Lion EA

Thank you both. She's on SS and RMDs from her IRA. 2022 she drew out about 3X her RMD from her IRA. She also has an investment account that she's spending down on her medical care; I don't know her balances. She did say that the $20,000+ for these two years will wipe her out. I don't think it'll wipe out her principal, but she will be selling more to generate cash. Probably a huge hole in her stocks. (She had a great broker and did well in the stock market; we kept up with ES. When the market turned down, she owed little to nothing with her broker carefully harvesting her losses. I stopped her ES. In the two years she was too sick to gather her documents for me, the market went up, her broker did a good job, but she was out of losses to sell. Suddenly I have her last two years in my lap with new SS, new RMDs+, and net CGs, resulting in large taxes plus large P&I. I'm trying to keep her stress level down. She has an infusion today. I'll get her signatures this afternoon, if she's up to it. She gives me checks to mail for her.) Her out-of-state son visited my client a few weeks ago. He called me to say he knew he should try to gather her tax documents, but didn't have time. He asked if he could wait until she died to deal with it all a once! Then my client called to tell me she does NOT want her son dealing with her taxes. That's when she put together 2021 and 2022. Except her broker and investments and IRA were at First Republic that collapsed. It's taken me time to get all that. I think I have everything. That website is very helpful, cbslee. It is a bit ambiguous re whether to pay and then ask for FTA or reasonable cause/Form 843/letter or not to pay the penalty first, but it is clear that IRS collections efforts could begin if not paid. I think this client and her stress level might choose to pay (even though the thought of paying is stressing her out). The wait appears to be 2-3 months to a year. Do you all suggest I phone today/Monday/Tuesday to try for FTA on the older year? Is it possible it could be immediate so I can coordinate my client mailing a check for the revised amount? I don't have a POA. Should I get that now? It'll only last until she dies, but hopefully I can make some progress re abatement. Again, thank you.

Not that it matters, but I had the dates off. She was diagnosed in 2022 and was very, very sick late 2021 into 2022 making the rounds of doctors until her diagnosis and then treatment and now nothing more can be done.

Filing 2021 and 2022 for a client dying of cancer, who has been very, very sick since early 2021/late 2020. 2021 especially has a large penalty. If we hope to have that penalty abated, do I have her pay it along with the tax and interest now? Or, pay everything except the penalty? If she should pay the penalty now, how would we get it back later? Part 2: try for reasonable cause? Or, just go with FTA?

My husband is music director at a church that uses DropBox, but never for sensitive data. He got a message yesterday from Norton (maybe, whatever he has for security on his desktop here at home) that his DropBox password has been compromised. It's the same for all 3 church employees (him, admin, priest) but never any PII. They use it to send the bulletins to each other for proofreading, that kind of thing. I won't use DropBox for my biz.

I'm from the Chicago area and do NOT have an accent. Those in southern IL have an accent. Those in WI, MN, and MI have accents. But not me!

What's "all y'all"?

You're getting all the [fill in the blank] ones this summer, aren't you?!

Because the depreciation has been taken for over two tax seasons, you do NOT amend. You will use Form 3115 to calculate/report the correct depreciation and make the 481a adjustment on the current return.

I was asking if I should mail her 2022 original documentation to her/the soon-to-be-former client. Certified? Registered? Return receipt requested? Is electronic tracking enough? Now? August? When? With the Firing Letter? Have her pick up in person, because she dropped off in person? Have her sign a receipt listing her documents picked up? I'm trying to avoid anything that will add to her idea that I misplaced any documents. Fire her, but NOT make her more angry than she is already. And, cover my butt, because she IS angry.

She already picked up a physical folder of her 2021 returns, and I uploaded a set to FileShare and sent complete copies via eSign. No future set unless she pays her $800 fee to me! And, picks them up in person AND signs for them.

Thanks, Dennis. I should ask my insurer before I make a move. She had a new house built, sold her old house, so was displaced for awhile with some things in storage. The CPA is a very new neighbor. Of course, he could be a corporate CFO or something not related to personal income taxes at all.

Good point. This is why I have insurance. Should I mail her back the 2022 info that I will not use with a cover letter to fire her? (I've had the letter ready since she refused to continue to use my portal and eSign while preparing her 2021, finally, after she got me her missing 2021 info in 2023.) I have the USPS flat rate w/tracking envelopes. Or, should I use registered mail? Or, certified mail? Return receipt requested? Or, ask her to pick up her materials, since she dropped them off each year. If I do that, do I need her to sign a list of what she's picking up, because missing documents were the 2021 issue. Then I have a confrontation with her if she won't sign, and I can't keep her tax info. That's what I hope to avoid by waiting her out...

I'm afraid that an immediate firing will lead her, especially if she has that CPA's written or recorded opinion, to filing in small claims court or turning it over to her lawyer (she has a biz so has had legal issues and doesn't hesitate to engage her lawyer). I don't expect to get paid for 2021, but do hope she calms down or is mad at someone else about something else now. Because she dropped off 2022 when she picked up 2021, I do need to fire her, what, in August to give her a couple months before her extension ends? Or, July? Now?

I have one like that now. Retired teacher who neglected to give me her NY and CT 2021 Forms 1099-R. I knew she needed them (long-time client) but she claimed she gave them to me with her 2021 tax info in October 2022. She finally obtained duplicates from NY and CT in February 2023. Now she says her neighbor the CPA tells her that I should pay all her penalties and interest because I filed her returns so late!! She is threatening further action if I don't "do the ethical thing." I've contacted my E&O provider who wants me to file a claim. Very time-consuming. In the meantime, she dropped off her 2022 tax info; I filed 2022 extensions for her. And, of course, she did NOT pay my 2021 fee. (She said she was leaving me a check when she picked up her 2021 tax return folder, but she did not.) By the way, this woman has been communicating electronically and was one of my first to use CCH's eSign to sign her returns and receive her review copy a few years ago. But for some reason this year she said she cannot use FileShare that she's used for years nor eSign, not even email except when she chooses to email me. She has been mailing things like the missing Forms 1099-R and Form 8879, adding weeks to our 2021 preparation time.

Make sure you charge enough for all the 2018-2022 amendments and prepare them on your own schedule to give you higher annual income this year and next. And, your 2023 prices will be higher, also, to take into account NE's new rules! Get those prices up over the next year before you sell your biz or your client list. And, charge for tax planning as you look at the QBID on each biz return going forward to use the 2/7 rule. Charge a bunch to save your clients a bunch. Here's one article with an example: https://craykaiser.com/the-2-7-rule-for-wages-and-maximizing-qbi-deduction/

One Form 3115 expert is Lisa Ihm and Brass Tax Presentations. They have a $20 booklet with line-by-line instructions and spreadsheet attachments and... https://brasstax.com/shop/ols/products/form-3115-line-by-line-correcting-depreciation Look around their website.

He can issue a 1099 if he wants to, and he might want to -- to document all the funds that went our to that contractor.

And, think of the realistic IRS bills it could create! (Maybe already has.) All types of spam will be more believable, and we have to be more careful than ever. Right now we can prompt ChatGPT with writing samples of who we want it to imitate, and then prompt it to write certain emails, whatever.

10,000 NYS families bought Fairfield County, CT, homes in 2020. Prices soared in CT. (Probably dropped in NY.)

One of the AI proponents on TaxTwitter said that AI will not replace tax preparers; however, tax preparers who use AI will replace tax preparers who do not. So far, I've only used AI (ChatGPT, an earlier version) to write to letters at the start of this tax season, one to announce/accept my price increase and one to fire clients. I look forward to having my tax software, tax research, etc., build in AI capabilities that I can use seamlessly. I do NOT want to be nor have the skill or time to be the technical person who creates new AI uses in my business. I guess that means price increases from my vendors. Hopefully in line with productivity increases.

Wow!

Not sure I've got it, yet !! So H was a partner until that last day, so they both get Final K1's with their shares. BS is what BS is on that date, NOT zeroed out? H's ending capital/basis/etc. is now zero on the last day? And W's is now the combo? Or does it even matter now that it'll be a SMLLC on their joint 1040 for the last 4 months of the year?

It is an LLC, H&W only MMLLC for short year, 50/50 so "dissolved" as of the date of the 50% change, Form 1065 for many years, but now a SMLLC. OK, I think I can do this. Thank you, Kathy and CBSLEE. Very helpful. (My only other partnership was my own son/wife who are divorcing, so I told son-to-be-ex-DIL to take the returns elsewhere. I will have no 2023 partnerships. Two S-corporations, but they both have bookkeepers. And, a few trusts, but they are dwindling, also.)

H&W 1065. H is slipping into early dementia. Lawyer has him sign over his 50% partnership interest to W while he's still lucid enough to make financial decisions. Gift. No money changes hands. Last day of August 2022. Filed extension to 15 May 2023. Final 1065. Schedules L & M are my weak points anyway, but wife keeps good records. Balance sheet goes to zeros, right? Distribute to H&W 50/50? Or 50% goes from H to W within 1065 and distribution is 100% to W? Or, something else entirely? Does it matter, since they file MFJ anyway? Never dissolved a partnership before. (Trying to get my few biz returns to go elsewhere, but I do this whole family's personal returns, so need to get this done.) What do I need to know? Service biz, ran a job fair (performers & tech staff to meet summer stock theater casting directors) -- which died out during Covid -- with a "subscription" part that continued. Owned a portable keyboard that's depreciated and some cash in bank. CT-based, so PTET mandatory. All help gratefully appreciated.

The IRS's Audit Techniques Guide states on page 14: https://www.irs.gov/pub/irs-utl/ministers.pdf "Ministers often pay a small annual renewal fee to maintain their credentials, which constitutes a deductible expense. However, ministers' contributions to the church are not deductible as business expenses. They may argue that they are expected to donate generously to the church as part of their employment. This is not sufficient to convert charitable contributions to business expenses. The distinction is that charitable contributions are given to a qualifying organization (such as a church) for the furtherance of its charitable activities. Dues, on the other hand, are usually paid with the expectation that a financial benefit will result to the individual, as in a realtor's multi-list dues or an electrician's union dues. A minister's salary and benefits are not likely to directly depend on the donations made to the church. They may still be deducted as contributions on Schedule A but may not be used as a business expense to reduce self employment tax."