BulldogTom

Actually, the District Schedule A-1 appears to be out of date. I ended up doing the return by hand anyways. I could not find an updated district tax schedule in the software. With all the changes to the sales tax rates and new district taxes, this was the most complicated Quarterly Sales Tax return I have ever done. Trying to coordinate the increases in our accounting software with the changes in the sales tax return was a bear. Even though we have one contract that was in place prior to April 1, I could not find a way to adjust the Sales Tax, and the instructions were no help. It was only a few dollars and I just paid the difference rather than pick a fight with the state. Ahhhh, the joys of living in paradise. IOU's, disfunctional government, overbearing employer regulations. Paradise. Tom Lodi, CA

Never mind - it is a new form, not an update. You have to add the new form to the return. My bad. Tom Lodi, cA

If you use ATX to complete the Quarterly Sales Tax Forms, the rates have not been updated for the April 1 changes. Keep your forms from the state, you will need them. Tom Lodi, CA

Choice of entity is a very important decision for the owner. Taxes are important, but liability protection must also be taken into consideration. Agree that final 1065 should be filed if the partners left. Short year return for "new" entity. Owner should contact an attorney to get the state filings and articles in order. I would recommend a new EIN for the new entity if the old one has not been used. Tom Lodi, CA

My guess is those CC are personally guaranteed. If he can't pay them, they will be able to come after his personal assets. If her business is in a corporation or LLC, there may be some protection from credit card companies. This is the time for a lawyer. You should not be giving this kind of advice. Limit your work to bookkeeping and taxes. You did not acquire the debt, it is not your issue to get them out of it. Tom Lodi, CA

Thanks Eric. It is the little things like this that make you special. Tom Lodi, CA

http://www.irs.gov/businesses/small/articl...=207042,00.html This was posted in the general chit chat forum by KC. It is the last post on the bottom of the front page and titled "Of General Interest" Tom Lodi, CA

I got it in under a minute. pretty simple actually. Not an engineer, just a taxman. Tom Lodi, CA

Nope - I will not. The website says it has to be under 18 MPG to trade in. My pickup hasn't gotten 18MPG since about 2001. The website says it is rated at 18MPG, right at the amount to qualify. I was looking at getting a new car anyways ( I was really hoping GM or Chrysler would have to auction off some cars to avoid bankruptcy, but that didn't happen). So why not get a small piece of the government stimulus money. Hell, I will be paying for it in taxes for the rest of my life. Why let the bankers and wall street get it all? Anyways, the reason I posted the site was so that you could have a resource if your clients asked you about the law, and if it would be taxable money. Tom Lodi, CA

Eric, KC posted a really good article on cancellation of debt. Is it possible that the site can handle an archive where these types of articles can be placed for future reference? I know you already do a lot for us, and if this is too much, just say so. I would put it on my computer, but I would forget where I put it. I was thinking the moderators could be the only ones to put these articles in, and the members would only be able to read them so it does not get clogged with a bunch of junk. Thanks for all you do. Tom Lodi, CA

That is a good artilcle. Thanks KC.

FYI The NHTSA has a new website for the Clunker trade in law. The whole text of the law is on the site. The trade in is not taxable income according to the law. Here is the website. It is pretty good. http://www.cars.gov/ Watch for the .gov or else you will get a commercial site. I am pretty sure I will take advantage of this free money. I have an old pickup with 245K on it that is worth about 1200. 4500 trade in for it on a new gas sipper sounds good to me. Tom Lodi, CA

I admit I don't know exactly what the code will say on this issue, or if this scenario is even contemplated in the code. However, I can see the IRS taking the position that the taxpayer had the tax benefit of home ownership. It may not be right, but the burden of proving the eligibility of the credit lies with the taxpayer. Why am I playing devil's (IRS's) advocate here? That is your job Jainen. BTW - I am glad to see you are back on the board. I missed you when you took your hiatus. Tom Lodi, CA

Sorry this is late, but I would be careful advising that she is eligible. Did they file a joint return in any of the years that they were married and if so, was any mortgage interest or property tax deductions taken? The IRS will have all the amunition they need to disallow the credit if there is a prior year tax return within 3 years showing mortgage interest or property taxes. Just my 2 cents. Sorry to be a wet blanket. Tom Lodi, CA

SBBT has sent a letter saying that they believe the law in several states (CA for me) requires registration as a loan broker to offer RAL's. Their position is they cannot offer a rebate and the preparer cannot charge the taxpayer for RAL's in CA unless they are registered as a loan broker. They are therefor suspending payments of rebates on RAL's to tax preparers in CA. Did any of you recieve this letter? Do you think they are correct in their opinion? I hate RAL's, but I have to offer them to stay in business. I wish they would outlaw the darn things. Tom Lodi, CA

I am sitting on the fence here a little bit. I think the SS8 is a good idea because it shows the employee immediately took action when the eroneous form was recieved. Kinda kills any argument that the employee ever agreed to being an IC. I would file the subsitute for w-2 and not include the 1099 anywhere. When the letters come, let it come. Oh, and by the way, your client might make some money by turning this tax cheat in. I forget what the form is, but file it and tattle tale on the employer. It might be enough to pay the bill for your fees for cleaning up this mess. Tom Lodi, CA

I love it.

I don't know that this was a change in proceedure. In my own church, I am occasionally approached by members who want to give me donations for the youth group I am in charge of. I accept the checks and forward them to the bookkeeper for recording in our fund account. I am not sure how he normally gives to special funds in his church, but I know he does make many separate checks for various funds outside the general fund. Having been on the inside of the workings of a church finance committee and knowing that the offering is the worst place to make a designated gift (becuase the volunteers are trying to count the cash very quickly and get home on Sunday) I would assume that this was his rational for going directly to the chair with the check. I know he delivered another check this week to pay for a server upgrade at his church (after I convinced him not to buy the server and give it, but to have the church buy it and give them a check for the cost). He took it in during the week and gave it to them. I can't answer your question Jainen, but thank you for confirming my analysis of this transaction. Just a follow up - an elder of his church called me and wanted to know why their was a problem with the way they did this. They trully just thought they were being expedient. The other issue that was brought up was confidentiality. My friend never intended that they knew he knew that they were on hard times. Tom Lodi, CA

Margaret, I was not picking on Feed the Children, they are an excellent organization. I hope it did not sound like I was? I was just using them as an example of a donation going directly to the benefit of an individual. Jainen, As for my friend, he is in the top tax bracket and is more concerned about being audited than he is about getting the deduction. He is very generous to his church and gives to this particular fund on a regular basis. His jewels in his crown are more important than the deduction on his tax return. Jesus said, "Render unto Caesar what is Caesar's, render unto God what is God's". I just believe we should take the deduction when we follow this instruction. But, Caesar's rules are also to be followed in taking the deductions. I think the rules were not followed and no deduction. My friend is a good man, a generous man, and this was not motivated by tax avoidance. He never told the church to give to this family, and he never said how much to give. Tom Lodi, CA

Except that the friend never told the committee who to give the money to. He merely brought the family to the attention of the committee, and then gave a donation designated to that fund. The church committee chair directed the donor to put a name on the check. I hear what you say, and I think that you are correct, (not about tax avoidance - that was never the motive). I think it was not my friend who made this non-deductible, I believe it is the church that created the problem. How about this for a comparable scenario. Feed the Children has a funds drive and they ask you to sponsor a child. You give $100 per month for the direct support of a needy child. They send you a picture of the child you are supporting. Is this no longer deductible, even though sent to the qualified charity, because it is made for the benefit of a single individual? Is this merely a tax avoidance scheme? Tom Lodi, CA

A friend of mine passed this by me for my opinion. He knew of a family in his church that was having a hard time. He asked the chairman of the benevolent committee if they would do some thing for the family and they said they would. So he wrote a check for $1000 to the church and gave it to the committee chairman. The committee chaiman told him to put the family name on the check in the memo line, which he did. Then the chairman gave the check directly to the member in need. My take is this is a direct contribution to an individual and not deductible. What do you say? I still want to know how the family was able to cash the check, but that is a different question. And this is not a family member, close friend, or otherwise related party to my friend. Just someone in his church on hard times. Tom Lodi, CA

http://www.legalbitstream.com/scripts/isys...y/irl88f7/1/doc KC, I don't know how to insert a hyperlink, but the link above goes to LegalBitStream.com and Notice 2005-1. In Part C, Question 15, it seems to say that once you adopt a non-qualified deferred comp plan, no early payouts are allowed. I am still looking for other guidance, but this seems pretty clear. Unless it was superceeded gy other guidance, I think the CPA is correct. Are you aware of anything after this notice that might be germain to the situation? Tom Lodi, CA

This is an area I am not very familiar with. Client has an unfunded Deferred Comp plan for 1 key employee. No deductions on books yet. No income to key employee yet. First payment scheduled in 2011. Client is having a good year - yes a very good year. He wants to accelerate the payments on the plan to take the deductions this year. CPA is telling Key Employee there is a 20% penalty for doing this. Anyone have experience with this situation. Tom Lodi, CA

A CP2000 is not a tax bill. It is a proposed change to the tax return. Until the tax is actually assessed, the IRS cannot take any refunds against it (there are exceptions for flight risks, but the commissioner has to approve them). So if you are worried about the refund, get an extension of time to provide the information. They will normally give you the time if you just say the client is compiling the documents and you have scheduled an appointment to review and respond to the notice. An extra 30 days should get the refund in the bank unless they are holding it for another reason. Tom Lodi, CA

To avoid all this confusion, I have gone exempt on my withholding. I will just make it all up on my bonus at the end of they year. Since withholding is considered to be taken out ratably throughout the year, no underwithholding penalty. I tried just going M12, but the CA tables still were taking too much. It is cool being the controller for the company, because I can just pop into the software and make the changes when I want to. So long as I don't get fired just before the bonus is paid, this strategy will work like a charm. Tom Lodi, CA