BulldogTom

My engagement letter says I don't pay interest. I point that out to every client. However, in the few cases where I have made a mistake and there is interest involved, I usually pay it. In Denne's case, I would pay it too. Just my 2 cents. Tom Lodi, CA

TaxmannEA, Not sure what the issue is in the tax return, but if you have everything ready to go to represent the client, the IRS just handed you the ticket to the tax court. It may be a blessing in diguise. I love dealing with the auditors that are assigned at the final level before tax court. They are generally very knowledgable, easy to work with, and professional. The few times I have had the opportunity to deal with an auditor reviewing the file prior to the tax court date, I have have always gotten the proper result. If you are ready to proceed to tax court, just think of this as a way to bypass the beaurocracy and get straight to resolving the taxpayer's issue. And no, I have never heard of a NOD coming as the first contact. You should call the IRS and see if they have any additional info for you. Tom Lodi, CA

Every time I think maybe this TRX company is worth a shot, something like this happens. They make a "big announcement" only to pull it due to confusion. Seems to be the story of their existence, at least from this far off perspective. I got a demo disk from them and was planning on looking at it this summer. Probably not now until I know for sure what software will actually be showing up if I order. They need some stability. But, if CCH makes a major change to ATX, I might look at them again if they have a couple years with the same software. Tom Lodi, CA

I think what Jainen is saying is that what Denne "has" to do is governed by the engagement letter. If there is no engagement letter, then the liability is potentially unlimited or governed by local law. Tom Lodi, CA

Thanks Jainen. I did not think of that. But the return will need to be paper filed if I do that because e-file will not accept more than 1 form 982. I think I will put the second copy in the file and e-file it without the CA copy. If CA sends a letter, I will call them and ask where they want the difference. If they don't know, I will be happy to suggest a place where they can stick it (on the return - of course). Tom Lodi, CA

Client filed bankruptcy. Has COD income which is excluded under §108. I need to reduce the basis of his remaining assets. Not a problem on the federal side. But on the CA side, he still has some NOL carryover that he does not have on the federal side. There is no equivalent of the 982 for CA that I can find. The software is popping in the NOL in CA and I am sure that is wrong as CA conforms to federal on COD excluded in bankruptcy. How do I show the reduction of the tax attribute in CA that is not the same as on the Form 982? Any help appreciated. I don't have any hair left to pull out or I would be doing that right now. Tom Lodi, CA

Good to know one of our own is going to get some input. Please let them know how frustrating the last two years to have the e-file servers go down at the end of season. The software is good, but the service on e-file has been a real issue. I had a reject that showed up as accepted and did not know about it for a week. I still have one in transmitted status that accepted in February. Tom Lodi, CA

I know this is a little late, but did any of you read the president's return when it was posted on the internet? Something has been bothering me about how it was prepared. He included a Sch. C and listed the business as "Author". There were no expenses on the Sch. C except some minor reimbursements to a publisher (i think that is what it was). Then he paid SE tax on the proceeds from his book. Shouldn't that income from the book be Royalties and included on Sch. E and not subject to SE tax? He obviously cannot be carrying on a business when he is POTUS. Hey, if the guy wants to pay more in taxes, more power to him, but isn't that return done incorrectly? Tom Lodi, CA

I am in the opposite crowd (sort of). I say you take this guy on provided you get a retainer equal to the amount you estimate you will charge for preparation of the tax returns. You can't do an offer anyway until the returns are filed. Then have a separate engagment for the OIC. Bill at the hourly rate and get a second retainer for 1/2 of the estimated hours you will spend. This is going to take some time. If he can pony up the cash for you to get on the job, you might be able to make a few bucks on the returns in the off season. There are no guarantees on the OIC - and he needs to know that. Tom Lodi, CA

Eric, I don't normally go to chat rooms, so if this is a stupid question, let me know. Would we be able to invite someone to chat? So, lets say I have a really nasty tax return with a couple of issues and I want to get some ideas on it. Could I invite KC, Jainen, Old Jack, Catherine and Rita to join me at a specific time to chat about it, while keeping others out of the conversation? Or would it be open to anyone who happens across the session while we are discussing it? I would think that would be really cool to have a private room to go chat in. Thanks for all you do Eric. You are the best in my book. Tom Lodi, CA

This might be a little bit of a stretch, but there was a court case or IRS ruling a while back that dealt with grandparents who were paid by the county to care for their grandchildren so the parent could work. There was no business motive because they were caring for relatives, therefore no SE tax. I don't have the information at my fingertips, but I have it at the office. You could look for that case or ruling and see if you could make that work for you. Tom Lodi, CA

<<yadda yadda blah blah SHUT UP BITCH!!!!>> OMG - that is the funniest, truest thing I have ever seen written on this board. Tom Lodi, CA

I am glad someone looked up rapacious - I had no idea what it meant, but I knew it was not flattering. Tom Lodi, CA

There is a worksheet in the publication. I helped a client prepare one of these earlier this year in anticipation of a letter from the IRS. They ended up with a stack of documents about 1 1/2 inches thick. All bank statements, retirement account statements, appraisals on home, list of cars, loan docs. Basically everything. If the IRS comes calling, they are ready. Tom Lodi, CA

If the prior preparer handled it as a sale of an asset on the 2008 return because that is the date that the client gave it back to the bank, I would do nothing. I would document the file and be ready to respond to an IRS inquiry if it comes. But I would be suspicious of the treatment by the other preparer. Double check that the truck was properly disposed of for the amount of debt remaining on the note at the time. If it was not done correctly, advise your client accordingly. Tom Lodi, CA

Eli, He has "sold" the truck back to the bank. Use the amount of debt forgiven as the sales price and do a disposition just like you would any other asset that has been sold. Tom Lodi, CA

Jack, That "myth" came from a CCH support tech who was on the board for a short time eariler this year. I think she said that it would be 2 more years was the rumor floating around CCH SFS. Tom Lodi, CA

That is a variation on the old line that goes like this: How does a farmer end up with a million dollars at the end of the year? He starts with 2 million. Tom Lodi, CA

Lisa Ann, Try this company. I don't know if it is overkill for what you are looking for, but I have heard it is pretty good. www.harrisbusinesssystems.com The product is called Maxwell. Ask about Computer Ease. I think they are still selling that too. Tom Lodi, CA

Dennis, Please don't think I was putting your software down, because that is the last thing I would want to do. For those of us in the construction industry who have to deal with prevailing wage jobs, we understand what you mean by the complexity. It is highly specialized and not everyone is willing to do it. That takes nothing away from your excellent product. Tom Lodi, Ca

With one child, you are limited to 3K, and since all of that was paid by non-taxable income, there is no credit. You will have to repay the amount you claimed as a credit on your return. Tom Lodi, CA

Dang, I am really feeling left out. I did not take advantage of TRX offer last year, and because I stuck with ATX, I won't get the 40% off this year. I missed the boat. Tom Lodi, CA

How many children? Limited to 3K for one child or 6K total if more than one child. You have claimed too much child tax credit if you claimed $2,900. Tom Lodi, CA

We use timberline. But that is not my choice. It is very old technology and cumbersome to use. The reporting leaves much to be desired. However, I must say that if you know what you are doing, it will do everything you ask of it. It just takes a long time to figure out how all the modules work together. In fact, I am going to my 4th conference on how to use the software next month. I will be looking at setting up direct deposit using the software and getting our vacation and sick accruals to work properly. Tom Lodi, CA

Lisa, What you need is a contractor's software. They are not cheap, but that is really the only place you can find what you are looking for. Unfortunately, you can't just buy the payroll software. You have to buy the program to make the payroll work. Timberline is one of the industry standards. American Contractor is also very good. Intuit has a product called Master Builder that is geared towards smaller contractors but might work for you. How do I know this, because my day job is Controller for a contractor and we do prevailing wage jobs. I have looked at several software packages over the years. Tom Lodi, CA