BulldogTom

What I really would appreciate is the return of William. Oh where are you sweet Willy? Tom Lodi, CA

Do you have a guilty consience Jainen? I am not worried about my practices, but apparently the new 230 requirements have worried you. I have always been very careful about my tax advice and my interview. I sleep well at night because of it. I am not worried about the new rules. I conduct my business with integrity, and I don't see a need to change my interview because the IRS might look at my practice. I am not afraid. I have nothing to hide. Tom Lodi, CA

I will take the Spidell update as I do every year. Mortgage debt forgiveness is not a law yet, hence not to be fretted over. The Davis Case is still in the courts and we will not be able to do anything with it until the court rules. The RDP mess will be a mess no matter what the Governator signs. I don't think CA will even track down the RDP's who file single anyway. As for the preparer penalties in Cir 230, see my earlier post - I don't worry about that. I don't make mistakes. Tom Lodi, CA

I guess I have seen all of this in previous material so I am not really suprised. But your point is well taken. I have a client who may get the AMT credit, and a client who has a son in college who might get a suprise on the kiddie tax. I have no spousal partnerships, only Schedule C's. And I am ready to prepare a California Domestic Partnership return if it walks in the door. But I don't have to worry about preparer penalties because I never give bad advice and never miss on the tax law. All my clients are honest and every return I prepare is accurate. NO WORRIES - MON! Tom Lodi, CA

Thanks Wayne. That is what I was looking for. Nothing new or earth shaking, mostly just inflation adjustments. The MIP deduction is going to be a pain when the clients don't know it only applies to loans originated in 2007. Tom Lodi, CA

I have been looking around for new laws for 2007 and not really seeing anything. I was wondering if I am missing something. Is this just a real quite year for new tax legislation? Tom Lodi, CA

M M = Melvin the Surfer Tax Dude? M M = Mike the Preacher Tax Dude? You two need to give us a clue as to which one you are. Poor KC can't keep you straight. But I enjoy reading both of your posts. Tom Lodi, CA

CNA for me to!!! Sole Proprietor, spouse employee, some bookkeeping revenue. Got it through a broker called Dimarak out of San Diego (I think). I believe I pay $185. Tom Lodi, CA

KC, I know that, I was trying to be funny - guess it didn't work. Lawyers are usually an easy target for a quick joke. Of course, that does hit a little too close to home for you. Good to see you back on the board. Do you have an update for us? You are in my prayers. Tom Lodi, CA

Did the lawyers have to pay back their Fee for helping their clients defraud the company? That is the more interesting question. Tom Lodi, CA

Mike, I bought my first home under a program similar to what is described by Gene, except it was not a gift but a loan. It was basically a piggyback loan of the 20% down payment. The program was called DAP - Downpayment Assistance Program - and was intended for first time homebuyers. Worked a miracle for us as I was able to buy a new home with good credit and closing costs while I was still a senior in college. It sounds like there is a private group or foundation in SoCal that has attracted the attention of the IRS and your client was linked to them in some way. Has your client bought or sold property in the last couple of years? Is it possible that there is some SS# mix up? Could this group have reported some "creative" items on a closing statement where your client was involved in the transactions? I would advise the client to give you a power of attorney and stay out of any conversation with the IRS for the time being. You talk to the IRS and then advise the client if he needs the services of an attorney or if it is something the client can handle. Something smells - I would tread very lightly through this. And be careful not to make the client's problems your problems. Good Luck. Tom Lodi, CA

Bill, I want to start a new thread so it does not get buried. I just want to make sure I understand your post earlier. You got MAX for $695 plus S&H? Were you on Max last year? Would you mind posting the contents of the e-mail that you got from ATX (hopefully with a salesperson's name)? That is a huge discount, and if the rest of us can get on that offer, ATX will have a lot of renewals. I have not renewed, but I will for that price. BTW, ATX cannot stop you from posting that e-mail here - because they don't own the site. Isn't that cool? Maybe they will regret their decision to cancel their board. They could have deleted posts like this in the past. Tom Lodi, CA

You are in our prayers. Tom Lodi, CA

I appologize for my unclear post. I should have said "if the card is in the name of the owner and the organization is a corporation and there is mixed use, I would shy away from putting the CC on the balance sheet." My point was (1) if the entity is a proprietor, and the card is in the owners name, I have no issue with putting it on the BS and recording each transaction as either an expense or capital draw, (2) if the entity is a corp and the card is in the owners name, but strictly used for business purposes, I have no issue putting it on the balance sheet, and (3) if the entity is a corp and the card is in the name of the owner but is mixed use, I prefer not to put the card on the balance sheet, opting for recording the business transactions from the card usage as a transaction between the owner and the corporation. My assumption was always that the card was in the name of the owner, and I was approaching the question from that assumption. That is the problem with quick answers to questions, we sometimes think that what we think we said(or typed) is what will be understood. Tom Lodi, CA

Deb, Is this a sole proprietor? If so, are there any other expenses on that card? If the card has no other charges that are personal to the owner, set it up as a credit card in QB, and just post the payments and interest charges to it . If the card is being used for mixed purposes (business and personal) it will make the interest calculation manual at tax time, but I would still set it up as a business credit card, post all the transactions, and show the personal ones as owner distributions. If it is a corporation and there is personal uses, I would shy away from the credit card showing up on the balance sheet and record a loan from the shareholder and document it. Have the corp pay the shareholder and the shareholder pay the credit card. My 2 cents. Tom Lodi, CA

Bonnie, Good for you. Nobody likes insurance companies, so laying the blame at their feet is a good move. I too am sick of the government bailing out people who make stupid mistakes. And then you see the President going out and proposing to bail these people out at taxpayer expense. 2 years ago, I could have "qualified" for and gotten a loan on a 600,000 home. I could have put no money down and made teaser interest only payments for 2 years. If I had known the government was going to bail me out when the rates reset and I was over my head, I would have done it. Instead, stupid me, I bought what I could afford with 20% down and a traditional mortgage. Now the guy down the street in the better home with a reckless streak is going to get ahead. Makes you want to just take all the cash from all the credit card offers you get in the mail every day and head to Mexico for a margarita. Responsibility is not paying off in America today. Tom Lodi, CA

I feel for you. I have a client that I went down this road with. My advice is DON'T DO IT. You will get request after request to rewrite the letter to the broker's standards. I may now have lost my client because the last time the broker called and asked for a letter, I would not change the wording and she hung up on me. They will try to tell you that it is just a formality that the lender is asking for verification that the return was processed by you. Then they will try to get you to make statements about items in the return, especially income, assets, and confirmation of business ownership. They will try to dictate the letter for you. BTW, the letter I have given this client's broker says 2 things very clearly: 1. I make no representations about the information in the return(s), as it is the taxpayers representation to me and I do not have any knowledge of the accuracy of the information the client gives me. 2. The letter is not intended to be used as a factor in denying or granting of credit, and I expressly forbid it use in that manner. These two items usually get the second call from the broker, trying to get them changed. It is hard when you need clients, but they put you in this position to help them out. I have resigned myself to losing this client (he has not called after the broker hung up), but I am not going to get sucked into his problems with his mortgages. It ain't my risk, and I ain't taking it on. Good Luck Tom Lodi, CA

I am looking forward to that game tonight. Sorry, I am rooting for the upset. I want to see if LSU is really that good. They lost a lot of talent. I never bet on a highly ranked team with a new starting quarterback. Enjoy the game. Tom Lodi, CA

Not playing the "KittyKats" again. That was a once in a lifetime thing. No way LSU travels to the DogHouse. However, we do get Kansas State at home this year. Playing on the road at Texas A&M and Oregon. It is only 3 days till kickoff. Hope springs eternal in Bulldog Land. Good luck to your Tigers. Tom Lodi, CA

Assuming the 2003 return was timely filed (april 15th or whatever the date was in 2004), taxes were paid, and there was no fraud or gross understatement of income, the statute would have run on April 15, 2007. You should see the same result as the 2002 1040X. But then, this is the IRS we are talking about, and they just might go tilt on this one. ;0) BTW, this is why I don't normally go beyond 3 years back with a new client. I know it is not right, but I ask very vauge questions about anything prior to 3 years old. I don't want to get sucked into a multiyear mess. Tom Lodi, CA

It sounds correct to me. 2002 was a closed year when the 1040X was filed in 2007. The IRS is barred by statute from assessing new taxes. The taxpayer's statute is two years to file a claim for refund from the date the "tax" was paid to the IRS. They are inviting the taxpayer to claim the "overpaid tax" on the 2002 that they don't owe. Tom Lodi, CA

Jainen, >>A very small dig at the poor service of national companies might fit in, but don't get into the blame game<< Is this too big of a dig? At the initial audit, the taxpayer relied on his preparer and the reputation of the national company that prepared his return, not understanding that the preparer was unable to practice before the IRS during the examination. Taxpayer contends the evidence establishing his positions taken on the tax return was not fully disclosed, nor properly presented to the service at the time of the audit. >>Also include a proposed result<< Is this veiled threat to go to Court of Claims to obvious? In the interest of effective tax administration, taxpayer requests audit reconsideration as opposed to other avenues of review available to him. If you grant this request, we believe you will conclude, based on the law and evidence, that the taxpayer is entitled to earned income tax credit. I have the letter down to one page, it starts with who I am and the request for reconsideration. I then include the first paragraph above. That is followed by the law upon which the taxpayer relies and the application of the current facts to that law. It closes with the second paragraph above. Am I on the right track? If you were the lucky auditor who got this letter, would you grant the request? Tom Lodi, CA

I would do it a little different. I would work on the books for this year. When you start asking for all the records of ALL the cash and reciepts of the business, you may find that he is not so keen to "get caught up on past returns". If he is cooperative and you feel he is really giving you all the info, then go back and do the three years. It will look better for you in the long run if the first year you have the client, the books and return are pristine. Might help when you file the back returns with less than perfect data from the client. Just my 2 cents. Tom Lodi, CA

As much as I don't care for HRB, you have to give them credit for their classes. They do an excelent job on the basic course. It seemed to me that the intermediate classes were not so good and the advanced courses were very good. (my wife worked for them for 6 years and took lots of their classes). If I were to hire a new employee without any experience, I would send them to HRB. Tom Lodi, CA

Jainen, To clarify, I did not win yet on 2006. I just succeeded in getting it moved to my local office. I am waiting for the meeting to be scheduled and I have the 1040X on my desk to present the auditor. The issues on that one are pretty simple and I think I have it under control. The 4549 is from the 2005 audit. The only change made is the denial of EIC. HOH was not changed, Dependents allowed, CTC was allowed. I can see nowhere in the record where the IRS made the claim that the taxpayers showed reckless disregard for the rules. The 4549 is very short on the subject. It says something along the lines of "We disallowed Earned Income Credit because you did not prove you were qualified". Again, since the rules changed in 2005, it seems to me that the service just denied the EIC because they had done so the previous 2 years and saw no need to change course. I believe this is an error on the part of the auditor and gives me a fighting chance. As for the other years, I am going to amend 2004 (after I finish 05 and 06 audit). They denied everything on audit in 04, and the taxpayer deserves a better result than what he got (he is the father, paid the rent, provided the food, clothes and medical). If he had good representation, the results should not have been so harsh on him. Even if they deny EIC, he should have gotten the dependent exemptions. I found an issue that I think I can use to amend the return. It may or may not work, but it is something to try. And if the audit reconsideration works for 05, I may just ask for that instead of amending 04. 03 is such a long shot. I don't think I can even get IRS to talk to me on it so I am shelving that unless the IRS opens the discussion. My letter bleeds into page 2 right now. I will consider all you have stated (when someone says something 2X, I ought to listen) and apply this to my letter. I thank you again for your thoughts. Mondovi is definately in play, but I have not seen a Jeroboam (sp?) yet. I went to their website and did not see it listed. I will be taking a trip out to the winery to look in person. Tom Lodi, CA