OldJack

Regardless of the value of a person's estate at time of death there is an "estate" that must file a federal income tax return on form 1041 if the estate has gross income of $600 or more. If the estate did not distribute the shares of stock and instead sold the shares of stock distributing the cash, then the estate must report the sale on form 1041. The estate should use the fair-market-value of the stock for cost basis (stepped up) as of the date of death to determine gain or loss for the 1041 Sch-D. Income earned and recognized after the date of death are not loose ends and must be reported on form 1041 rather than 1040. The tax year of the deceased ended on the date of death for form 1040. It is a common practice that income reported (in error) for the entire year under the social security of the deceased must be prorated for 1040 and 1041 based upon the date of death.

This is normally a W2 taxable benefit but it depends upon if the payment is non-taxable as a cafeteria plan, life insurance plan or just an employee benefit. See Publication 15B.

So now Jainen, you switch and try to sell the cereal without the box. LOL

>>"Additional" is also a general term.<< Jainen.. you are trying to sell a cereal box without the cereal.

>>First, the judge observed that<< As it says its only the judge's observation and his ruling in his court. Fact still remains that the law is clear with congress intent when the code says "additional tax". The term "additional tax" is not something any congress could not understand when voting. Sure congress intended to penalize the taxpayer just like they do with all taxes, but the word of the law still says it is an additional tax. I have not read the court cases but it appears as another example of judges trying to legislate from the bench. Also, this post was not about bankruptcy cases, you can do better than that.

Oh please. It is clear that the warranty covers penalties and interest, but in this case it is clearly an additional tax. What the preparer failed to include on the tax return was the 10% additional tax that was due. The tax code 72(t) clearly calls it an additional tax so we should quit calling it a penalty and trying to make it covered by the warranty.

>>That seems pretty flimsy to me. << I'm just a flimsy guy! :P

It is an additional tax:

Admitting ones mistake is desirable and we should all do such. But going back and doing it as an edit by erasing the texts leaves the following posts needing edit also. Should we all have to edit our posts just because someone previous edited theirs? Such mistakes should be up-front showing the mistake and a statement correcting. Erasing the mistake is not admitting anything.

I must take exception to your conclusion. I believe that, as a CPA, I study much more than any doctor or lawyer and participation on tax forums is not to put anyone down it is to discuss and study more than doctors and lawyers. I have both doctors and lawyers as clients and at least the ones that I have are not all that smart. edit: and to show them I am a professional, I usually charge doctors and lawyers twice as much as anyone else.

This penalty was in fact caused by the taxpayer. Jainen, what is it about the original post that says "They left off the 10% penalty for early withdrawal of retirement plan" that you don't understand. The error was clearly that the taxpayer owed the 10% penalty and it was not on the original prepared tax return. JH did not cause the early penalty, the taxpayer did, with the IRS recognizing it had been left-off of the tax return.

Original post: >>A gentleman had his 2005 return prepared at Jackson Hewitt. They left off the 10% penalty for early withdrawal of retirement plan. The retirement withdrawal was included.<< Call it what you want but JH should not have to pay the "10% penalty for early withdrawal" as that was owed by the taxpayer had JH not made a mistake. If the IRS had not caught it should the taxpayer have paid it to JH since the taxpayer really owed it? Of course it would be good advertising for JH to pay it.

I like seeing who is reading the post shown at the bottom. Sometimes I just read to learn and have nothing further to add to the post. Its not like I don't want to let anyone know that I don't have an answer. Other times it may be that I don't have time to answer and just want to know what is going on with the post.

For such a quote you need to give us a reference. My only question is with regards to: >>Since the gain shown on Line 16 (Schedule D) is due to depreciation, this gain is considered unrecaptured §1250 gain. It will be included on Line 19 of Schedule D. << What authority says it is unrecaptured §1250 gain when the property at time of sale is §1221 rather than §1250?

Gain upto the amount of depreciation allowed or allowable after May 6, 1997 may not be excluded under code sec. 121 and is therefore taxable. What form it is taxable on depends upon the physical location and access of the rental portion of the home. Basically, if access is within the personal residence portion it will be reported on 1040 Sch-D, if access is only from outside the residence portion it will be reported on form 4797 subject to ordinary income tax rates if form 4797, line 8, has "Nonrecaptured net section 1231 losses from prior years". Otherwise the gain will flow from 4797 to 1040 Sch-D as "Unrecaptured section 1250 gain".

>>It is a REALLY BIG bottle<< Hmmm. You never cease to surprise me with such knowledge KC.

And my Congratulations also. Its always nice to see the good guy win! Now send us our consulting fee. :)

Well... thats a lot of police. How did they get all 13 in one vehicle?

>>you MEANT to say "giggle<< Yeah sure JohnH... I'll bet everyone else thought I meant "jiggle", when the truth is I meant "wiggle" so others in the office could see. LOL

>>Thanks Old Jack. I knew perfectly well what you meant.<< Actually I about fell out of my chair laughing when I read the other comments and saw what I had done. Truth is a good giggle might also help. LOL

VGA cards can become loose as a result of heat and cold, starting and ending power. Since this is an intermittent problem I would check the card to see it it is properly seated in the socket before purchasing any new hardware. All you have to do is giggle and push on the card.

The only reason tax prep fees are so low is that we think we have to compete with other tax preparers. Your clients stay with you because they trust you, not because you charge less than the place down the block. pun intended.

As I understand it you are concerned about the fact that one shareholder is paying more per share for his shares of stock than another stockholder will be. This is perfectly appropriate and desirable in most cases. A corporation can sell its stock for whatever the market (or fool) will pay for the shares as long as it is not selling at a discounted FMV price to a related person. Example: Today I organize a corporation and contribute $500 for 1,000 shares of common stock. Tomorrow you wish to purchase shares as you think the corporation is going to make money. The corporation can sell you 1 share of common stock for $500,000 if you are willing to buy. If the stock is no par stock it would simply show on the balance sheet as common stock issued $500,500. If it was $1 par value stock the balance sheet would show common stock issued $1,001 and additional paid in capital $499,499. The additional paid in capital is equally per share owned at liquidation of the corporation. [edit:] And to answer your question, there is only common stock issued and additional paid-in capital does not create an additional class of stock since it is only capital designated separate for accounting of par value purposes. Also, you should be aware that in a code sec. 351 transaction the corporation can record FMV for the assets contributed and issue shares of stock on that basis, however, depreciation basis is still the same as the individual's sole proprietorship basis. Thus, you would record each asset as two asset values on your depreciation schedule with the additional FMV over basis as a non depreciable asset.

I don't know but I would suggest the brother should work this out to establish his own account, in a USA bank, thru a bank in his own country before travel. Your client should have nothing to do with the account unless he is willing to deal with such things as the government questioning if it is some money laundry scheme or for terrorist.

Each year of a S-corp "ALL" income or losses passes through to the individual on the K1. Therefore, prior years do not show anywhere on the 1120S-k1. The determination of loss allowed or disallowed is determined at the individual 1040 level. Therefore, the fact that you had taxable profits on the k1s and 1040s in prior years has no relationship to the current year loss other than those profits added/increased the individual shareholders basis for claiming the current year loss. Of course, if the shareholder withdraw those prior year profits, then his basis was reduced and you may not have basis to allow deduction of the current year loss. If you can't deduct the loss this year it carries over for possible deduction in the next or future years. Use the tab for basis on the K1 in the ATX program and you may need to look at the at-risk form 6198 at the individual level.