BulldogTom

Client is in the business of providing half way home care. Provides half way houses for individuals coming out of various government programs. Had 6 homes in the business. All were purchased under varialble loans with low interest only teasers. All were foreclosed on. Client declared BK and lost his home as well. Here is the twist - the business is still operating in leased properties. The IRS instructions say that the COD income must go to the activity that generated it. But I think exclusion under the BK exception can be elected and that trumps any other election. But wait - there is more. 4 of the loans are recourse and three are non recourse. I just need some clarity on how to proceed. There are not and will not be any 1099C's coming from the lenders. I know KC prefers to wait, but the banks are not following the reporting rules. If the banks are not going to produce the 1099C's, what are you supposed to do? Thanks for letting me vent. Tom Lodi, CA

Why don't you run for congress so we can have reasoned debates like this? And with your tax experience, perhaps you can work on a tax re-write at the same time. I can accept what you just said. I don't think most americans would disagree with helping out the working poor with subsidies for their insurance. How about a tax credit for providing your own health Insurance. Sliding scale like EIC? Or how about allowing a larger deduction for out of pocket health care rather than the 7.5% haircut. These two items would probably bring as many people into the system as what they are doing now. BTW, I omitted my favorite piece of the new law, a dispute resolution proceedure for fighting with your health insurer. That is way overdue. Right now, your only choice is to sue and then go to arbitration. It will be nice to have a single place to go to get some intervention (yes, I am saying I will appreciate this government board). Tom Lodi, CA

KC - you know better. Equating energy star with healthcare is a big stretch. We know the govt screws everything up, but even I can't make that leap, as much as I dispise govt beaurocracy. Tom Lodi, CA

Thanks for posting. I know it must be a busy time for you. Good luck on this. Tom Lodi, CA

Chowderhead, With all respect to you, your story (and I believe every word of it) illustrates that people will make poor choices in their life. When the pap came back abnormal, that woman should have gone to a doctor to get more tests. If she really was so poor that she could not afford the tests, I am sure she would have qualified for government assistance. Her death will not be the result of not having a national health insurance mandate in place, but a result of her poor choices regarding her personal healthcare. I am not defending the current system. There are some good things in the bill that was just passed. I love that there will be no lifetime caps, no pre existing condition clauses, and some portability to the insurance system. But when you pass a bill that exempts political allies (the unions) from the same rules as everyone else, when some states get different rules than others, and when Big Pharma can pay 8 billion to get guarantees of multiple billions in profits in the future, this new law reeks. There is no way that the government can fix poverty. It is an individual effort that gets you out of that condition. Government can lend a hand, but it cannot take you out of poverty. Government's entrance into healthcare is part of the reason we are in this mess in the first place. Medicare is now the primary insurance for 25% of the population. The rules are so complex and the payments system so broken that my doctor limits the amount of medicare patients he will see. Why, because it is charity work in his eyes. If he gets paid, it is less than what he gets from any other insurance company. And those costs get passed on to the rest of us. This new law is going to break an already bad payer system. But maybe that is the goal after all. When it gets so bad that no one can stand it, Obama will get his single payer government run system. OK - off my soapbox now. Tom Lodi, CA

Just out of curiosity, how are you going to track the employees who qualify? Is there going to be a separate code? And will you have a report for the credt for 52 weeks of retention and the 80% rule for the second 26 weeks? Any word on what the affidavit is going to be to certify that they have been unemployed for 60 days? Does Medlin have an affidavit or are you leaving that up to your customers to find? Just asking. I have no idea how we are going to handle this at our company. We are hiring about 70 people in the next 2 months. Tom Lodi, CA

Thats "FRIKKIN BANANAS" if you please. Tom Lodi, CA

Interesting addition. The client called the lender (at my request) and asked the status of the 1099C or if the home had been sold. The lender stated that the 1099A is the only thing that will go out. They will not send a 1099C. So do I treat this like a non-recourse loan now? Or do I treat it like the 1099A is the 1099C? I am leaning towards treating it like a 1099C since I can figure the COD amount. Any opinions? Thanks Tom Lodi, CA

I am kinda assuming the lender will walk away. But if they try to collect, my client is probably going BK. Tom Lodi, CA

After all this discussion, I sent an e-mail to TRX asking for a demo disk. It arrived yesterday but I have not had time to look at it. I might get a chance this weekend to load it up and see what it looks like. That price is really tempting. One thing we noticed this year is that without the Bank Products, we did much more fee collects. I need to find out what they are offering for next year. If they have something similar to fee collect or if you have to go with a bank. Tom Lodi, cA

<<Wouldn't you use loan balance of 388K as sales price and his adjusted basis>> No. It is a recourse loan. The rules are clear that the sales price is the lower of the amount of the loan less the amount still owed by the borrower after the repossession or FMV at time of repossession. <<Don't forget the depreciation reducing his basis.>> Have taken that into consideration. It is still nearly a 200K loss. And since it is a complete disposition of the activity, it freed up the suspended passive losses we were carrying. Anyone else have a comment? I still don't think that I should be able to get an NOL off of a timing issue. Had the lender sent the 1099C, I would have 200K of cancelled debt to go with the 200K loss on the disposition. I don't mind taking advantage of the tax law if I can for my client. If I can go back and grab some bigger refunds with the NOL, I will. I don't know if I am missing something here. Thanks Tom Lodi, CA

I am double checking because I don't think this is the result I should be getting. Client worked in Las Vegas. Bought a home in 2006 (yes back when Vegas was a HOT housing market). In 2007 company relocated them back to CA. They rented out the home in Vegas until late in 2008. The tennants moved out and they could not find another renter. The mortgage was too much with no income and in June of 2009 they walked away from the home. Lender has issued 1099A but no 1099C. Purchase price 400k, loan balance 388K (no refi's) and FMV is 188K. Loan is recourse. When I dispose of the rental property for FMV of 188K, I am generating a huge loss. This is creating an NOL for my client. Is this supposed to happen? Can I carry that back and grab some refunds for the prior years? But the client tells me they are also insolvent because they are so upside down on the home in CA. I don't feel right about this for some reason. I know it is a timing issue, but can I really get an NOL out of this. Tom Lodi, CA

KC, My heart is aching for you right now. I was just trying to be funny, but I did not realize the pressure you are under. Let me know if there is anything I can do for you. Tom Lodi, CA

That could have come out of Jainen's computer. Must be getting to crunch time at KC's office. I think you need a chocolate break KC? Tom Lodi, CA

Prepared a return over the weekend. Client has 2 K-1's from partnerships that he is active in. The K-1's both had ordinary income and rental income. When I ran the check return, ATX came up with a red error that I needed to break the K-1's into two parts for the different kinds of income. I did it, but the Sch E looked funny with four entries when the client only had 2 k-1's. Is this normal? The amounts ended up correct. Why is ATX requiring this entry? Thanks Tom Lodi, CA

Normally, I would assume the patch. But with this congress (and I am pointing at both parties) being so fractional, I am not sure what will come out. I am afraid someone will attach some rider to the patch bill and it will get stalled over political bickering. This being a mid-term election year, I don't think anything tax wise will get done before the elections and then it might be impossible to get anything done at all. Tom Lodi, CA

Thanks Mike. I don't need the 1045 because I am using up a carryforward. Thanks for the help. Tom Lodi, CA

Joel, Are you being funny or have you successfully efiled a return with an NOL from ATX software? Tom Lodi, Ca

When I check my return, it says that the NOL is not approved for filing? Is anyone else seeing this? Is it true or should I call support? Yes, I update every morning. Tom Lodi, CA

Hey wait a minute, does this only apply if you have a difference between your Reg NOL and your AMT NOL? If they are the same, then no entry on line 3? Tom Lodi, CA

HELP - PLEASE. This is my first time with this form with a NOL. I am reading the instructions for line 3 for the umteenth time and I am still not getting it. I have all the forms in front of me to get the figures that I need, but I am losing it when I try to follow the instructions. Can anyone out there translate the instructions for me? Here is part of the instruction "Your MCTNOL is the excess of the deductions (excluding the MCTNOL) over the income used to figure alternative minimum taxable income (AMTI) taking into account only exclusion items." Jainen - now would be a good time for you to berate me about not understanding such a basic concept while giving me the answer - pretty please. Tom Lodi, CA

So long as the estate does not generate income (as in rents from the house while waiting for it to sell), there is no filing requirement. Why doesn't the fried disburse the fractional interests in the house to the beneficiaries and let them sell it? Tom Lodi, CA

Although not required, I normally show the sale and let if flow to the D as a non-deductible personal loss just to make sure the IRS sees it on the return. These things are normally big dollar amounts (at least in CA they used to be). I don't like letters from the IRS when they can be avoided. And if you do get a letter, you just show the IRS the D and it goes away. Tom Lodi, CA

CA has accepted my 100S. Hopefully the IRS will not be far behind. I think I will have to sneak down to the office tomorrow after church and see if it is accepted. Tom Lodi, CA

Well - I just sent it. I will get an extension ready if I don't have an ack by Monday Morning. Tom Lodi, CA