BulldogTom

I don't know if it was me. I wrote a letter to the Lodi News Sentinal that was published a couple weeks back. Had to do with the FEMA flood map designations. Did the Sac Bee pick up my letter? I don't read the Bee. Tom Lodi, CA

Let me change the facts and see how you would answer. Instead of the 3k getting him a tax benefit (eic), it puts 2,999 into the 25% bracket, and the 4% bracket in CA, along with the 15.3% SE tax on 93.5% of this cash. The taxpayer is now looking at an additional tax bill of $1,299 for telling you about the 3K. Would you still file the schedule c and put it on the return? For the record, I think you need only worry about HOH and can he survive a cash t analysis of providing the support. If he can't, file him as single with the dependent. The 3K is a non-issue in my book. You know what the law says about income from any source, regardless of the tax benefits or detriments that result. My 2 cents. Tom Lodi, CA

I vote for Ahhhhhnnnnolllld as the Terminator. Black leather, Harley, sunglasses. Rebel without a cause look. Right out side the office. (hey, ask your people if I can write off a Harley if it becomes the ATX mascot?) Tom Lodi, CA

If it was possible for Eric to give other software companies a demo page or link to a demo page of their own, would you appreciate that. I know many of us are looking to get new software next year. If there was a working demo of Drake, Proseries, Taxslayer, or any other software out there where we could try it and comment on those trials, would you find that helpful? I have not asked Eric about this, but why ask if there is no interest, right? Just a thought. Tom Lodi, CA

KC is right (as always). It is not my client, and I know you want to do the right thing. Unfortunately, the 90 day window has closed, and the IRS has no incentive to open it back up. This is the real tragedy in this situation. Losing the appeals/tax court track are huge rights that the taxpayer has lost. The IRS does not need to let you go there, and it gets harder to get the proper result for your client if you cannot use the traditional methods and your client does not have a lot of $$ laying around to pay for the taxes, representation, and legal fees. I have a client in the same mess. They don't know what they should be doing, but they know that what has happened to them is not fair. I know it too. But they let the 90 days go by in 2003, 2004, and 2005. I can fix 2006 and I am well on my way to doing that. I can make 2007 right and make sure they get the proper result that they are entitled to under the tax laws. But they are poor (yes, I am basically doing all of this pro bono) and cannot afford to go the court of claims route (at least not yet - I am still working on that one) for the back years where they got hosed. Cientax - good luck. I know you care about your client, and that is a good thing. My advice is to forget about the audit recon route. My experience was that the process is not set up to benefit your client. Use your time and energy on a different tack that will produce better results. I would recommend amending the return, putting everything in order the best you can for that amended return, and see if you can get the IRS to bite on that one. When the IRS ignores or rejects the 1040X, file the claim for refund. They have to pay the taxes and sue for the refund after the IRS ignores them for another 6 months. It is not a pretty scenario. Again, good luck. And if you have a better approach or get better results on the audit recon, please let us know. Tom Lodi, CA

The workaround is to move the interest to line 48. Unbelievable is the word I used when it popped up on my computer. According to other posts, the progammers believe this is the proper programming per IRS regulations. Un-be-liev-a-ble Welcome to the new ATX...powered by idiots at CCH. Tom Lodi, CA

I think they will not have to file a return if they are elderly or disabled vets. I read that the IRS will get the information for seniors from SSA and the disabled vets from the VA. I think the only people we have to file a return for are those who make less than the minimum filing requirements and at least 3,000. That will kick their return into the system and get them the $300 in the summer. Tom Lodi, CA

ceintax, Listen to Jainen on this one. I requested audit reconsideration, and the IRS never read my letter. They $hitcanned it and never even sent me a reply. I called and they just acted like it never got there. I have proof of mailing, but that did not impress the witch on the phone. Your time will be better spent elsewhere than asking for an audit that will not be granted. Kinder gentler IRS my butt. They are still the lazy, vindictive, incompetent slobs they always were. (no offense intended to anyone who every worked for them - just a generalization/opinion). Tom Lodi, CA

Take a look at a §195 election and you may be only amortizing 1K. I think you can expense in the first year up to 5K of start up cost if you make the timely election. Don't quote me on this one because I am going from memory. Look it up and I think that will be the way to go. Tom Lodi, CA

Use of ATX software is not a requirement to be a friend on the board. Many of us may not be using the software next year - so you just look like the leader who read the tea leaves best and got out while the getting was good. Could you please tell us what software you are using and how you like it. Welcome back. Tom Lodi, CA

Wasn't she the one who sold the homemade pens online that her kid made? Didn't her screen name start with an "A". KC should know. Tom Lodi, CA

Sorry, I have not done this. I have been watching your posts to see what you came up with because I am not sure how it would work out. Wish I could help you, but that is a new one to me. The only MFS I file is the spouse who is stuck without the kids and the other has been gone for 6 months. Very rare. Sorry. Tom Lodi, CA

There is no formal election proceedure, you just figure the additional taxable amounts for the prior years, and then put LSE on the line. ATX will do this for you when you use the LSE worksheet. If it results in less taxable income, the entry will be made. When you e-file, the form will flow through with the return. Tom Lodi, CA

So long as the degree does not qualify her for a different job (ie doctor), I would agree with you. Tom Lodi, CA

If there is a change to the law, please let me know, because I have a client in the same mess. Took the distribution from the 401K. 10% penalty applies. Please correct me if I am wrong because I still have the return at my desk waiting for other final items from the client. How is "the tax programs are allowing the deduction"? Are you entering a code in the penalty worksheet for IRA withdrawal for first time homebuyer? Tom Lodi, CA

On my example, number 1 was not met also - the taxpayer is not in AMT, and interest on 150K of mortgage debt is not deductible (assuming they did not improve the home). Tom Lodi, CA

Not necessarily. Remember, only 100,000 of home equity debt is deductible as qualified home mortgage interest. Out here in CA, you could have blown past that amount in a couple of years when the housing market was hot. For example, if I bought a home in Clovis CA in 1997 (5 bdrms on 2 acres with horse corrals) for about 250,000, it very easily could have been worth 600,000 in 2005. Say I refinanced for 500,000, using all of the proceeds on other than home improvements, I can only deduct the interest on 350,000 (250K acquisition debt + 100k home equity debt). This is the law regardless of AMT implications. If in AMT, then it gets worse, because no Home Equity debt is allowed. Hope that helps Tom Lodi, CA

Good luck on that. When we ask about mortgage history, there are two responses: 1. Why and how much is it going to cost if I tell you the truth.. 2. Huh - I don't know... Tom Lodi, CA

That is why you childless folks aren't going to pay it back. But those of us with bundles of joy still at home are going to pay it back next year. I read the house version of the bill that passed 2 weeks ago. This might not be the same after the senate got through with it. I have not read the text of the new bill that will go to the president. Tom Lodi, CA

Don't those muni bonds pay as they go? I thought you got the interest on a quarterly or at least annual basis. For the interest to accrue and pay at maturity is different to me. Perhaps some of you have seen these? Tom Lodi, CA

I think you are mistaken Pacun, this is an advance on the 2008 child tax credit. That is how the original House version read. It may have been changed at the last moment, but that is how it was advancing through the senate. Make sure your clients know how much they got, you will need that next year. Tom Lodi, CA

I thought about that to, but look at his post, it says the bonds "matured". That sounds like he reached the final day and the issuer gave him his capital and interest at that time. This is how I read the meaning. That is why I go with the 1099 Int Otherwise, you are right that he bought a bond for 1000, recieved non taxable interest over the years, and then sold it for a premium that would be taxable gain. This is not how I read the original post. Still not sure we have the right answer, but I am hoping L.S. will post more info. Tom Lodi, CA

I think you have to run it through the 1099 Int worksheet for the $2,487 in interest. On the 1099 INT worksheet, use box 8 and the information at the bottom of the worksheet for box 8 to make it tax free to both Fed and State. I don't think you need to report the return of capital, but I don't think it would hurt to include the "sale" on schedule D with a purchase and sale price = 1,000. Good question. I don't know for sure if this is the right answer. My best guess. Tom Lodi, CA

KC, Please tell me you aren't staying with ATX next year? I know the ATX people are good people, but those lousy, lying, condescending jerks from CCH now own this software. They have shown no respect or regard for their clients, and flat out lied to us. Do you really think that anouncing enhancements for next year is proof that they won't jack the price up or swap you into a "comparable" product next december when it is time to deliver the software. I took a some grief last year when the Total Tax Guide was replaced with the CCH Master Tax Guide. Everyone told me that complaining about getting a better product for the same price was stupid. Now the Master Tax Guide is $25 more expensive than the TTG (may it rest in peace). I would rather have the TTG, I think it is a better book. I think next year you will get your ATX version of Taxwise software. Just like we got the Klienrock version of the Master Tax Guide last year. Tom Lodi, CA

I was not questioning your statement that the amount is deductible on the schedule a. I believe it is too, as an unreimbursed employee business expense. I was questioning your statement that sympathy is the most important ethical standard. So not like you Jainen. You are the person I go to for the "cold hard facts of tax". You are the one I look to rain on my parade when I try to push the envelope. So it is suprising to hear you say that sympathy is the number one ethical standard. Tom Lodi, CA