranger. Maybe he forgot what board he was on. Tom Hollister, CA

About 10 years ago, I had a new client in the same situation. (funny, I just did her Daughter's tax return 2 hours ago). The mother had physical and legal custody of the kids, but the dad kept filing first. I got involved late in the situation, and the client had a 90 day letter from the IRS. We filed a Tax Court petition and gathered all the documentation. The school records, birth certificates, and the lease for the home she lived in. The IRS sided with the taxpayer. The next year, the e-file rejected again. Same situation, father filed first. We sent in a paper filed return with a copy of the dismissal from the tax court from the previous year. Check arrived in 6 weeks. Never had an issue again. I still do her return and both of her daughters returns. Tom Hollister, CA

I don't have the software in front of me right now, but there is a check box in the worksheet that say use simplified method or use actual method. If you check either box, the amount will flow to the 2106. I think you have to link the office to the form as well. Sorry, if I had it in front of me I would point out exactly where it is at on the form. Tom Hollister, CA

I am not sure if I am correct, but I have always used the machinery code (7 years) for trailers that we use in the construction industry. The other choice, because they are registered, is to put them under autos. Maybe someone else will chime in. Tom Hollister, CA