Maribeth

The brothers had a financial document. What they sold to their father was that financial document. The father needs to determine what he purchased from the brothers. Example: B has a contract with a face amount of 10,000. F buys that contract from B for 8,000. F will recognize 2,000 in proft as the contract is paid off. F will also recognize interest on the contract as it is paid off. Maribeth

Mike, you have two things going on, apples & oranges. The 1099-A reports the "sale" of the asset; the 1099-C reports the cancellation of debt, if any. You will report a transaction this year for the 1099-A. It may or may not be taxable, for example, if the property was a personal residence. The selling price is the lower of the loan balance or the FMV of the property given up. For example, if the loan balance was 200,000 and the FMW was 150,000, you would use 150,000 as your selling price, subtract your basis, and the result would be taxable under whatever rules the asset would be taxable under in a "normal" sale. If the loan is nonrecourse, there will be no cancellation of debt. In our state, only original acquisition of a personal residence can be nonrecourse. Almost everything else if recourse. If you have a recourse debt and the lender writes it off, then you will receive the 1099-C. This reports the amount of the debt that was not satisfied by the taking of the property. So, as in the above example, if the lender takes back property with a FMW of 150000 and the loan balance is 200000, then the lender will write off 50,000 and report that on a 1099-C. This income usually will be ordinary income. We have spoken before about the classes I take down in Kennewick from Joy Wilen. She will be in Kennewick on May 16 and will be doing a 6 hour class on foreclosures, bankruptcy, etc. Her fee is $115 and the class is held at the Red Lion at Columbia Center. Her phone number is 1-360-695-9818. I will be there and if you show up it would be great to finally meet you. Maribeth

Hot springs in the midst of the Canadian Rockies, April 18th -- hot water, cold CDN beer. Life is good. Maribeth

You are right. A transaction has occured with the issuance of the 1099-A and another transaction may occur with the issuance of a 1099-C. Two different things are going on: the foreclosure on the property and the cancellantion of debt. And as an aside -- NON-OWNER OCCUPIED property with a NON-RECOURSE debt? Boy, I didn' think they made those anymore. I would almost bet money that the 1099-A is recorded incorrectly. Maribeth

Never, ever put two returns in one envelope. File the amended grandmother's return, wait about a week, then send the second return. Maribeth

You have commerical property that was purchased in 1984 and was depreciated under ACRS SL. That type of property should be §1250 property. If the property had been depreciated under ACRS accelerated (prescribed), then the property would be §1245 and all of the gain attributable to depreciation would be taxable in the year of sale. Maribeth

Yes, the losses are released. There is an option at the top of the input screen to indicate that the asset was disposed of during the year. If you check that, the losses should flow through to the Schedule E. Maribeth

Form 4835, then will flow to Schedule e

It appears that for your state purposes the wife is not covered under unemployment. That is a state law, not a federal law. She would be covered under filing for 941 and for 940 but not for your SUTA. If the client wishes to have her covered under SUTA, you might check your state law to see if she can "elect-in" to SUTA. My state has this election for small family-owned corporations. Maribeth

We've never, ever had a problem with the EFTPS taking money before the date of settlement. We HAVE had a problem when WE have put the wrong date down or applied the payment to the wrong year. I would have your client double-check their copy of the payment acknowledgement. Maribeth

That election has always been there --- well, at least for many, many years, ever since ACRS. If you take the standard mileage rate in the first year of use, you have elected to treat the vehicle as being depreciated under SL. You can never, ever take accelerated depreciation on the vehicle. If you swith to actual in a future year, you will use SL depreciation. Maribeth

Enter everything on each spouse's return, just as if they were MFJ. Create a spreadsheet showing all income and the split between the two spouses. Use the adjustment that you determine to make an entry on line 21 as a negative amount reducing the income. (i.e., Husband's share is 52000, wife's share is 49000. On his return line 21 will be (49000), on her return line 21 will be (52000). Also remember that you cannot split the SE tax. That must be calculated and paid by each person on their total SE income. Maribeth

Linda, Your client has sold her house back to the bank for the amount of the loan balance. If she has never refinanced the home, then the loan is most probably non-recourse. Banks routinely mess up the preparing of the 1099-A and the 1099-C and I never, ever accept what is on those forms without checking the numbers and answers out. I would simply report the sale of the residence on Schedule D, take the §121 exclusion and move on. Maribeth

I have done so in the past for several of my medical clients and all has gone through just fine. Maribeth

Put both 1099's on a Sch C-EZ, take a corresponding deduction for amounts properly reported on line 21, then put the spiffs on line 21. Maribeth

Yes, you can submit W-2c's through the social security website. There is a 'button" for corrected forms. Maribeth

We do the same. However, we use a different name that works quite well for us. The folder is called "Clients File Cabinet". Inside the file cabinet are "drawers" (folders) for each client. Inside each drawer is a section for each year. The logic is easy to explain to temp employees. Maribeth

Your client "steps into the shoes" of the decedent. You need to find out how the decedent was reporting the sale and you continue to report it the same way until it is paid in full. Maribeth

That is correct. You file the final 1065; the subsequent activity is reflected on Schedule C. Maribeth

Increase your accumulated depreciation to show that the basis is zero. This adjustment is done as of the first of the year in which the cancellation of debt occured. Maribeth

The IRS will not give the client credit for his social security, but SSA will give him credit for the wages reported under his social security number and reported to SSA by the employer. Your explanation appears fine -- the income was not reported, should have been reported and you are now filing the 1040X in order to correct this omission. Maribeth

I agree with Karen Lee. I would reduce the health insurance expense by the amount of the COBRA credit. In my thinking, it is not and could not be a reduction in the payroll tax expense. That does not seem logical to me. Maribeth

Starting with taxable years beginning after December 31, 2010, an employer is required to disclose on each employee's annual Form w-2, the VALUE of the employee's health insurance coverage sponsored by the employer. This amount is the total value of ALL health related insurance plans under which the employee is covered. It is not the premiums paid; it is the value; probably determined using the COBRA valuation. The amount is not taxable; it is only a reporting requirement at this time. Maribeth -- just finished a 3 hour seminar on this topic today.

We purchased PDF factory and its companion Fine Print. It works great for us, in both the printing functions and the storage functions. I highly recommend it and the price is very reasonable. Maribeth

TPS has the full accounts receivable functions: creating invoice, accepting money, making deposits, month-end statements; all the reports needed. Maribeth