BulldogTom

The issue is at the Notice of Deficiency stage. The Taxpayer was late getting the 30 day letter to us. His fault, not mine. When we got the 30 day letter, the response time was past. We sent one anyway, but the NOD showed up about a week after the response went out. It is not just the 1099 income that is coming into the equation. Just for kicks, the IRS disallowed the EITC, which the client is fully qualified to claim (cares for his disabled brother). It is not just the 3K, it is quite a bit more. I don't have a great deal of hope for the client getting out of paying ordinary tax on the payment. But I am going to present as aggressive of an argument that I can. I think the IRS will realize they are going to lose on the SE income and the EITC. I might just get someone in appeals who will let me get all three issues through with a no change, but that would be a miracle. Tom Newark, CA

Sorry, when I said I did not do the return, I meant that my staff did the return, not me personally. We have had this client for many years. That is not the issue in this case. The payment was $9400. I will ask about an agreement with the bank. But unless the IRS gets a copy of the agreement from the bank, how do they know what it says? Credible testimony is still credible testimony, even if it is self serving. "I would not have completed the short sale had I not been given the additional funds" is pretty convincing. Thanks Tom Newark, CA

How about this. The transaction was not a foreclosure, but a short sale. I did not do the return so I did not know that little fact until yesterday. I think that strengthens my hand. Now the question is, is that payment listed on the sales contract. I don't think so, because the buyer did not make the payment, the lender did. But it makes the transaction definitely not a foreclosure, it makes it a sale. So the question is, was it a fair market value transaction only if the boot was supplied by the outside party to the transaction? If my client were to testify that he would not have made the sale absent the cash from the lender, it is part of the sale, because it would not have happened otherwise. Please keep posting your points. And if anyone knows how to get in touch with Jainen, I would love for him to come back an rip me to shreds on this post. Tom Newark, CA

Clients have been in the US for over 10 years (That is how many tax returns I have done for them). They were here longer, but I don't know how much longer. We have discussed FBAR and they don't have enough cash in the bank in UK to require reporting. She is a nurse, and was a nurse in the UK. Apparently, the first lump sum payment is tax free to her because of her occupation. After that, she will get a regular monthly payment that will be taxable to the US. Thanks for your responses. Tom Newark, CA

Here is the argument I am planning to take to tax court. §1001( b ) says the amount realized on the sale or other disposition of an asset is the amount of money received plus the fair market value of property received. The foreclosure of a home is a sale or other disposition of an asset. The taxpayer received (realized) money and debt forgiveness. I can't find a TR or Code section that trumps this one. I am looking, but all I see is the IRS VITA tax guide saying that if a taxpayer received a 1099MISC it is taxable. My argument is §1001 (a) and ( b ) control. I know the IRS is not going to agree. Where is Jainen with his encyclopedic knowledge of the IRC when you need him. Tom Newark, CA

Client received a cash payment for not fighting a foreclosure on his personal residence. Bank issued a 1099MISC. Client never gave me the 1099. IRS now wants tax and SE tax for the 1099. Question - is there any way this payment can be part of the sale or other disposition of the property? Because if it can, the transaction results in a non-deductible loss on the sale or other disposition of the home. Anyone think I am crazy? Tom Newark, CA

Client is going to start receiving retirement payments from England. She says the first 45K payment is tax free to her in the UK and the monthly payments that follow will be taxed. Anything special about this transaction I should know about? Looks to me like the 45K will be taxed as ordinary income in the US and the monthly payments will be eligible for the FTC. Never had a foreign source retirement income client, so any help is greatly appreciated. Tom Newark, CA

Thanks Judy. That is what I thought I might have misremembered. Tom Newark, CA

Wasn't there a cable company (Adelphia?) that the founders looted the company for personal items. High dollar artwork, yachts, houses, planes all on the books but used personally. If I remember correctly, the whole family was employed but few of them actually worked. Some one help me out on this one. Tom Newark, CA

Taxpayers are H&W. Several years ago, they sold the stock of their company to a related party on an installment agreement. Very low basis in the stock. 95% GP% on the payments they are still receiving. Spouse passed away this summer. Is there any way to step up the basis on the payments being made on the installment agreement. I think I remember something about a special rule for installment sales, but I can't seem to track it down. TIA Tom Newark, CA

The problem is that congress or the IRS will not require the institutions to report on a calendar year. What they let them get away with is amazing. It is the equivalent of letting a corporation on a fiscal year report their 1099's for the company's year rather than the calendar year. I don't get that one. Is there anyone who knows a congressman with an ounce of common sense? Tom Newark, CA

We are planning to go to a show, and we might stay and extra day or two, so the difference in the hotel cost will offset the cost of a rental car. My Sister may be out in LV for other reasons that weekend, so we may stay to spend some time with them. If the Rio was right on the strip, instead of across the highway, I might have stayed there. But the vibe in Downtown, with the street vendors and the LV experience makes it a nice place to stay. Keep us in mind if you decide to go. I am thinking that I want to go see Jersey Boys. Are you interested? Tom Newark, CA

Eric, Before the upgrade, we used to get single spacing when making a carriage return/hit enter. Now it is double spaced. I am guessing that you are using Word as your editor for these posts, and the great and powerful gods of Microsoft have declared that that is how the defaults should go. Can I change the settings, just for me to have a single line when adding a carriage return? If yes, how do I do that? If not, can you change it globally, and if so are you willing to change it for everyone just because I don't like it the way it is now? Thanks Eric. Appreciate all you do. Tom Newark, CA

I have not booked the flight yet, but Southwest is offering $73 each way out of San Jose. They usually don't raise their fares until 21 days before the flight so I am going to wait until I book the conference on the last day before the discount expires and book my flights and hotels the same day. The Rio looks really nice, but I think we might go to Downtown LV for our hotel. It is a lot less expensive, even if the rooms are not as nice as the "Strip". I can get rooms for about $30-50 in downtown. There is one for $19, but I stayed their one time and the rooms are very tiny. Are you going to this tax forum? Tom Newark, CA

Gail and Deb are correct for TY 2014. But, in tax year 2015, she could have no income and qualify for medicare or if she has a job that pays less than 400% of the poverty level, she could get a subsidy, even with the 400K in the bank that could be used to pay for insurance. That was the point I was trying (very badly) to make. Tom Newark, CA

I try to get everyone to invest with Edward Jones because I like their year end statements and it makes my job a lot easier to prepare their tax returns. Tom Newark, CA

I think I am going to try and get tickets to Jersey Boys. I have not been to a good musical since we saw "Cats" in London on our honeymoon. That was a long time ago. Tom Newark, CA

​I don't think I see anywhere in the code or regs that the testing for affordability is wealth based. It all seems to be income based in my reading. So, I could have a million bucks in the bank, and still qualify for the subsidies because my job working seasonally at the ski resorts does not meet the 400% poverty level. That is the way I read it. Just my 2 cents. Tom Newark, CA

I think you all ought to come to Las Vegas instead....because the desert in the middle of summer is a much better experience. (s). But the pool at the Rio looks inviting. Patty and I will be going to LV. The flights and hotels and rental cars are so cheap I can't pass this one up. Anyone else going to Las Vegas? Never been to an NATP event. Looking forward to it. Tom Newark, CA

I have recently noticed an occasional glitch when I open 2014. The blue screen will come up and the program will not open. I went to task manager and it shows ATX Splash Screen on the task list. When I cancel that task, the software opens up. It just started doing this to me after tax season, and it does not happen all the time. I noticed that it happens when I fire up my computer and I click on the ATX icon immediately. If I wait until I have opened my e-mail and internet, it does not seem to happen. weird. Tom Newark, CA

​I still use QB Pro 2003. I will until I am forced to put it out to pasture. When I got the software, I conned the support rep into giving me the password since at the time, I did not have an internet connection. I can load it as many times as I want. I only load it on my machines, but I have had a lot of machines in the last 12 years. Tom Newark, CA

I pulled this quote off the web. "The law itself asks the bureaucracies to do something that's basically impossible," said Holtz-Eakin. "Find every American, determine their income. Given their income, determine the subsidy for which they're eligible, send that subsidy in advance every month to the exchange in the state of their residence, and to the insurance plan of their choice." That says it all. Tom Newark, CA

I think I will see more of my clients filing Tax Court Petitions in the future. As soon as I see the Notice of Deficiency, I will be recommending that they file the petition to get to some level of competency in the IRS. Of Course, that means the tax court will be overwhelmed and tax administration will grind to a halt. But I think it is the only way to get the IRS to come to the table to work out our client's issues with the tax agency. Nothing else will work. They have turned their back on tax professionals. The courts are going to be our only redress for our clients going forward. Tom Newark, CA

I got home from work today and there is a message in my inbox from one of my clients. They are selling the rental and want to know what the tax consequences are. I tell all my clients to talk to me before they do stuff like this, and it warms my heart when they actually do. Now I can save them from the 3.33% CA withholding on the sale. Tom Newark, CA

Never mind. I found it. I am a dufus. Tom Newark, CA