BulldogTom

Danrvan, I agree with you on the Federal side. What about the state? Where I live, the state don't give a rat's @$$ what the feds think either. I think the state would want a tax return. They have their own revenue and taxation code with their own court cases. You could be sandwiched between two tax authorities. Without a formal dissolution of the corporation, I think the water could get very muddy if you took it into the personal return of the taxpayer. Another factor is how long it has been since the corp stopped operating and went de facto defunct. I think it would be cleaner, depending on how long it has been since the de facto dissolution to file the Fed and State returns than it would be to try to explain it later at audit. Just my 2 cents. Tom Newark, CA

That changes things. I was under the assumption that the closing of the corporation was done with the filing of all required forms with the SOS and final tax filings. If that corp is not dissolved by the SOS, then I think you need to file a return for it. If the corp has been dissolved by the SOS, then I stand by my original position. Tom Newark, CA

I laugh every time I get my last issue of that rag. Tom Newark, CA

The key to this all is what Lion said, it was sold to an unrelated party and in an arms length transaction. Zillow is not a good reference for DOD, but a non-related realtor could be. A full blown appraisal (have yet to see one of those on the trusts I do) is of course the best evidence of DOD valuation. Most that I see throw a loss because of the selling expenses. That should be expected. Tom Newark, CA

I just can't go there. It is too much like stealing to me. I will patiently explain that the standard deduction is better for you. Tom Newark, CA

Off the top of my head, I am thinking that if the shareholder is the only one, then take it into income on his 1040. I know it is not correct, but the corporation is defunct and cannot receive the payment (no checking account, no way to take the money in). Give the utility a W9 with the shareholder's TIN and bring it in on the personal return. Unless you want the headache and the extra income that goes with it. Tom Newark, CA

I am with Gail on this one. I think he is trying, no matter what his physical limitations. I would not go the route you suggest. He says he is in business, has a history of being in business, and keeps good books and records. Still trying to win bids. You have to have a profit motive, and it seems like he does. So long as he is doing the work to submit bids, I think he materially participates. Just my 2 cents. Tom Newark, CA

Client is an engineer - Strike one. Client is a millennial - OK, whatever. Client set up his own LLC online - strike two. Tells me about it at the end of doing his 1040 return. No activity, just set it up and did not do anything with it. So I do the CA 568. We are reviewing and I show him where it is a disregarded entity and I used his social for the TIN. "Oh, what about my EIN". He did that too, and told the IRS he was a partnership. Life is too short to deal with smart people who think they know everything and need to just click some buttons online. Tom Newark, CA

Income in full to line 21, expenses to Sch A? Is that what you are proposing? Tom Newark, CA

I was all in on the schedule C, until you posted this. If they are not actively participating in the rentals, they just hold the property and hand the keys to whoever shows up with the right paperwork, it might not be a trade or business subject to SE tax. I am not fully convinced myself yet, but if it was my client, I think I would be hitting the research a bit more. It would be even better if the rental company sent a 1099 with box 1 rents filled in. Hmmmmm....what appetite do you have for a fight with the IRS. There may be enough here to send that income to a schedule E....or not. Tom Newark, CA

Client sold her rental home to her son. The property had a large step up in basis when her spouse died (2007 - height of the housing bubble). The home fell into disrepair as the client was not able to keep it up. She got an appraisal from a realtor (unrelated) at 30K "as is" value. There was a flipper who offered to buy it for 35K. The son of the client stepped in and matched the offer because he did not want the long term renters in the property evicted, so the client sold to the son. Basis is about 75K at the date of sale. I know that the client cannot recognize the loss in a related party transaction. Where in the software do I tell it that this is a related party loss and not deductible. The loss is not going to do anything for the client. There are and have been no taxes due for several years and the client died a few months after selling the home. Thanks Tom Newark, CA

It happened again. Tax return rejected for SS used on another return. Turns out the kid who had $600 of income and $30 of withholding filed his own return to get his money back. Now he gets to pay me to amend the return, and I am going to charge him more than $30 to fix the problem he caused his parents. College kids are so smart. They get advice about taxes from Jerome the gardener at the college. Jerome is real smart. Tom Newark, CA

Just an update, I now have two of these. Two calls to support and they don't know what the issue is. If you are trying to file a CA 541, it will reject for the above error. Tom Newark, CA

I put my kids to work in my tax business at age 12. They stood in front of my office an waved a sign. The shredded papers for me as well, and generally did anything that I would have a "girl Friday" do. They kept time cards on an excel spreadsheet. Every penny they made from me went to their Roth IRAs. I wanted them to have money to pull for college (that is why they started at age 12, so they held the account for 5 years and could pull the contributions if needed). Oldest son did not have to touch his during college. Youngest might have to, but it will be close. They did not miss the money when they were kids, and they might thank me in 40 years when they see what their tax free IRA balance is at that time. But I have no idea what the answer is to the original question. I only opened the thread to see if someone had an answer. Tom Newark, CA

We need to get Betty Sue and Jerome back on the board. They are real smart and could give us the answer lickity split. Tom Newark, CA

There is a difference between what I said and your circumstance. In the earlier post, I said if you have provided labor to a company and they pay you for that labor, you have entered a trade or profession, and when the company sends you a 1099 Misc, regardless of which box it is in, you are SE all the way. See my post below I agree with your situation. There is no labor or services being provided by your client, not subject to SE. I did one the other day where a client rents land to a farmer to grow crops on. The 1099 MISC was coded to box 7. Wrong, it is rents and goes to the Sch. E and I did it that way. Tom Newark, CA

There was no 1120S. Client is a shareholder and gets a K-1, but I charge their mother for the S-Corp return. Tom Newark, CA

I don't pay a lot of attention to the time I put in on a return. That is why I charge by the form. Life & tax prep are just averages. That being said, I think they dropped off their stuff about 3 weeks ago minus the Sch C info and the S-corp K-1. I had some down time that afternoon and I did the data entry in about 1 hour or maybe a bit more. I put the file away until I got the Sch C info last week. About 20 minutes to enter. Finished the S-corp on Sat and imported into the clients return. Did about a 20 minute review (mostly on the 6198, 8582 & the NR return. Spent about 45 minutes with the client reviewing the return and catching up with them. What is that...about 2.5 hours including chit chat time in the office and tax planning for next year. Tom Newark, CA

I got this rejection error on ta CA 541. The 1041 went through fine and there is no complication on the trust. Anyone know what this means? I don't have 2 hours to spend on hold with support tomorrow. Thanks Tom Newark, CA

My original bill was $631. Tom Newark, CA

Are you a 501 ( c ) 3 Charity? Tom Newark, CA

I just finished the most expensive tax return I have ever done. I charge by form so I don't realize what the price is until I add the bill at the end. Here is the return. Tell me what you would charge. 1040, 2 W2's, 1 1099R for a non-taxable rollover, 2 1099INT, 1099DIV, 1099G for state refund, Schedule E Pg 1 for 5 Out of state rentals, 5 Depreciation schedules for the rentals, K-1 from an S-Corp (I prepare the S Corp return, Client's parents are majority shareholders), 2106 employee mileage, Sch. C, Office Use of home for Sch C and for 2106, 6198, 8582, 8959, CA 540 return, CA 540 Sch CA, CA 3801(Passive Loss Limitations), CA 3885 (Depreciation Differences for State), Out of State Non Resident return with supporting Schedules for the rentals. To be fair, this is a dream client. They had all the entry documents organized with a cover sheet and all of the expenses for each rental summarized on a spreadsheet with all the backup documentation. The Depreciation Schedules have been set up for some time so no new asset entry. The work was a breeze to do, once I got the S-Corp return done. The client even sent me a new Income Statement after I discovered an error in the Sch. C. It was the first year for the Schedule C so I reviewed it more carefully and it really was a minor error. No...you can't have this client. So, what would you charge for that return. I did give them a $75 discount because I could not believe what my bill came out to. Thanks Tom Newark, CA

Gail, you have it correct and Fidelity is wrong. It should have been coded to 4, taxable to the beneficiary with no penalty. And the beneficiary cannot roll it into his own account because he can't co-mingle the inherited funds with his own. The inherited funds have to be withdrawn over within 5 years or set up to be taken over the life expectancy of the beneficiary. Only a spouse can roll the funds into their own account. Fix it on the 5329 and don't lose sleep over it. Tom Newark, CA

What Jack said, except...if the child is married. Then the FASFA calculates them as and independent student. I have wanted for years to set up a website that puts Freshmen together at universities, gets them married, and then qualifies them for all the education scholarships. After Graduation, they get divorced and move on. What a great scam to the education system. And only for a small fee. Tom Newark, CA

The 40% price increase from AT&T made me go look at cable, but I quickly closed the browser when I saw what Comcast wanted. Tom Newark, CA