BulldogTom

We need a new title for Kyle. After that one, "Advanced Member" just does not seem to adequately describe his stature on this board. Tom Lodi, CA

Thank you Kyle. I wish you had thought to record the conversation on the phone so it could be posted here. Eric is a great man, and we all owe him a lot for what he did in putting this community together. But he needed to get paid back for what he did to us yesterday. Can you from memory give us a blow by blow of the conversation? Tom Lodi, cA

KC - you wouldn't????? Yeah - you would. tom Lodi, CA

Trying to e-file and not getting a response from the server. Called ATX and they said they were updating the server and it should be good to go in an hour. Still not getting to the server. Is it just me? Tom Lodi, CA

OK, this should go to the other board on the site, but I never read that one, so I am posting it here. Are any of you CA ATXers going to the Drake 4 hour seminars in CA. They are doing a bunch of them. I think I will go to the Burbank one on the 25th. Since I am going to SoCal anyway that weekend, I can make this a deductible business trip. And 4 free hours of CPE doesn't hurt. Tom Lodi, CA

You need to find out for sure if the tax has been assessed. Call the agent in charge of the audit and just ask if it is closed or not. If the case is closed, file an amended return. If not, share your information with the agent and they should fix it. The 1099R has the details, so it should be a non-contentious conversation. The trick is going to be getting in touch with the agent. Tom Lodi, CA

ERC - you SUCK!!!! That has to be the best April Fool ever. My heart was in my shoes. I could not believe it was going to happen again. You got me good. Tom Lodi, CA

Thanks all. That is a cool website. Tom Lodi, CA

What happens when it turns out to be a loss? Non-recognition of loss. I got it now.

Maribeth, I think you are right. Thanks so much. Tom Lodi, CA

That is along the lines of what I am thinking. What I did is take the difference between the number of shares he had and the new number of shares and said he sold them. Then I took the remainder and said he exchanged them share for share. I will put some numbers to it. Client holds 1575 shares with a basis of 10,000 or 6.34/share. He recieves cash of 3,933 and 1074 shares of stock in the merged bank. So he sold 511 shares with a basis of 3,260 for 3,933 with a gain of 673 and exchanged 1074 shares of old for shares of new with a basis of 6,760 Something is telling me this is not right. I can't put my finger on it though. Is it possible that he has to add the value of the new stock to the cash recieved as the sale of all 1575 shares, calculate the gain, and then act like he puchased back shares in the new company? Thanks again for your help. I just can't find anything that is on point in my research. Tom Lodi, CA

Client held shares of stock in a bank. The bank merged with another bank, and the client recieved both cash and stock in the new bank. I am not sure how to handle this. The terms of the merger call for each shareholder to recieve $2.50 in cash and .6 shares of stock in the merged bank. Any suggestions on how to handle this? If it was stock for stock, I think I would not report it and substitute basis. If it was cash for stock, I would have a sale and gain/loss. The 1099B shows it as a sale, but it is a very weird looking Substitute 1099B. Any help is appreciated. Tom Lodi, CA

This is a little off color, so if you are easily offended, just quit reading now. The post by Jack reminded me of my "colorful" economics teacher in college, the best professor I ever had. He was teaching a principle to the class that he called the "prostitution principle of economics". Why does a hooker get paid before providing the service? Because the value of a service declines immediately after the service is rendered. The more desireable the service, the more that can be charged for the service before it is rendered, and the steeper the decline in value after it is rendered. Now, I am not saying we are all hookers, but we do provide a service that is in high demand right now. If we don't get paid for it while the cliet percieves the need for the service, the client's motivation to pay us will decline proportionately after the service is rendered. I have never forgotten that lesson. All the women in the class were shocked. I was roflmao at that one. Thanks Mr. Yerge. Tom Lodi, CA

Taxbilly has always been "elite", now he just has the title to prove it. Tom Lodi, CA

I am with you Ray. Food is good, but......................... some things ARE more important. Both is always better. Tom Lodi, CA

Yes they are. I first had them at the Big Fresno Fair about 10 years ago. They are abour 6" long by 3" wide and they have the crusted cinnamon and butter on the bottom. They keep them hot so the cream cheese melts on them a little. They give you a fork, but you have to eat them with your fingers and then lick the sticky off your fingers. Tom Lodi, CA

This came up one time before, and I think it is correct. I think it has something to do with the law that a baby who is born and dies in the first year can still be a dependent. I think if you are alive on 1.1.XX and you die sometime during the year, you get a full year return, full exemptions, full credits. Tom Lodi, CA

My problem is my client got the 1099 SA and it is code is 1. I don't like changing the distribution codes on the forms, because of exactly the reason you stated Cathy - if the IRS looks at it, they are going to say no way and send the bill first and ask questions later. I was hoping for a way to explain it on the tax return. My eyes are getting tired, so I think I will sleep on this and see if I can get it to come out right tomorrow. Thanks for the responses. Keep them coming. Tom Lodi, CA

Help Please. My client contributed to an HSA, but he was not eligible. His spouse has coverage for the entire family. So he took the money out of the account. There were no earnings in excess of his contribution. I have tried to put this all together in the software, and this is what I am coming up with. His contribution is not deductible. His withdrawal is taxable. Since he did not have eligible medical expenses, he has to pay a penalty for withdrawing the money. This seems like a totally unfair result, but tax law is not fair. I hope I am missing something. Since California does not comply with the Federal on HSA's, we don't see many of them. Any help is appreciated. Tom Lodi, CA

Nope. Cinabon can't compare to the fair. Tom Lodi, CA

It is a little cold out here too. Breezy and about 65 today. Lots of pollen in the air from all the trees blooming. Just terrible. Sorry, I couldn't resist. Tom Lodi, CA

Mel, you are cruel. Out here in CA, there is a small company that runs the fair circuit in the summer. They make some of the best cinnamon rolls, and they smear a bunch of cream cheese on them and sprinkle them with walnuts. It is the best $6 I spend at the fair every year. And you can watch them make them right through the window of their trailer. The fair is still so far away, and so is Hawaii. Hey Mel, if I take my wife to Hawaii for a three day weekend in April, will you make some rolls for us? I am serious. I have to take Patty for a long weekend after tax season for missing our anneversary in March. I was going to take her to Monterey, but Hawaii would work too. Tom Lodi, CA

This was my question on an earlier thread, and I have not found an answer. If you have any source material on this, please post it. I have a client who is purchasing a quadplex. He will live in one unit. My first thought, which will probably not be right, is that you treat it the same way you would for depreciation. The square footage of the entire property divided into the total purchase price times the square footage for the personal portion. That will give you the purchase prices of the personal residence, which will then be used to determine the 10% limit for the credit. Using my example, if the quadplex is 2000 square feet and cost 400K, and the personal residence is 500 square feet, the purchase price of the personal residence is 100K (400K / 2000 sq ft X 500 sq ft). The limit imposed by the law is 10% of the purchase price or 8K. In this example, he would get the 8K credit (or the 7500 if purchased in 2008) and the 300K would be the rental portion to be depreciated (minus land of course) on the E. This is how I am going to approach this until I see some better guidance from the IRS. Anyone who has some source material, please post it. I would really like something with authority other than my own thoughts. Thanks. Tom Lodi, CA

Many 401K plans are written in such a way that withdrawals are not allowed except for certain reasons. One of those reasons is a "hardship" as defined by the individual plan. In order to prevent the tax and penalty, the 401K will sometimes permit a "hardship loan" from the 401K. Many 401K accounts do not allow a loan because of the administrative cost of allowing them. If they do allow a hardship withdrawal, they are not exempt from tax and are only exempt from penalty if they meet one of the code provided exceptions. There are a lot of plan specific rules about taking withdrawals from a 401K, and employees will often confuse these rules with tax rules. Hope this helps. Tom Lodi, CA

Mike - here is a joke you might like. It has nothing to do with birthdays, but I like it. A church lost their pastor and formed a search committee. They interview process included the candidate giving a Sunday sermon. One young man really impressed the search committee, and was scheduled to preach that Sunday. He lit up the pulpit with a sermon on serving God, and the entire congregation was enthralled by his exhortations and passion. The elders immediately hired the young pastor. He accepted and arrived the following Sunday to preach. He gave, word for word, the exact same sermon as the prior week. The elders were suprised, but let it go, assuming that he did not have time to prepare another sermon. The following week, the young pastor again delivered the exact same sermon. The elders got together and decided to let it go for one more week, as it was a very good sermon. The fourth Sunday came, and the young pastor delivered, word for word, the same sermon. The elders had had it. They called the pastor on the carpet and demanded an explanation. His response was short and to the point. "When the elders and congregation act on this sermon, I will move to my next topic." Happy Birthday Mike. Tom Lodi, CA