BulldogTom

Great, this will be my busiest weekend of the year. Tom Newark, CA

Turbo Tax just announced that it will stop efiling to ALL STATES. Tom Newark, CA

Update - I am back in the game again. So, I still don't know the answer to the problem with the iterative method when it keeps bouncing back and forth. I think it is an issue that the IRS has not contemplated, especially with the added confusion of the taxable part of SS changing. Using the Alternative Method would have meant that the TP would have had to pay it all back, because if I am reading the Rev Proc 2014-41 correctly, you only do the entry one time and stop. So that was not a good answer. If I put a $2000 IRA contribution into the equation, I can use the iterative method and it actually was not bad. I think it took me 3 turns through the changes and I got to even on the amount of the credit payback and the amount of the SE HI deduction. Thank you Judy for that wonderful suggestion about contributing to an IRA. It saved my client about 4K. Tom Newark, CA

Judy, Why did you use $2500 as the max payback. He is single and I think the max payback for a single person is $1250. This is where I kept falling back into the over 400% trap. And thank you so much for taking the time to work on this. I appreciate you. Tom Newark, CA

Yes. That is the amount on Line 33a of the 1095A. And I like your idea about the IRA. I think he can use that. I don't understand the alternative method. I think I am going to read it one more time and then go to bed and see if I am smarter in the morning. Thanks Tom Newark, CA

I have tried to read Rev Proc 2014-41 and I guess I am stupid, cause I don't get it. TP is 63, Self Employed and draws SS. Went to Covered CA and got coverage based on his income 2 years ago (No SS at that time and a bad year for a construction contractor). They gave him an advanced PTC of $5,834. Premium for the year is $6,179. Income from SE is $31666 (the best year he has had since I got him as a client 5 years ago). SS Gross amount is $19,764. SE tax is $2,237. I have the return almost done when the TP brings me the 1095A today. I plug in the numbers on the 8962 and he has to pay back some of the credit. OK, we expected that. Then I go change the SE HI deduction based on the calc of the 8962, and he has to repay 100% OF THE ADVANCED PREMIUM TAX CREDIT. His income is now more than 400% of income. So I heard about this situation in my update class, that it is a circular calculation and if you go to Rev Proc 2014-41 they tell you how to make the calculation. I can't figure out what the Rev Proc is saying. The problem is, the other moving number is the SS benefits. So every time I move down the amount of the SE HI Deduction, more of the SS is taxable, which increases the income level to over 400% of the poverty level, which makes the whole credit go away. But if the whole credit goes away, the taxpayer gets to deduct the entire amount of the premium tax credit that he gets to repay, making him below 4 times the poverty level and I start all over again. Can someone explain Rev Proc 2014-41 to me? Is there a formula that I can use? Something that will get me to the final answer? Please. I just feel stupid. Tom Newark, CA

Great question Jack, and from the answers so far, I don't think any of us know the right answer. Please let us know if you come across some official guidance. I would say call the service, but they ain't answering the phones. Perhaps a call to Heathcare.gov support personnel? They are working theopen enrollment right now and they are the ones who are where the request needs to go. It is thin, but better than what you have. Tom Newark, CA

You have 2 issues here. You have the cost basis from when they bought the house and land, and the depreciable basis from when they transferred the home to a rental. If those 2 amounts are the same, and I would suggest they should not be, the disposition is simple. If you don't have the land on the fixed asset schedule, put it on and do a bulk disposition. Everything will flow through the software. If there was a difference between the cost and the depreciable basis, because when it was put into rental status, the value was less than the cost, then you need to make an adjustment to the basis to get the proper amount of gain on the sale to flow through. Tom Newark, CA

I think the mileage to and from is deductible charitable mileage at 14 cents a mile. Might pay for 1/2 of the cost of the gas. Everything else I would pass on. Just my 2 cents. Tom Newark, Ca

They are starting to come in. I have a couple fee collects that are hitting my account today. Tom Newark, CA

I tell my clients it is a PENALTY TAX. The 9 clowns in black gowns called it a tax, and that is now the law of the land. Tom Newark, CA

OOPS. But the repayment was only $7, so I don't think it will go on the IRS radar. Tom Newark, CA

That is what I did when I got the error message. The 1099G had $0 in box 1 and a repayment amount. I could not get past the error so I put it on line 36 with an explanation. Tom Newark, CA

Hate the Seahawks. Not a fan of the Bellicheat team. I think the Pats win in one of the lowest scoring super bowls ever. The SEA defense is better than the Pats O which is very good, but the Pats D is so much better than the SEA offense, and yes I know SEA has the BEAST MODE in the backfield. Won't matter. Pats D is a strong unit that can focus on Lynch and still shut down what little passing the Hawks generate. So long as the Pats offense does not turn over the ball....... Pats 13-6. Pats score their TD on a short field turnover when Wilson fumbles trying to scramble. Tom Newark, CA

I think I have it figured out now. It is just the way the instructions are written that got my boxers in a bunch. Thanks for pointing me in the right direction. Tom Newark, CA

This shit should not be this hard. Excuse my French. Thanks Ladies. Tom Newark, CA

TP has a family of 5. On January 1, he is working part time and spouse works full time. Neither is eligible for health insurance through their employer. 2 of the dependents (spouses children from previous marriage) have coverage through their father per divorce decree. One dependent (child of the TP) is not covered. At the beginning of the year, they check the cost of a policy on the exchange and find that it exceeds 8% of their family income. They do not purchase. In May, TP moved to full time with his employer. Significant increase in pay. Son (full time student, dependent) also gets a job when he starts college. TP enrolls his family (himself, spouse and 1 dependent) in employer plan. Has to wait for coverage to kick in. Policy is effective 8/1/14. So we have 7 months of non-coverage, for which I was able to calculate the penalty tax. That was pretty straight forward. I I am struggling with the affordability exemption. I want to give it to them if they qualify, but I don't want them to get audited if I screw it up. And I think they are right on the line for qualifying. I am getting lost in the affordability worksheet. Do I compare 8% of their full year income to the cost of a bronze level plan for a full year to see if they qualify for the affordability exemption, or the second highest silver plan? It makes a difference. They come out to 3.82 times the federal poverty level, if that is important. I thought I had this stuff down, but now I am spinning from going through the worksheets. Thanks for your help. Tom Newark, CA

I think if they convert before the first partner withdraws, they can do the conversion tax free, and then the leaving shareholder can sell to the remaining shareholder. Tom Newark, CA

I think there is. Look at §351 for the beginning of your search. Then look at Rev Rul. 84-111 and Rev Rul 2004-59. I am not an expert on this, but I did a little digging around and I think you can get a tax free conversion of the partnership into a Corporation. The basis in the stock will then be the basis in the partnership interest. After the conversion to a corporation, the departing member can sell his stock to the remaining member. I think you can elect S status as well at the same time. You might even be able to execute a buy sell agreement in the corporation articles to facilitate the immediate transfer of the shares at a predetermined price. I really think this can be done. Perhaps the partners have a buddy who specializes in Corp Formations to help them out. Read the article from the link below and then see if you think this can be done. http://fedtaxdevelopments.foxrothschild.com/2010/08/articles/federal-tax-rulings/review-of-incorporation-of-a-partnership-rev-rul-84111-19842-cb-88/ Tom Newark, CA

This year is quick, no issues, just very smooth efile. I think sticking through the bad times with ATX might be paying off. It ain't what it was before, but I am really happy with the e-file this year, as well as the rest of the software in general. Tom Newark, CA

Thanks Lion. Tom Newark, CA

Lion or KC, Where is that information in print for me to review? If it is not too much to ask? Thanks Tom Newark, CA

TP has been involved in a lawsuit against a former employer. It is now moving to settlement. The lawyer asked the TP to ask her Tax Professional how to word the settlement so as to reduce tax liability. First of all, I am not going to bite on anything that has to do with the wording of a settlement. I do taxes, I am not a lawyer. I know this and will be careful. I think I know all the rules. The portion of the settlement that is attributable to lost wages must be paid as a payroll check, subject to all PR taxes and withholdings. The portion that is attributable to punitive awards is other income reportable on line 21. Many years ago, there was some ambiguity in the law about discrimination settlements and if they are taxable. From my understanding, the Supreme Court settled this matter and all discrimination awards are subject to the rule I just wrote down above. I think Congress also stepped in to make the laws match the SC rulings. So my advice to the TP will be, if your attorney has the ability to move award amounts between lost wages and punitive damages, the higher the punitive award, the better. Did I miss anything? Thanks Tom Newark, CA

But we are not talking about an adjustment to the tuition, we are talking about a payment used for paying tuition. A distinct difference. Tom Newark, CA

This is normal. They will e-mail you if there is a problem with your submission. Tom Newark, CA