JohnH

Most of them are probably thinking there's plenty of time to squeeze a few bribes ( oops, I mean campaign contributions) out of lobbyists and maybe do some horse trading on other votes before 2012, so why the rush?

Interesting question. I don't see that the personal bankruptcy affects the corporation at all - the money is still owed to the shareholder. If the shareholder listed it in the personal bankruptcy as an asset then the debt to the shareholder still exists. If they failed to list it in the personal bankruptcy, the shareholder may have a potential problem with the bankruptcy court, but that isn't the concern of the corporation and the debt still exists.

Follow-up on this, for what it's worth. I insisted on a copy of the QDRO, carefully explaining what it was and why it's a separate document. But client seemed to be unusually confused on what I wanted and kept saying they had given me everything they had. I finally just gave their info back to them and told them I didn't want to risk being the goat if the penalty (over $5K) applied. Also gave them some blank forms. Sometimes you "gotta know when to hold 'em and know when to fold 'em; know when to walk away and know when to run".

Congratulations on the great news!

Check out: http://www.ncesc1.com/individual/faqs/siteMap.asp If you'll look about halfway down this page, you'll see several choices under "Individual Services", which include "Form 1099" and "View Your Benefit Payment History". Your client will have to set up a password and jump through a hoop or two to get access, but it's probably the fastest way to get info on one or perhaps both years.

Should I push for a copy of the QDRO before completing the return?

I agree, which is the only reason I'm even posting anything on this thread. I wouldn't object if Eric deleted it in its entirety.

We all make mistakes from time to time, so the first thing is not to beat yourself up over it. Secondly, bear in mind that some clients will understand if you try to be accommodating while other are unreasonable. The client controls whether or not they are a reasonable person; that's pretty much out of your control. All you can do is offer to do what is right and see what happens. If the clients uses good judgement and appreciates your efforts, you will build a long-term relationship and secure their loyalty. If the client is unreasonable, you may as well see them leave now and save yourself a lot of future stress. You have made a reasonable offer to make the client whole by paying the interest and refunding your fee. I assume there are no penalties. Some preparers will only pay part of the interest because they feel the client had the use of the money (more or less an interest-free loan) but I'm inclined to go along with paying all the interest as you have done. At this point, the client has to step up and accept her responsibility to repay the tax. Surely she isn't unreasonable enough to expect you to pay the tax liability as well, but if she does you must simply tell her that isn't going to happen. She can set up a payment plan if she can't pay it off right now - probably $25 per month if that's all she can afford. She will have to pay interest on the unpaid balance if she sets up a a payment plan, but that is not your concern. You have put her back in the position she would have been in if the tax had originally been paid when due, and that's all any reasonable person has a right to expect. Don't waste your time writing explanations to IRS. They really don't care about the circumstances and the reasons the error came about won't alter the outcome. Penalties can sometimes be abated, but interest is statutory and really not worth your time and effort to try and get anything done about it. Three other points. 1) is there also a state income tax adjustment? If so, you should amend that return for her before the state assessment comes flying over the transom and you find yourself plowing this same ground again 2) IRS prefers that you make checks payable to "United States Treasury". (They're harder to alter if they fall into the wrong hands) That's why the IRS person said that to her. 3) you should pay the client directly and let her handle her transactions with IRS. Less chance for them to compound the problem with a misapplication of the payment. Forgive yourself for being imperfect, chalk it up to experience, and maybe thank God that it's an $1,800 error rather than an $18,000 error.

I resurrected this thread because I'm looking at one of these situations now. The taxpayer just gives me a blank stare when I try to explain any of this, of course. The 1099R is issued in the name of the recipient (who is under 59-1/2) and it has a Code 2. I have a copy of the PSA but it says that the 401K will be liquidated "with each party being responsible for one-half of any penalties and taxes owed for early withdrawal." Since the trustee used Code 2 on the 1099R, I suppose I could assume that a QDRO was prepared after the judge signed off on the PSA, but then that might be an assumption which could be costly if I'm wrong. Anyone have any thoughts on this? Should I push for a copy of the QDRO before completing the return?

I like your philosphy. It's similar to what my father-in-law (Sam) used to say about the subject. Sam bought & sold real estate in a small NC town, but he never asked for signed contracts. This was many years ago, when real estate values and commissions were much lower than they are today. My brother-in-law questioned him one time about several people who had stiffed him for $600 or so. Sam replied, "That's OK, he beat me out of $600, but he'll never get a chance to beat me out of $6,000." Sam's philosophy was that the long benefits of knowing a person's character was much more important than having a few more dollars on hand at the moment. It served him well - when he died at an old age he was very secure financially.

I think a key point to remember is that QB is a double-entry system, but the other half of the transaction is often hidden from view. Therefore, it's sometimes easy to get the debit right but to have the credit going to the wrong account (or vice versa) and not even see it happening. This leads to the mistaken idea that QBis not a "true" double entry system, which is an incorrect assumption. However, this background work causes lots of confusion and leads to some weird results at times, especially when QB is being used by non-accountants.

As Deb stated, you have to link "Items" to "Accounts" in order to keep things in order. When you prepare an invoice, you don't enter the account number on the invoice - you enter the item number. I like to think of each account in the chart of accounts as a funnel, with various "Items" flowing into the top of the funnel. This enables you to track activity by item when you want to, but to keep things simpler on the P&L by funneling numerous items into the account (virtually as many as you want to). For example, you can set up a separate "Item" for tax prep for each year, but as you set up the various items, you tell quickbooks that each item flows into your account 410.

Pre-emptive action. Reminds me of the old advice from the military about how to handle yourself in a fight with multiple opponents. Pick the biggest, meanest looking one and take your best shot at him. Why? 1) Eventually you're going to have to fight him anyhow - may as well do it while you're fresh. 2) You might get lucky & whip him, which could scare his buddies enough that they'll run away. (From person experience, it never quite worked out according to plan)

I think jainen is right. JohnH has a tendency to shoot from the hip, especially late at night. (But it does sometimes help to jump-start the conversation).

Depreciation Portion of SMR Year(s)___________Rate per Mile 2008 & 2009_______ $.21 2007_______________.19 2005 & 2006_________.17 2003 & 2004_________.16 2001 & 2002_________.15 2000________________.14 I just used an average of 20 cents per mile in my answer without inquiring about what specific years we are discussing. My basis is probably too high.

He has no gain or loss on the sale of the car.

One downside I'll note about CPASecure. If you sign up for a year's service and pay them in advance, their terms of service lock you into an automatic renewal in the following years unless you give them 30 days ADVANCE notice. Let that 30 days get by you and they will hit your credit card for another year's service. Then if you cancel they will refuse to refund your money, even on a pro-rata basis. They're not the only company out there with a policy of this sort, but I sure don't appreciate their business practices.

It's being discussed on their forum by those who can get in. I'm sure TMI will get it worked out soon - just keep checking.

Did you consider that maybe he just knows me better than you do?...

I'm mainly wondering what CA does if the corp is out of business and has no assets. $800 per year is a lot of money over time, and I'm wondering if the state tries to determine any responsible parties and/or hold them personally accountable for the unpaid fees (or if they can). In NC, the corp can't dissolve or do business either if it's behind on F&I taxes or annual reports. However, after so many years of inactivity, the Dept of Revenue puts it on revenue suspension and then the Sec of State just administratively dissolves the corp and everything's over if the corp doesn't have assests.

I've often wondered about this. How does CA handle the unpaid $800 per year if the corp has no assets? Do they have provisions to determine responsible parties & go after them in any manner, or does the fact that the corp is defunct end the discussion?

I'm one of those who stopped signing returns I prepare for free. I have several family members and a few charity case returns that I prepare for no compensation. In the past I just signed them as "Paid Preparer" to keep things simple. But beginning in late 2009, I stopped signing any return for which I don't issue an invoice. I still prepare them on ATX just like any client return, but I delete the "Paid Preparer" info. Nothing sinister about it - I just want to reduce the number of returns with my name on them.

Here's a prediction. Within a few years, an audit of a line item or two, or even single year, will be a rarity. Most audits will probably encompass all open years. And will look more like fishing expeditions than audits as we know them now. Why? Mainly because the info will be fairly easy to compile, especially since the preparer community has been so compliant in expediting the standardization process. Don't think only about the info in the IRS computers - expand your thinking to how preparers are being nudged to obtain and store supporting documentation to protect themselves against preparer penalties. Roll over for the government and I can guarantee the bureaucrats will scratch your tummy just long enough to get a noose around your neck. This isn't a "black helicopter" type of post, although many tax preparers will dismiss it as such. Yet right now on another forum we've been discussing the fact that IRS auditors are now asking for the entire Quickbooks backup file when auditing a business. Anybody foolish enough to suggest that they only want this to verify opening balances?

Only two of us all day? OK Old Jack - should I turn out the lights or do you want to do it?

Whoa there Jack. I'm not suggesting anyone is intellectually challenged. I was simply pointing out a flaw in your statement that failure to jump on the eflinging bandwagon automatically equates to a declaration that one can't handle modern technology. That's a seriously flawed assumption. Just because you're wrong in making a sweeping generalization of that type doesn't make you intellectually challenged. And just because you try to employ a perfectly valid debating technique doesn't make you courtesy challenged. Lighten up and enjoy the conversation... The answer to the underlined text is found in the new string about why some of us aren't willing to efling . No sense reinventing the wheel here. (By the way, I just recently discovered the wheel - what a great idea! Why didn't somebody think this thing up a long time ago?)