imjulier

I'm not sure I agree with Jack just because I am not 100% certain. I do however have clients who use their retirement accounts to invest in real estate. In researching this, I found out about all the rules and prohibited transactions (which jack refers to) and determined that most clients are not savvy enough to do this on their own without significant guidance. Per your description, I suspect this is the case with your clients. That being said, I would have the concern that the IRA has become disqualified and is now fully taxable. This is one you need to spend some time and read up on. Not the most convenient right now but did they really just decide to tell you all this? If so, they can wait and live with the consequences. Where is the money? Is it back safely in an IRA or a legitimate self-directed IRA? I know this isn't that helpful but I'm just trying to throw some questions out there and continue the conversation. Julie

If one car was traded in for another a 1031 exchange would be used. trading in for a lease, I don't think so.

Another accountant always says, "Zip up your jacket, your heart is falling out." LOL. Ah, that's a good one. I've totally noticed that my rich clients donate nothing except old underwear and my poor clients give all but the shirt off their backs.

I agree with Pacun. Mortgage interest subject to limitations if they apply.

I did one there last year that sounds just like yours. That's how I did it.

Yes, prior year losses should carry over to line 1c on the 8582. I have not had a problem with these rolling over. However, if I was having a problem rather than figure out the rollover problem, I'd be inclined to over-ride on worksheet 1.

Have 1099 Div and 1099B which has parent's name on it as custodian but the child's SSN so I'm thinking that's where it will be reported to IRS. I'm thinking this should be reported on the Child's tax return (not a child any more...age =20). Any other thoughts? Thanks, I know everyone is busy!

Was this an above board sale? It wasn't sold to a friend/relative for $20K was it? If so, its a related party transaction and I think the loss is disallowed. We'll figure that out depending on your response. It looks fishy to me.

Hey- I'm just checking to see if I'm missing anything. Student has claimed Am Opp Credit for 4 tax years but still needed to complete some credits so still has tuition in order to get a degree. It looks like they can still claim the tuition deduction on the front of the 1040. Correct or am I missing something? None of my reading indicates that they can't claim this. Interestingly enough, when I checked for errors in the return none popped up, but when I went to e-file, I got the error that the student was eligible for the Lifetime learning credit. Parents are phased out of this based on income but they are not phased out of tuition deduction. Interesting, this will help that following the normal school year (Sept-May) it would take most people 5 years to get finished. Thanks for your input. Julie

Judy- Thanks for the great article. And thanks to others for your well wishes.

Seems like I should know this but I have been up all night....had to put down my 14 year old dog last night which was just a little sooner than I thought. So sad, she was a great dog. Are there any adjustments to make in going from a PC to LLC filing Sch C? I am only familiar with built in gains in going from a C corp to S corp and only at time of sale of the assets. I think that does not apply to this situation. Any other considerations on transferring the assets? They are fully depreciated (some with bonus depr taken) and another preparer did the final return for the PC. I'm thinking about just not transferring them over to the Sch C. Anyone know anything different? It is a small amount of assets anyway. Thanks, Julie

Sorry Joan- That sounds worse than mine and I don't have any suggestions. Extension sounds great. Julie

I found it! But I might send her on her way next year any way. She missed picking up a deposit in her revenue....too bad I spent all that time trying to look at the expenses because I was convinced it was on the expense side. Shoot and miss I guess. Oh well, I will have to tell her that me finding that one mistake probably cost her $375. Oh brother.

I agree with you that this is a really big plug. I do have her complete bank account download and can do some double checking. I am an actual accountant and do understand all the debits and credits. I think there is something wrong in her spreadsheet but for the life of me I can't figure it out. Like I said, she is not a big help as she never understands why I might need additional information and why I end up charging her for 20 hours at the end of the year. We go though this every year. I think I will work to get her bank statements monthly next year and do all the bookkeeping in QB and I bet my bill to her ends up being the same over the year without all the frustration. If she refuses, I will let her go to someone else.

Just wondering what you all do when your S corp books end up being out of balance? If I have to "plug" a figure, I reduce expenses since the information I have from the taxpayer obviously can't be relied upon. Do any of you take a different approach or does everyone else balance all the time (impossible I say). Here is the more lengthy story. I get a spreadsheet of data downloaded from the s corp bank that the owner (not an accountant), then manipulates to try to determine her expenses and split them out into categories. She splits out taxes paid (IRS and state) , contractors, and many other categories. I take her information and put it into my own spreadsheet to compile her financial statements....balance sheet and income statement that I then use to complete the s corp return. In the process of doing this, I end up reconciling cash to the bank but it inevitably ends up being off by some amount. This year, it is off by $11K. If I talk to the business owner about it, we are unable to get anywhere because she has no idea what accounting is and why anyone actually does it. I have tried numerous times to get her to start using an accounting package but to date, she refuses. Anyone have any input into how to address this situation? Thanks. Julie

Seems odd that the client would take the initiative to mail them to the SSA unless you gave them explicit instructions to do so. I suspect they sent them to the recipients and the recipients will know that they received the same form twice.

Funny, I go the other way. Take the time to make all the entries in the tax software and then enter in summary in QB. Also, how you allocate the purchase price can affect the outcome. Maybe someone knows if they have ever taken your approach.

I called my carrier about a claim for about $1200 and found out this amount was less than my deductible. Also, after the call got the amount reduced to about $800. Agreed to split it with the client. Lucky enough that the client knew that mistakes happen and fully understood that this was a one-time issue and resolved for the future. Most of my clients are like this but I could see one or two flying off the handle.

KC-Those are good articles. I noted that one recommends CPAs look at cost segregation if the purchase of the building is gretaer than $750K. That does not fit this situation. I'm curious if anyone has had a chance to catch up on the new capitalization rules though because I think they require this....anyone know?

Who does a cost segregation study? A realtor? I wonder if this would help my client as they have a commercial bldg which I simply allocated between land and bldg. Bldg is obviously being depreciated over 39 years. They are paying off the loan over 20 years. This is creating $0 cash flow but they are having to pay taxes due to income. I believe allocating some assets to a different class life would obviously accelerate depreciation and lower their tax burden. Does anyone have experience with this? I'd appreciate some input just to make sure I am thinking about it correctly.

Just curious. Whaty does evertone else say when clients claim to know the M&E rules and know that the 50% limitation doesn't apply to their transactions? It only takes one year for a new client to determine that they would rather not report the M&E and bury the expenses in another category like marketing, presentations, etc. Since I have yet to have a client in 10 years that is willing to take the 50% hit, I'm wondering whjat everyone else does? I generally argue with them for a while and then lose them as a client because I won't treat it the way they want it to be treated. I now there are legitimate exceptions but they don't care. What do you do?

It didn't work for me either by making the election in Asset Global Settings. I just selected "none" from the asset entry tab and it seemed to work. But probably not technically correct.

Hey- Anywhere on ATX site or others that we can check which forms have been approved for e-file? I can't find one and am just wondering if I'll be able to e-file forms 8582, 4562, and Sch E p 1. Thanks, Julie

I noted in using the 2013 payroll program that the 940/941 EF info form is not available. The ATX website does not have any information on this form. Anyone know when it will be available or followed up on this in any way?

Good morning- You are all a wealth of information. Thanks for the responses. Julie