BulldogTom

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

You may want to have a chat with your client about voluntarily changing to Accrual before the IRS does it for them. If the company is going to continue to grow and have these revenues, they are going to go to accrual regardless of if they want to or not. If they elect to make the switch, they get 4 years to take the accrual variance into income. If the IRS imposes the method of accounting, it all comes in at once. One other thing that can happen is if taxable income goes over 1 million in the year of the switch, you are now under more restrictive Estimated tax rules. Some of your safe harbor goes away. I know this because my company is under the new rules because in the last year of our 481 election, we ended up in this boat. Sucks. Tom Lodi, CA

Message on my answering machine from frikkin piece of dog crap ATX. "The ERO application is now live. If you are going to offer bank products, you must update your application. Hurry, because space is limited for Bank Products." So I go onto the frikkin piece of dog crap MyATX website to submit my application. OOPs. You need to Login as ADMIN. Never set up an ADMIN account, so I had to call Frikkin piece of dog crap Customer Support. Told them what happened and they set up my ADMIN account for me. So far so good. Then they tell me I cannot submit the application until I renew. Frikkin pieces of dog crap. space is not limited in the bank products, it was just a way to try and get me to pay for the software early. I was going to renew early, until that frikkin piece of crap sales jerk tried to get me to sign a 3 page document of legalize to take the frikkin sales tax as a autodebit from my account. And the frikkin lying piece of dog crap salesman changed the amount from what he had quoted me on the phone. The frikkin piece of dog crap wouldn't even return my e-mail when I pointed it out. I am done venting now. Tom Lodi, CA

Thanks KC. I think it is the §1202 exclusion that I am looking for. Tom Lodi, CA

I have a question for those of you who know something about §1244 Qualified Small Business Stock and ESOPS. C Corporation was formed in 1987. Single shareholder with 100% of stock. Is looking at starting an ESOP for the employees. If he sells some of his shares to the ESOP, does he get a break on his Capital Gains tax? I seem to remember something about a 50% reduction in tax for the sale of §1244 stock, but I can't find it right now. It may have been something from way back when and no longer applies. Any help pointing me in the right direction would be appreciated. Thanks Tom Lodi, CA

I use Accountant Stationers and Printers out of Los Angeles. I use a generic cover and put my own lables on them. I like that you can buy them in packs of 50. I forget how much they cost, but I have been using them for about 8 years. Tom Lodi, CA

I just called AMEX to see what they say about the legality of charging the $20 fee. It is legal in Georgia (the state where the transaction is initiated is ruling - not the state where the customer is) to charge up to 5% according to the AMEX rep. However, it may violate the terms of ATX's agreement with American Express if they did not change their agreement prior to instituting the charge. AMEX is going to look at the agreement and see if ATX in fact made the amendment to its agreement with AMEX before charging this fee. I should not let these little things bother me, but it is $20, and that is money I would rather spend on other things than ATX. Tom Lodi, CA

It won't get there by Monday. I have to pay the Shipping and Taxes right now. Am I the only one who waited for the last minute to renew with the discount? Tom Lodi, CA

OK, so I have waited until the last minute to renew my software. Still getting the 10% discount and no billing until December. So I call in - and they still have that stupid $69 shipping charge. I expected that. They won't budge. Fine. But then he tells me there is an additional $20 charge for putting this on my Credit Card. What the heck is that for? "Because our credit card processor is charging us and we are passing it on to you." Nickels and dimes and $20 bills they keep nicking us for. Venting - thanks for letting me. Tom Lodi, CA

That makes more sense. Many accounting software packages lock out postings to retained earnings. But usually, if they are locking out retained earnings, they will provide for opening prior periods for audit adjustments (the software I work with does). I am glad you got it all worked out. Tom Lodi, CA

<<So my concern for 2009 is proposing an adjustment to the books to reduce A/D and depreciation by debiting A/D and crediting depreciation, then making another adjustment to debit depreciation and crediting an income account. But by doing this I over state the income by 200k, unless I create an opening equity account credit it instead of the income account, does this sound correct?>>> NO NO NO You need to make one entry (well, two if you count the income tax liability). On 1/1/09 adjust ONLY the Retained Earnings and the Accumulated Depreciation. Debit Accum. Deprec. and Credit Retained Earnings. Explain it as a prior year adjustment. Do not touch depreciation expense or income. Those accounts were not affected in 2009. By hitting retained earnings, you are accounting for the additional income already. When the CPA audits the financial statements this year, they will go back and restate the prior year(s) and footnote the clients activity. My next question is why the CPA is not doing this? If they are aware of the audit and they know there is a material change to the audited financial statements they put out, I would think they would be providing the accounting entries. Something sounds like there is an issue with the financial audit. Just speculating, but it don't add up to me. Tom Lodi, CA

Are you trying to do this in some software for the books, or just on the tax return? The retained earnings account is normally adjusted when the year is closed. Your software will do this for you. If you go back and open the year and make the debit to accumulated depreciation and the credit to depreciation expense and re-close the year, the adjustment will be made to retained earnings automatically. Then do the same thing for the next year. Everything will roll forward. If you are just doing this for the 2008 year on the tax return, ajdust your beginning retained earnings and beginning accumulated depreciation and you are good to go. I am not sure that this is what you needed. If not, post again and I will try to explain better. Tom Lodi, CA

Actually, writing a tax court petition is the part of my job I love the most. I have only done it 3 times, but I love doing the research. When you know for certain you are absolutely correct in your application of the tax law, and you write it out with all the code sections, regulations, case law, and rev. rulings that support your position, there is a great feeling of accomplishment. BTW, the client won on all three. Beating the IRS is fun. Tom Lodi, CA

I know you know this, but just as a reminder - the only way to go to tax court without paying the tax up front is to file the petition within the statutory period. It is hard and fast. Your client (even though it is not your fault they are in this mess) will not be happy if they have to cough up 50K before they can go to court. Protect yourself and make sure you file the petition a week before the due date CERTIFIED RETURN RECEIPT. Just my 2 cents. Tom Lodi, CA