BulldogTom

Any help/advice is appreciated. Two individuals who are shareholders in another corporation - a C corp - were exploring the possibility of doing some work for another customer in the same industry. To avoid having the main customer of the C corp finding out about the other customer, they formed a Corp and filed an S election which was accepted by the IRS in 2007. The new deal fell through and the S corp has just been sitting there. The bookkeeper has been filing the Payroll and Sales tax returns, but no one thought to file the 1120S. Now another opportunity has come up for the shareholders, and they are looking at using the S Corp. How would you handle this? There is absolutely no activity except the cost of the contractors license, contractors bond, and the annual statement of information fee paid to the state every year. The expenses were paid by individuals and not recorded in the books (there really are no books, just a bank statement with the same amount of cash every month for 2 1/2 years). The S Corp has no sales or other expenses. Would you file all 3 years and ask for the penalties to be abated? What would be the reasonable cause? Would you file one year and have the IRS request the other years? The penalties are pretty severe at $89 per month for every month late. Thanks in Advance. Tom Lodi, CA

Now that is funny. I bet she isn't getting paid for looking either. Tom Lodi, CA

It has been a few years since I did one of these. It is still a 1040. You just fill in the date of death on the filer info tab. Is there any income generating activities that will need to be settled? Like a rental home, interest on bonds that mature after death, a business or trust that she was entitled to income from? If nothing like that, it will generally be a final return for the decedent with the executor of the will signing the return. I forget exactly what needs to go with the signature. Maybe someone else can chime in. Tom Lodi, cA

Why in the world would anyone want to work with an engineer? They think they are smarter than everybody and they whine about the fee on everything. Oh - maybe that is just my brother in law, the engineer. I don't do his taxes because he thinks he is smarter with turbotax than I am. Ha - he could have gotten it done for free from me and not had to pay intuit - but he is the engineer and he is so smart. Tom Lodi, CA PS - sorry Catherine - I know your post is serious and I shouldn't be joking on it. But I couldn't resist.

In the strictest sense, Jainen is correct. Bad recordkeeping in the past has led to this result. On the other hand, if I looked back on the trial balance and every single year there was an amount coded as a liablity to the owner, and the account title said loan due to the owner, I might be persuaded that this was a loan, that the owner intended it to be paid back with interest, and treat it as such But the earlier thread says "the owner never really determined that the money was to be paid back or not". That pretty much seals it as a contribution of capital in my book. Withdrawal is a dividend. JMHO Tom Lodi, CA

I noticed this year I can choose to have my sch. D calculate by the number of items entered. I have been playing around with it, and it seems like this is an either or proposition. Either by item count or by the form, not both. I would really like to have it both, a fee for the form and additional amounts per line item. Anyone have a suggestion on how to make it happen. I tried customizing the master form and did not have any luck. Thanks in advance. Tom Lodi, CA

Never Mind, I finally found my last application. Tom Lodi, CA

OK, I only fill this out every 3 years, so please excuse me for this one. Which address do I put on the application? My home or my office? How can I check which one they have on file now? Tom Lodi, CA

This capitalist pig is all in favor of preparer registration. I am exempt as an EA, but my wife who works for me is not. She is CTEC licensed. I have no issue with the taxing authorities ensuring that the practitioners who assist the public for a fee are competent to do so. I cheer every time the IRS busts a refund mill that is cheating the government and assisting taxpayers to do the same. On the other hand, I am not in favor of some of the CA tactics to get preparers to audit their clients tax returns. This is very troubling to me. The IRS is sometimes pushing in that direction also. I will quit preparing taxes before I will audit my clients and rat them out to the IRS or CA. My job is to find every loophole, deduction, exclusion and credit to minimize the tax burden of my client. If the IRS wants me to advocate for them, they should pay me to do so. I will not be drafted into their service by virtue of my occupation. Stepping off my soap box now. Tom Lodi, CA

I was at Spidell yesterday. CA is calling the Cash For Clunkers a sale of a personal asset for the amount of the voucher (I agree - no issues there for me). Fed law clearly says it is non-taxable income. CA says it is a disposition of a personal asset. How are you going to enter on the return? I think I am going to omit from 1040 and add a CA Sch. D to CA return. Any comments or suggestions? Tom Lodi, CA

Did anyone else have this happen. I updated (like I do every day) the software and when I went in the next time it automatically started downloading updates. I know my preferences and I know I did not set them to auto update. Now I am sitting here for 10 minutes waiting for the software to update and it is stuck at 92%. This is not good. I don't like when ATX changes my preferences. GRRRRRRRRRRRRR!!!! Tom Lodi, cA

Sorry John, I think you are off base on the e-file thing. (although I agree with the stealth auditor comment) I did not like it when the state of CA went to e-file. I offered every one of my clients the chance to opt-out. Very few did, even though I was charging for e-filing the return. Then I figured out how easy it was, and the next year started charging for the opt-out form. I don't charge for it anymore. Every once in a while a client will want to paper file. But the majority of my clients (like 99.9%) don't care how the return gets filed. Tom Lodi, CA

OK, this may sound stupid, but aside from the tax implications, why is this guy short selling if he has wealth? Can he afford the payments? Just wondering. Tom Lodi, CA

You don't say how old the client is. I am assuming he is of advanced age? If so, you may want to explore this option instead. Prepare a return with a zero balance due. Send it in, then fax in the POA. That will get you legal on the POA. Then call the IRS first as mentioned above with the client on the line. Document the call. Then make the next call to the Taxpayer Advocate. Tell them your client is very old and does not take very good care of his financial dealings anymore. Emphasize that the client does not have a filing requirement and that you have sent in a zero balance due return. Let them know it will be a devastating expense if the client has to file the tax court petition. Send them a copy of the Zero Balance return and see if they will take care of it. Be ready to file the petition if they won't help you. How many days are left on the ninety day letter? Tom Lodi, CA

OK, I get it. It will change the credit from a first time homebuyer to either a first time homebuyer, or a homebuyer who has lived in their current home for at least 5 of the last 8 years. Thanks for the clarification. Tom Lodi, CA

I only have 17 rose bushes. I gave them a quick prune last week, but not down to my winter prune. I don't know what varieties I have, but I do have the most beautiful yellow rose with a pink fringe at the end of the petals. Whenever I get in trouble with my wife(quite often), I just cut one and put it on the table in a vase. Works every time. Tom Lodi, CA

I am so disapointed. I wrote a long piece for this waiting for Jainen to call me names and poke fun at my flawed logic. I got squat from him. I am going to go pout now. Just kidding. Tom Lodi, CA

Can someone explain the new long term buyer reduced credit? Are they saying that anyone who purchased a home in the 8 years preceeding the date of the act (when obama signs it presumably?) and lived in the home as their principal residence for 5 years will get a refundable credit of 6,500? But if you purchased the home 4 years and 11 months prior to the date of the act, no credit? Is this what that thing says? I just saw this on the news, and I know it has not gone to the house yet, but I am very confused on the reporting I am seeing on the news. Thanks, Tom Lodi, CA

I just have to jump in here. I cannot believe that Jainen, of all people, is arguing for a flat tax. At least I think that is what he is doing. I like his arguments. Here are mine in opposition: The constitution requires equal protection under the law. However, the tax law does not follow that. What other segment of law is not equally applied to all citizens? Murder is murder and the statutes apply equally to all. Extortion, rape, theft, speeding in your car, arson, contracts, --they are all applied equally to all who run afoul of them. However, the tax law is applied differently to different social classes. If you are in the poverty class, you do not have to pay taxes at all. If you are in the rich class, you fall under a completely different set of laws. The same law that provides a tax break for property taxes to a lower economic class does not apply to the rich class. And the only difference is the level of success the rich taxpayer has harvested from this country. In CA, just earn over a million in a year, and a special tax is applied to you. For what reason? Because you are rich. But doesn't the armed forces provide protection for all of us? Doesn't the fire department respond regardless of the address? The water behind the dams does not flow only to some home and not others. The canals that ship water from the delta in northern california to southern california do not only go to rich peoples homes. Every child gets to go to school for free without regard to their addresses. All of the great services the government provides go to all the citizens. Yet some do not pay anything for them. How would you like to buy a home from someone, discover there were un-disclosed problems with the home, sue the person who sold you the home under the law, and be told by the judge "Sorry, you earn too much money to avail yourself to this law. You fall under a different law. You lose because you are rich". However, the government services for food stamps, medicaid, low income housing and social services are not available to the rich. Still the rich have to pay for them and cannot avail themselves of the benefits of the government services. If I were to change the name in the above paragraph from rich to white and from poor to some ethnic group, no one would ever stand up for this type of law. Why don't we have equality under the tax law? Why doesn't the same law apply to all? Equality, it is a beautiful thing - isn't it? Tom Lodi, CA

Thank you all. Appreciate the help. Tom Lodi, CA

I made a mistake on a W2 for 2007. I have made the corrections. Do I need to send in the correction on the Red forms? I don't have any. Tell me I can print this on plain paper and send it? Please??? Tom Lodi, CA

You going to be getting some new clients this year Eli? Tom Lodi, CA

It is curious that the deadline for nominations for the prize was February 10th. Lets see, Obama took office on January 20th, and in 21 days accomplished so much to bring peace to the world that he is bestowed (what was until now) one of the most prestigeous honors in the world. I am not a big fan of Clinton either, but I would be able to make a better case for him winning than Obama. This is like the NFL deciding after the draft who has the best team and awarding the super bowl trophy before the season starts. Mind boggling? Tom Lodi, CA

What conflict is he resolving? Iran? Afganistan? Israel? When J. Carter won, he made extrordinary progress in the middle east. Obama has not done anything yet. He may, at some point, be very successful in resolving some of the world's problems and be worthy of such a distinguished honor. But I don't see anything yet that qualifies him. Tom Lodi, CA

Has anyone used this bank for RAL's and Refund Checks? I am looking for a way to divorce from CCH on the bank products and keep ATX software. My experience with SBBT /ATX / CCH has been less than desirable. Their website makes it sound like a solution that I would like. Of course, that is just sales material. I have requested information and will call them in the next couple of weeks. Any experiences that anyone would like to share? Tom Lodi, CA