JohnH

This is amazing. If you can get BOA to budge on any customer noservice issue, then you and the client are outstanding negotiators.

Yes, you're right. It really is better that they discuss things with us ahead of time. But based on this guy's behaviour, it appears that he gave her just enough info to obtain the answer he wanted and now he's backtracking with the REST of the truth. I don't like this type of client any more than the ones who take action without discussing things with us. The ones who feed us selected info are actually worse - they often have an agenda that involves passing out some blame if they can get away with it.

Shoudn't the person who sold him the HSA have been answering these questions anyhow? Whenver someone asks me about their HSA, I tell them to check with their agent and that all I can do is process the paperwork at year-end. From the way you explain this, I'm guessing he already had his answer from the person who sold him the HSA - he was just feeding you bits & pieces of info to try and get a response from you that he liked. I'd tell him I can only give answers that are as good as the info I'm provided, and if he has dug a hole for himself I can't really do anything to get him out of it. Follow it up with: "Oh, one more thing. We'll talk at the end of the year when you bring in your info. Until then, you need to get specific advice from the people who sold you the plan." If you're lucky, maybe he will get mad & go somewhere else.

He's also confused about something else. In another article, he suggests the old nonsense about a business owner worried about being denied a tax deduction for failing to issue a 1099. I've also seen this misninformation thrown around on tax forums for years, yet there's absolutely no cite to support such a notion. (I think I saw one tax preparer mention that it came up in an audit, but even there the issue was murky). Maybe the law will be changed in the future, but as things currently stand there's simply no support for making such a statement. However, I do agree with the basic premise of the article, and I'll gladly do my part to contribute to the paperwork blizzrd if the law isn't changed.

I also like Tenenz. Fast shipment, reasonable prices, and the folders are good quality. http://www.tenenz.com/index.php?view=landing_page&SRC=TENENZ&SRCID=ATXSSPRDCT

Depending upon total income to him and the corp, he's probably just as well off paying tax on the distribution as a constructive dividend and sticking with the facts as they are, double taxation & all. He may even be better off. If he reports the distributions as Schedule C income, then he pays 15% S/E tax and regular income tax on the earnings, even though the corp gets to deduct the 1099 payments to him. But if he lets the corp report the income then the corp tax rate is 15% (roughly the same as the S/E tax), and on his personal return he gets to treat the constructive dividend as a qualified dividend subject to the lower tax rates. The only down side is that he won't get SocSec earnings credits for the two years. (This could be a major issue or it may not matter at all - just depends upon his total filing situation, age, etc) Of course, if the income is very high and his corp jumps well into the 25% bracket, or if his personal income exceeds the SocSec maxiumum, or if he's subject to AMT, then all the above could change drastically. State considerations might also affect the total outcome as well. Running a dummy return using round numbers would give you the difference, but it's likely you'll quickly discover that the double taxation really doesn't matter from a net cash standpoint when all the dust settles. And reporting things as they actually occurred, coupled with getting it right from this point forward, might go a long way in getting a quick resolution if he gets tagged for an audit. Sometimes an auditor will reward straighforward reporting, whereas they can get downright testy when there's been a lot of creative reclassification.

Yes - my iPad also functions as my ebook reader. You can download apps for the iPad that make it work as a Nook, Kindle, etc, so you have access to all of their offerings - you're not limited to a single vendor. I've never used one of the others, but I've read that the iPad display is better than any of the other readers. Some people even claim that the iPad has made the other readers obsolete, but I'm not suggesting that as a fact. I think the prices for the ebooks are very reasonable, and it's really handy to decide you want to read a particular book and then have it in your hands 5 minutes later. The ability to carry dozens (or hundreds) of books on a single device is awesome. If you like to read different books simultaneously, then each book is always on hand. I'd suggest comparing the features of and of the readers to the iPad. The upfront cost will be considerably more, but you may decide it's worth it because the iPad offers infinitely more features. Could easily be wrong here, I think it's likely that within a few years, a business person who isn't using an iPad (or similar device) will be hamstrung as much as someone who doesn't use email these days. Here's an article that appears to be unbiased. It lists the pros & cons of each, and concludes that the Kindle is the better choice, provided your only interest is in the e-book reader features. http://www.digitaltrends.com/gadgets/kindle-vs-ipad/

The iPad screen is about the same size as a netbook screen. However, layout isn't really a problem with the iPad. It becomes second nature to zoom in & out on the fly using the "finger pinch" feature. (no mouse or keyboard needed). An iPad user is equally at home using it or a full-size screen on a desktop computer.

I use a Blackberry and an iPad constantly. Should I vote twice? :)

IMO you are correct, but in most cases this is the elephant on the sofa whenever the subject is gently being tiptoed around.

So according to that, if the mother died in 2010 and the son inherited the house, then the executor could set his basis to be the FMV of the house provided the total value of the estate is less than $1.3 million. If the estate is valued at more than $1.3 million, then there might be some allocation among the assets necessary. Am I right or am I still confused?

I continue to remain confused on this basis issue. I thought the executor could assign a stepped up basis(not to exceed the FMV) for assets inherited in 2010, with a maximum limit of $1.3 Million for the entire estate. If that's correct, then if the mom died in 2010 and the house were still in her name, he would get stepped up basis unless her estate exceeds $1.3 million. Am I wrong?

First she should tell you (or her son) what her elder-law attorney advised her when the attorney suggested that she put the house in her son's name. Apparently she didn't look into the tax consequences ahead of time, but she did speak with an attorney before doing something this rash, didn't she?

Knowing what you now know about this tax return, have you considered how you're going to handle things if the client wants to come back and have you prepare their return next year?

Here's the really stupid thing about this situation. If either institution would refund him his $300 and offer some sort of reasonable compromise on the rate, he would probably accept their offer. Instead, they dig in their heels and alienate him, along with everyone else he can tell about the way he's been treated. In the case of BOA, I agree with Jack - they really don't care. But Credit Unions are sometimes flexible and often have local people who can make better business decisions. Guess this just isn't the case here. Why is he losing money each day? He hasn't moved his money to another bank yet? Or maybe when you say he is "losing money" you're referring to the difference between 3.2475% and the 2.5% he's getting now (about $800/year before taxes). If so, he should probably just put that out of his mind & go bowling or something - that train has left the station.

H-m-m-m. Are you implying it's a problem when the "Reconciliation Adjustments" account shows $98,343.21, with a 4/13/2029 date? I need to go back and check something...

Sometimes, when the client has completely messed up Quickbooks, it's much easier to use the QB entries to produce a transaction report, convert the entries to Excel, and then manipulate the Excel data outside QB. It can be very tedious to reclassify QB entries one at a time, and it doesn't offer a means to make global changes, aside from simply moving an entire account to another.

I'm coming down on the "it's a total waste of time" side of this discussion as well. The bank and/or the CU may throw him a little bone, but that will be about the only thing that will happen. But since he's probably retired and has all the time needed to spend on it, he may as well go for it. One thing is for sure - he needs to spend some time investigating where he's going to do business in the future. I say this for two reasons: 1) If I were him, I'm not sure I'd want the incompetents at either institution handling my money; 2) if he gets any satisfaction, whomever he collects from will be looking for ways to make it up - no more favors for this customer. (I hope Denne will keep us informed on how this situation sorts itself out -> you know, who did what to whom, etc)

My asset allocation rules don't allow me to confuse fixed income and equity investments. There's a firewall between them. Money allocated for fixed income should never be crossed over to equity investment. Besides, why would I put money into any individual company when there's the Vanguard Total Stock Market Index Fund to guarantee me the average of the entire US market, plus Baby Berkshires are selling in the $80 range? May as well get Warren Buffet & Charlie Munger to manage part of the equity side - they have a better track record than anyone living today.

You could go to an online interest calculator and run the interest earnings on the principal times the rate. Print that out without any other calculations and let him take it from there. I would not give him anything in writing attempting to calculate his loss on the transaction, because if he really pursues this and your calculations happen to be wrong, then he may want you to own the difference caused by your secondary error. I also agree with Jack - whatever time anyone spends on this is a waste. It's strictly a project for a 90 year old retiree to occupy his mind. Nothing wrong with that, but hardly productive from your point of view. Now for the really important question. What's the name of this credit union and are they still offering rates anywhere near the range of 3+% ?

INSTRUCTIONS? Who said anything about reading the instructions? I think that's very unfair and you should take it back. (But thanks)

I ran into an unusual situation with Form 5329 in ATX and am curious if anyone else has seen it & how you handled it. The taxpayer took a $40K withdrawal form their IRA, with $12K being used to pay education expenses for their dependent child. When preparing the return, I found that they also had about $3K of deductible medical expenses (over the 7.5% haircut). Consequenlty, they qualified for two different exceptions but only one code can be entered on the 5329 in ATX. There doesn't seem to be an option for splitting the entries, so I just entered the entire $15K on the 5329 and used the code for the education expenses since it comprised most of the adjustment. ( I guess the other option would have been to manually enter the scond code on the 5329, but I didn't do that). Does anyone have a better way to do this, or is there a work-around in ATX that I missed?

Was there some consistency in the year-to-year income in the past? And does he have any idea about how things should look based on what he knows about 2009? If so, it MIGHT be a good idea to file the return with an estimate based on any personal information he may have to back it up (payments to partners he received, insurance, etc). If the info isn't available, he needs to file using the best info he can come up with. He can always amend if he gets a K-1 at some point in the future.

I'm with Jack, except I think I'll wait until the second threatening letter I get from them.

Getting the Fed ID#s will not be a problem. If the 1099 filing requirement remains, most companies will just begin providing their W-9 information on their invoices and/or statements, so it will be right there for everyone who needs it. I expect that IRS will approve some sort of boiler plate wording for that info box which will make obtaining a W-9 unnecessary, so nobody will be getting away with holding back 20%. As for the paper flood problem, IRS can fix that as well. They could just require electronic filing of IRS copies of 1099 forms when the number exceeds a certain threshhold (right now it's 250 forms, but that could easily be lowered to 25, 50, 100, whatever, depending upon what suits their fancy). I hope the requirement gets changed, but I don't expect it to happen any time soon. Last week's failed amendment wasn't intended to pass. It was just a trial balloon to get the issue on the table so the trading & payoffs can begin. Congress has plenty of time to get it done, after all the bribes are in place and the proper votes on other issues are traded back & forth.