OldJack

I wonder how many tax preparers make less than the welfare benefit in their state?

That’s according to a report out Monday, “The Work Versus Welfare Trade-Off: 2013 An Analysis of the Total Level of Welfare Benefits by State,” from the libertarian Cato Institute in Washington. The report, by Michael Tanner and Charles Hughes, is a follow-up to Cato’s 1995 study of the subject, which found that packages of welfare benefits for a typical recipient in the 50 states and the District of Columbia not only was well above the poverty level, but also more than a recipient’s annual wages from an entry-level job. That hasn’t changed in the years since the initial report, said Mr. Tanner, a senior fellow at Cato. Instead, the range has become more pronounced, as states that already offered substantial welfare benefits increased their packages while states with lower benefits decreasing their offerings. To be sure, not all of those who rely on government programs take part in every benefit to which they are entitled, and the most generous benefits are in states that have the highest costs of living. The state-by-state estimates are based on a hypothetical family participating in about seven of the 126 federal anti-poverty programs: Temporary Assistance for Needy Families; the Women, Infants and Children program; Medicaid; Supplemental Nutrition Assistance Program; and receiving help on housing and utilities. In Hawaii, that translates into a 2013 package of $49,175 — up $7,265 from an inflation-adjusted $41,910 in 1995. Rounding out the top five areas for welfare benefits, along with their 2013 amounts, were: the District of Columbia ($43,099), Massachusetts ($42,515), Connecticut ($38,761) and New Jersey ($38,728). The state with the lowest benefits package in 2013 was Mississippi, at $16,984, followed by Tennessee ($17,413), Arkansas ($17,423), Idaho ($17,766) and Texas (18,037). One change the authors noted between the surveys was a slight increase in the value of work to welfare, by a few dollars an hour. “There was some improvement of the relative value of work through the Earned Income Tax Credit, particularly at the state level, and the child tax credits,” Mr. Tanner said. “Those largely didn’t exist in 1995.” Some states also are curbing some housing assistance, he said, and now requiring individuals who receive welfare benefits to pay their own rent. The authors found that in 11 states, “welfare pays more than the average pretax first-year wage for a teacher [in those states]. In 39 states, it pays more than the starting wage for a secretary. And, in the three most generous states a person on welfare can take home more money than an entry-level computer programmer.” Click any header to re-sort this chart: State Total Potential Welfare Benefit Equivalent Pretax Wage Alabama $26,638 $23,310 Alaska $29,275 $26,400 Arizona $21,364 $15,320 Arkansas $17,423 $12,230 California $35,287 $37,160 Colorado $20,750 $14,750 Connecticut $38,761 $44,370 Delaware $30,375 $29,220 Dist. of Columbia $43,099 $50,820 Florida $18,121 $12,600 Georgia $19,797 $14,060 Hawaii $49,175 $60,590 Idaho $17,766 $11,150 Illinois $19,442 $13,580 Indiana $26,891 $22,900 Iowa $20,101 $14,200 Kansas $29,396 $26,490 Kentucky $18,763 $13,350 Louisiana $26,538 $22,250 Maine $19,871 $13,920 Maryland $35,672 $38,160 Massachusetts $42,515 $50,540 Michigan $28,872 $26,430 Minnesota $31,603 $29,350 Mississippi $16,984 $11,830 Missouri $26,837 $22,800 Montana $29,123 $26,930 Nebraska $20,798 $14,420 Nevada $31,409 $29,820 New Hampshire $37,160 $39,750 New Jersey $38,728 $43,450 New Mexico $30,435 $27,900 New York $38,004 $43,700 North Carolina $28,142 $25,760 North Dakota $30,681 $28,830 Ohio $28,723 $26,200 Oklahoma $26,784 $22,480 Oregon $31,674 $34,300 Pennsylvania $29,817 $28,670 Rhode Island $38,632 $43,330 South Carolina $26,536 $21,910 South Dakota $29,439 $26,610 Tennessee $17,413 $12,120 Texas $18,037 $12,550 Utah $19,612 $13,950 Vermont $37,705 $42,350 Virginia $20,884 $14,870 Washington $30,816 $28,840 West Virginia $27,727 $24,900 Wisconsin $21,483 $14,890 Wyoming $33,119 $32,620 Source: Cato Institute

Despite Jainen's experience and reputation he has been on occasion proved wrong. To rely only on an income and expense statement to prepare a proprietorship tax return without a balance sheet reflecting owner equity basis should be, and could be, malpractice. As in this case the loan/owner equity was not on the books and is an amount in determining outside basis until corrected on the business books. True that the inside basis and outside basis are normally the same in a proprietorship/(dba), as they are usually in a S-Corp or SMLLC, but there are always exceptions to everything. Due to tax rules it is a myth among accountants that a proprietorship is not a legal entity. Check court cases and you will find the proprietorship entity and the owner both listed in the cases.

Thank you for the lesson on a sole proprietorship as I must have been doing it wrong these last 45 years. It seems a little strange that you don't think a sole proprietorship could have a long-term capital gain from the transactions involved with the sale of a proprietorship business. True that the business must recognize gain/loss from the sale of assets but that does not preclude a "individual owner basis" gain/loss from the sale and from other items like sec. 1221 assets. In the case of the example in this post it was stated that the only assets were A/R, and software development. We don't know any values but I would guess that the A/Rec were not sold as individuals usually like to keep that. It would be nice to know if allocating the sale price to software development would be a reasonable allocation amount or if the sale price should also be allocated to something else such as the value of the going business. I would remind you that a partnership is nothing more than two or more sole proprietorships and there is nothing that says an owner does not have a tax basis in a partnership or proprietorship. >>Sec. 1221. Capital asset defined -STATUTE- (a) In general For purposes of this subtitle, the term "capital asset" means property held by the taxpayer (whether or not connected with his trade or business), but does not include -<<

I disagree. A sole proprietorship has the same basic 'cost basis' in a business as any other business organization. True if the sole proprietorship is not keeping proper accounting records it is difficult to determine basis. It does not matter if the loan/capital contribution was "booked" as it was indeed an investment in the business or the business would not have had the cash to operate. It is not too late to book the investment/loan if it can be proved that it was made and not already been deducted or repaid. The transaction of repaying the loan with the sale proceeds has nothing to do with the recognizing of business operating income or loss but would effect gain/loss on disposition/liquidation of the business. Therefore, there are two issues, possible income/loss of the business on Sch-C and/or form 4797 and possible gain/loss on form 1040 sch-D.

Sounds like he has expensed/written off all investment and now selling the web page/business name which would therefore be a $15,000 capital gain for form 4797.

I disagree! Regardless of how many forums you have everyone comes to this one and posts everything that should be on the other forum. Just accept it and move on.

No not really with regards to reporting! Sec. 1250 is specifically about possible recapture of depreciation on "realty" property according to year and method of depreciation. Certain depreciation is recaptured and other depreciation is not. Sec. 1231 is about all different types of business property.

Sec. 1250 property is first entered on page 2 of form 4797. Edit: Page 2 if only a gain! However, you need to calculate according to page 2 to see if you really have a loss.

Its not sec. 1231 property, it is sec. 1250 (depr property) reported on page 2 of the form 4797.

Its time to abolish the IRS and replace with something new!

>>Much of our chatter here is technical stuff about filling out the forms and somehow getting paid for it.<< Chatter on tech stuff is great, political opinion is not what I visit the forum to see. Some members here act like they are on facebook telling everyone about their personal life and social opinions. Its getting to be a bit much.

Until recent years I had never seen liberals discussing tax on this forum. Its a sad day when tax preparers have no common sense like our tax code.

Sounds like the original agreement and purchase created a non-related party partnership of real estate holding. Since the only asset was real estate no partnership return was required if each owner reports their own 1040 income and expenses according to the agreement. It appears the quick claim deed transfers ownership without sale proceeds, gain or loss, so no sale required to report by Jill, however, Jack may need a Form 4797 (zero sale loss) to report any tax basis in the real estate. Jack having zero income and expense has no need to continue reporting on Sch-E. Jill will now have rental income and expense to report on 1040 Sch-E and nothing more until sale of the property.

Sounds like the client might want to file form 966 for liquidation and pay no more payroll.

That's up to the client, after all it is their tax return!! I doubt that many want e-file.

I have already made arrangements with another CPA friend. Thanks anyway.

Its going to be you John as I am going to retire now.

And/Or you can follow the Rev Proc 2011-25, 2011-17 IRB 725 and have the taxpayer sign and you keep the following statement on file: >>My tax return preparer [iNSERT PREPARER’S NAME] has informed me that [iNSERT s/he] may be required to electronically file my [iNSERT TAX YEAR] individual income tax return [iNSERT TYPE OF RETURN: Form 1040, Form 1040A, Form 1040EZ, Form 1041, Form 990–T] if [iNSERT s/he] files it with the IRS on my behalf (e.g., submits it by mail to the IRS). I understand that electronic filing may provide a number of benefits to taxpayers, including an acknowledgement that the IRS received the returns, a reduced chance of errors in processing the returns, and faster refunds. I do not want to have my return electronically filed, and I choose to file my return on paper forms. I will mail or otherwise submit my paper return to the IRS myself. My preparer will not file or otherwise mail or submit my paper return to the IRS.<< Signed by taxpayer.

I have never e-filed and don't intend to ever e-file. Its not my responsibility to file a clients tax return, its the clients! I don't work for the IRS unless they would be willing to pay me.

But the obamacare says nothing about a waiver to meet any requirements! I don't see it as a real problem as the IRS has its own problems right now.

>>Can she (the student) refuse her medical coverage through her employer<< ?? No it doesn't answer the question!!

When a client tells you how they want their taxes done its time to tell them to find another tax preparer!

If you are concerned about stress, you are in the wrong business!

....Or, the estate can pay the income tax [or request a refund] with the 1041 and then distribute the remainder to the beneficiaries tax free and no need to amend 1040s.