BulldogTom

Totally unresearched - BEWARE. It looks like the first 2 items are property settlements, and if the spouse was my client, that is the position I would take. Tom Lodi, CA

Thanks Gail, Actually, I started looking at this by getting the instructions for form 8903, and there "might" be a way to make this work. There is a simplified deduction method that I may be able to apply to the qualified production activities income. There is a general rule about allocations of cogs and other income and expense that I may be able to use to my advantage. I need to get into the code and regs to see if the IRS instructions are too basic for this situation. I am still looking deeper, and would appreciate any other comments. Tom Lodi, CA

I am not an expert on Production Activities Credit. I am going to do some research on this, but I thought I would ask for some direction before I get into it. Situation: Corp has a profit of 300K. Has several divisions for managerial reporting purposes, but reports all activities on one return for tax purposes. The activities that give rise to the credit are in a division that posted a loss. Approximately 10% of the activities of the company as a whole would qualify for the credit. Approximately 30% of the activities of the division in question are qualifying activities. Overhead costs are the reason for the loss in the division in question. Question: Does the corporation have to have a profit on the division where the activities took place to claim the credit? In other words, does the company need to segregate and show a profit on the qualifying activities? Sorry if this is a basic question, I just don't deal with this credit enough to know what I don't know. Thanks for your input. Tom Lodi, CA

I believe the stock was down 40% before yesterday's announcement. The slight upward move was investors signaling approval of the activist board members ousting of the top managment. The worst is not over for them, they can't find a buyer for their mortgage business. Until they can dump that division, the losses wil continue to mount. Tom Lodi, CA

Hey all, Have any of you added Kleinrock research products to your order? I finally broke down and ordered the software, but when I tried to add the 1040 essential package, I was on another completely different shopping cart, and I did not have a login that worked. Seems like they would have a way for me to buy more stuff, unless they are divesting Kleinrock products. Tom Lodi, CA

Here was the "on the side" advice we got prior to amending the plan. If no one is fussing about the match, and doing what you want to do is not going to cause a fuss, then do what you want to do. If the plan can be interpreted many ways, and one of those ways is the way you want, do it the way you want. But don't put off making the amendments. I don't think the fear should be in how the deduction flies with the IRS, it is in how the employees will react to your decision. I would rather face an audit than a lawsuit. Tom Lodi, CA

We just went through something similar. In our case, it was bonuses and terminations (do we have to match the severence pay or bonus pay deferrals that an employee may elect to make?). Our answer was - "How is your plan written?". We went back to the plan and it was not clear. We ammended the plan to spell out exactly wat was eligible wages for matching contributions. Canned 401K plans can be good, but you have to understand them when you implement. The language governs the rules, and if the language is not clear, you could end up matching more than the owner anticipated or vice versa. Tom Lodi, CA

This is why I won't join the EA society. Until they work on making the designation known and respected in the public eye, I will not pay them dues. EA's have been around long enough that the public should know who we are and what we do for them. The society, for some reason, thinks they should spend their time and money lobbying in congress. While that is important, getting the public to recognize and value our services is more important. When I see a major national advertising push to make the EA designation known, I will join. Tom Lodi, CA

This has been a long time coming. The 4137 method was cumbersome to explain and file. I am happy to see this form. Tom Lodi, CA

Welcome to the family. We are all so cool with our "offishul" certificates. Tom Lodi, CA

There was a thread on a transfer fee being charged on the software? Did anyone find out what it is? Are only ATX customers from last year being charged? Did the salesman tell you it was coming, or did it just magically appear? Inquiring minds want to know. Tom Lodi, CA

I like your argument, but I don't think it flies (unresearched - just talking out my butt here). Let me give you another example. I have to go to London on business. I need a passport and a plane ticket. The ticket is deductible. I don't think the passport is. I think the same reasoning applies to the Visa. It only allows you to enter the country, it is not part of the job you are working at (even though it is required). Using your logic, I can deduct the cost of my drivers license if I deliver Dominos Pizza because I have to have that license to drive their vehicles. I don't believe that works, because the drivers license is not specific to that job, even though required. Again, I am just discussing, and I don't have time to research this, so you are free to rip me if I am wrong. Tom Lodi, CA

You bend over backwards? Or was that a rhetorical question? Tom Lodi, CA

Please post your experience. This sounds weird. Like someone who is disbarred from e-file is trying to get some bank products through? But then that is my suspicious mind working overtime. I love Elvis. Tom Lodi, CA

And when I have a big enough client base, I will drop them. But for now, I MUST be a full-service (even if that is bank products) office. Tom Lodi, CA

Right, HRB does not want to put out another product for the military that meets the new lending rate requirements, so they are just not going to offer bank products to the military. I hope this leads to massive protests and lawsuits, causing the whole RAL industry to implode. Disclosure - I offer the damn things because I have to be able to compete, but I don't push them. I really wish we did not have RALs at all. Tom Lodi, CA

I assume that means we will need to login to update our programs (I do this daily), which is how they are going to shove another inconvenience down our throats. I have so damn many passwords that I have them all written down, and what I am going to change them to, on a paper posted next to my monitor. I hope someone steals them and hacks every one of the websites for every bank, credit card, software provider, internet provider, school, utility company, phone company, and computer supplier that I deal with. I even have to login to listen to music on Yahoo! That will teach the buttheads. Big business sucks. Tom Lodi, CA

I don't know who first posted that site on here, but Legalbitstream is a great website and everybody ought to bookmark it. I have had great success with my research using it. Thanks to whoever shared that great website. Tom Lodi, CA

Competition is a good thing, especially for consumers. Besides, if you produced anything good, you would get bought out by "your friends up in Maine" in a heartbeat to keep out the competition. Tom Lodi, Ca

A couple of months ago there was a string where Melvin mentioned he had thought about writing a new tax program. He intimated that he probably could. Some posters on the board went so far as to say they would invest if he were to really attempt it. I am sure it would be a lot of work, but if Melvin ever decided to write a tax program, I would buy it (providing it had all the CA functionality). It is my hope that he would do this, but only Melvin can tell you if it is a potential reality. Tom Lodi, CA

I have come to believe that this will be the new CCH strategy. I think they are going to push everyone into MAX and leave it as the "mid-range" package in the overall product line. Over the next few years (2 maybe?), the "package deals" that we are used to from ATX like 1040 Office will be priced out of the affordable range by reducing features (note the loss of unlimited E-files this year) and then charging big $ to add them back. When you run the math, it will make more sense to buy Max than to get your custom package. Look for more things to come along (CA package with all Sales and Use, Payroll, and Property Taxes perhaps as the next "new bundle for those who don't own Max"?) It makes sense that CCH would keep Profx as the top product line, then Max as the mid-range and mid price full service offering, and UltraTax as the small office (1040 only) product lines. By moving all of ATX's clients into Max, they streamline the product, cut cost of development, increase the $ per customer, and cut the cost of support (only one product to learn). As a business plan, it makes sense. For those of us already on MAX, it is not a big change. For those getting squeezed on the 1040 products, it is going to suck. But the cost of MAX is affordable right now, and it does so much. Who knows what the price will be next year, but I think it is a good deal right now. My 2 cents. Tom Lodi, CA

Not Mike, but let me take a shot at this one. Yes, the expenses would be deductible as business related, 2106, 2% haircut, only if he itemizes. No chance that it can be put on 2006 return if paid in 2007 and going in 2008 (did you really mean 2006 or is that a typo?). But I would approach it in a different way. I would see if the chuch has a way to pay for the trip for him in one of his budget categories. Some churches have Ministry Related Expense plans that re-imburse the pastor for out of pocket expenses. If his church has one, get it reimbursed. If not, see if the church will pay the cost and reduce his budget next year as it relates to his salary/expenses. My 2 cents. Tom Lodi, CA

How old is your client? Did he take some cash? If he took money out of the retirement fund, he will get a 1099R from the 401K administrator at the end of the year. Depending on what his age is will depend on the way the 1099R will be coded. If he is over 59 1/2 it should just show a normal retirement distribution. If he is under 59.5 and none of the exceptions apply, the 1099R will be coded for an early distribution and the 10% penalty will apply. In either case, the distribution will be taxable at ordinary rates. If he did not take any money, just sold some stock within the 401K and replaced it with some other asset (bond fund, other stocks, MM cash account), it is a non-taxable transaction and will have no effect on his income tax return for this year. Hope this helps. Tom Lodi, CA

I hear you. I have spent the last 2 days trying to track down my client's tax return so we can finish the audit. We used to get very good service from the Practitioner Helpline, but that seems to be invaded by the "lumps of flesh" that normally exist on the taxpayer phone lines. I had a very simple question - "Where is my client's tax return? I received a letter 7 weeks ago that said it was going to the local office. Where is it?" Then I got to take a telephone tour of the United States from Atlanta, to Philadelphia, to Ogden, back to the practioner (no)helpline which is somewhere, to Fresno, only to be told that Fresno does not know for sure where the return is, but that they would send a request to some office to call either me or the taxpayer at some point, but that there is no deadline or timeline for them to respond. Tom Lodi, CA

It makes CCH look pretty smart that they bought ATX when 90% plus of the client list they bought is planning to stay. They probably thought it was going to be less retention than that, but hey, with the concentration between the big three providers, they probably figured they would get a fair share to switch to one of their other products anyway. I am still waiting for Melvin to release his software. I want to be the first customer. Tom Lodi, CA