BulldogTom

That was my question as well, but then I read the OP closely and it clearly states 100% from the employer, so I let it slide. I assume from the OP that they checked that out because of the way the OP was worded. Tom Newark, CA

That would be a stock redemption and no 1099 required. Just my first thought. Tom Newark, CA

But a SIMPLE match is limited to 3% of the employee income. So if the Spouse is earning 12K per year, the match is limited to $360. And the deferral is subject to FICA. In a SEP, the match would be 3K. Say the owner bumped the income to 15K per year, the match would go to $450, but the additional FICA on the extra 3k of income would go to $230 for the extra $90 of match. That is why the SEP, if possible, would be a better choice. However, in reading about the SEP, it is a profit sharing plan, so the idea that there must be profits to share makes sense. Tom Newark, CA

TP has a small schedule C business. He wants to adopt a SEP that contributes 25% of salary per year for his spouse (the only employee). Increasing wife compensation via the SEP contribution will definitely produce a loss in the business. I know the basics about SEPs, but I don't know if a spouse employee is eligible. If the business throws a loss, can he still contribute to a SEP for the spouse, or is she considered an owner as well for the purposes of the SEP and limited by the amount of income. Thanks Tom Newark, CA

We got the same email but they were looking for a preparer in Hollister and since we moved to Newark I figured something was up.

Don't start with that 50 shades of grey stuff. I would never lay a hand on you or any other woman. And this is a family friendly forum. Lets keep it that way. Tom Newark, CA

The issue is not the management fees, it is the vehicle from which the funds being used to pay them are coming from. All the expenses in a retirement account are generating deferred income, hence they are not deductible. Fees in a brokerage account are for the generation of currently taxable income, and therefore can be deducted to offset the currently taxable income that they are creating. Tom Newark, CA

If we are going to be stuck with this law, at least they could use the prior year income, and then allow for changes if there is a "life event". They already have a mechanism for that to open enrollment, so why not use the prior year, and if you can document that your income in the coming year will be less, then you go through the estimating thing and take your chances. I like your thinking on this Cathy. Tom Newark, CA

I live very close to the Tesla plant in Fremont CA. With both of my kids studying engineering, we frequently talk about Tesla and the advantages and disadvantages of electric vehicles and what advances are needed in technology to make the vehicles mainstream in the US. There is always press releases and news about what Elon Musk is up to in our local news. So we are watching Nascar this weekend when we started talking about how it would look if there was an electric vehicle Nascar race? In other words, challenge a bunch of rednecks figure out how to make them suckers go faster and farther with faster charging of the batteries and I think they would blow away the wine sipping Silicon Valley nerds who are trying to make this happen. That is all Nascar is about - going farther and faster than the guy next to you. If you think about it, it opens up a lot of possibilities. Dale Jr doing donuts in front of the grandstands at Daytona after winning in his Tesla model S and there is no sound coming from the engine!!!!!!! They could get Tesla to sponsor a circuit and call it the Tesla cup. Nissan Leafs competing with Chevy Sparks to see which one can get to 200mph on the backstretch? Nascar as the leader in the environmental movement? Tree huggers filling up the stands at Sonoma Raceway every year? Just some random thoughts for a slow Wednesday morning..... Tom Newark, CA

A few years ago, I was approached by one of my friends. His preparer died and he knew that I was in the tax business. He asked if I would be willing to talk to the employee who was continuing his prior preparers business about doing some per diem work to help her get through the workload that was too much since the owner passed. So I go talk to the lady, who was an employee of this small practice for about 5 years. As we were talking, it came out that the practice had been left to the son, but he was not a preparer. The woman who was doing all the returns was not licensed (a big no no in CA). They were not e-filing even though it was mandatory already in CA at the time. She was using the owners signature stamp on the returns she was preparing when they went out the door. I could not believe that she was doing this. When I pointed out the licensing requirement, the conversation ended and I left. My friend became my client, and after the season was over, the office was emptied and all the records put in a truck and taken away. I heard this lady was soliciting all the prior clients to come to her new office after the son closed the business on her. I wonder sometimes what happened to all those client files. Tom Newark, CA

Rita, in a community property state, if the ownership is joint, you end up with a full 100% Federal and State step up in basis on the first to die. If the stock was worth 100k and the basis was 10K, the surviving spouse steps up to 100K of basis. Tom Newark, CA

I think this is the right track. You have to select from the box and then fill in the rest of the required information for it to flow correctly. I am not in front of the software, but I recall having to do that earlier this year. Tom Newark, CA

California promotes the EITC. It runs PSA's on the radio and TV to encourage people to get it. The ads are very deceptive. "If you made up to 56 thousand, you could get a credit of up to 8 thousand." Like the way they use the top number for income qualification and the highest credit amount in the ad. I heard a commentator on a news show one time talking about the strategy, how the state promotes EITC as a way of bringing federal tax dollars back to the state to stimulate the economy. Tom Newark, CA

I believe if you go through the worksheet for earned income tax credit in the software, it will walk you through the calculation, and it will exclude from earned income any amount that was excluded on the 2555. I don't have the software in front of me right now, but I am pretty sure that is how it works. Tom Newark, CA

Yeah, it is not very intuitive. But you go to the letters, and hit attach, and then you select the items you want to add from the list. Tom Newark, CA

SWWWWEEEEEEEEEEEEEEETTTTTTT!!!!!!!!!!!!!!!! But I still prefer the Shelby Cobra Mustang. It IS my dream car. If I could just figure out what those damn 6 numbers they draw twice a week are, I will get me one of them suckers. Tom Newark, CA

Thanks

OMG!. That is my dream car. I need to raise my rates immediately. Tom Newark, CA

I am in favor of cutting out the bank and allowing licensed preparers to have their fee deducted from the refund and sent to the preparer. A split refund. You could apply for permission from the IRS at the same time that you renew your PTIN. Give them the account number that you will be using before the season begins. It should be simple to do for the IRS and it should allow the tp to get their return processed as fast as possible with no out of pocket expense. The IRS would also be able to collect data on the cost of preparation fees, not to mention allow them to have another source of income information about the preparer if they choose to audit the prep company's income. If combined with the outright prohibition of advances on refunds, it should clean up a lot of the fraud and price confusion in the industry. Tom Newark, CA

My first question? Were the stocks actually titled in the trust name? If so, why are they being reported on the individual's tax ID number? Tom Newark, CA

Linda, I believe that the transaction would be a sale or other disposition of an asset. There may be two transactions if he does not want to build. There will be a cost, covered by insurance hopefully, for the clean up and restoration of the land. That cost will be a non-taxable transaction, as it just puts the land back to the condition that it should be in to sell it. The proceeds from the insurance for the home that was destroyed would be the selling price of the home asset. Gain or loss would be recognized based on the remaining basis in the property. It will flow through the 4797 to the 1040. The short year schedule e will also go to the 1040 as normal, and if their are any suspended passive losses, they will be released and flow to the 1040 as well. The land will convert from rental property to investment property until sold and will will produce a capital gain or loss depending on the sale price and the basis. Hope this helps. Tom Newark, CA

That is the WORLD CHAMPION SAN FRANCISCO GIANTS in these parts. However, with Pence on the DL to start the season, the Odd Year Curse might be in play this year. Tom Newark, CA

When does Baseball and football start. I am dying with only nascar to watch on the weekends. Tom Newark, CA

The IRS needs to require the colleges to report on a calendar year. It makes no sense to allow them to continue to report on a school year when the tax law is on a calendar year of all the students. They make the colleges report a W2 on a calendar year for the students who work for them. They make businesses who are on a fiscal year report W2s on a calendar year. This is a simple change and would make tax compliance easier for students and the IRS. It is a no brainer in my mind. I wish the political establishment would just make some sensible laws. Tom Newark, CA

Thanks for this post all, I learned a lot from it. Tom Newark, CA