JohnH

Great advice from Jack. This guy probably is going to get mad at anyone who gives him the bad news, which is just beginning. It's going to get a lot worse and it will likely be everybody else's fault. Unless he's expecting an inheritance, he doesn't earn enough to pay for the work he needs done. Best approach is to walk away, unless you like charity work.

You're right, Eric. That sort of behavior is more reminiscent of a WWE wrestling match than a sporting event. Not that it doesn't happen from time-to-time in American basketball, baseball, or football, but it isn't ubiquitous. It adds a certain "sissified" aspect to the sport when there isn't a genuine injury.

The thing I like about soccer. If the US is doing well in the World Cup, we can watch the games and get excited about it. If they start doing badly, we can just go back to something important and say "Oh well, it's only soccer."

When I first got into the accounting business over 40 years ago, I was told to look at anything I was tempted to put into "Miscellaneous" and imagine someone asking me to explain what that expenditure was really for. The answer to that question is where the initial entry should go. So I just make that up-front decision and I never use "Miscellaneous" on a financial statement or a tax return.

Administration Fee? Consulting Charges? Oversight Fee? Purchased Services (my personal favorite catch-all)

Maybe they need to have a backup speaker lined up for the keynote address. There's still plenty of time for a resignation between now and July 1. (Think late Friday afternoon, as a general rule)

This is strictly anecdotal, and may or may not be relevant to your situation. I have a couple of clients who are more or less chronic late filers or late payers of South Carolina business taxes. They're otherwise very good clients and only do a small amount of business in SC, which is the source of the problem. Up until abut a year ago, I could usually get some relief by making a phone call or writing a simple letter. But beginning around early 2013, everything seemed to change. My last couple of phone calls have been rebuffed with a simple & terse "There's nothing to be done about this." It appears that SC has begun taking a harder line on penalties as a revenue source. If I were you, I'd still begin with a phone call. Maybe you'll find a sympathetic ear, or at least get some info on how best to proceed. You have nothing to lose, and that's about as positive as it gets from my perspective.

If there is no reduction in the COD income, it goes on Line 21 of the 1040. If you are going to exclude all or part of it, the COD income goes on the 982. Then you do the math and if any of it remains taxable, the taxable amount goes to Line 21.

Thanks for the confirmation. Presently the 990 is costing about $1,200, so the $4,500 figure would validate my estimate on the low side. (Incidentally, one might inquire as to why I haven't asked the CPA who prepares the 990 to give me a figure for the compilation. He would be the best source for an accurate estimate. I haven't overlooked that step, but there are reasons I don't want to pose the question to him until the board of directors has initially signed off on the concept and estimated cost)

Knowing that this question may fall into the "how much does it cost to build a house ?" category, I'm still posting it with a request for any comment. I'm putting together an analysis for a non-profit organization which is evaluating whether to join a national alliance. This is a small, established non-profit with total contribution receipts in the range of $250,000 per year. It is a valid non-profit with all activities being honest and operating on a highly ethical basis. There are no grants or other odd revenue sources, only contributions by individuals and some churches. Recordkeeping is in good order and there are no fancy year-end adjustments - it is virtually operating on a cash basis. There are some marginal benefits to joining the national alliance, but nothing significant. The main sticking point is that there is a requirement that Compilation statements be submitted annually. I'm thinking that a Compilation statement would probably cost a minimum of $3,000 - $5,000 per year, but this is simply a number I pulled from another source which may or may not be reliable. The organization is located in a major metropolitan area in a southern state, so I'm thinking the cost might be on the moderate side rather than "New York" or "California" prices, for example. Anyone care to take a shot at my $3,000 - $5,000 figure?

I have my personal accounts and much of our retirement account balances at our credit union. If they offered business accounts, I doubt I'd be dealing with a bank at all, except for maybe a sweep account.

Sure wish a couple of the banking behemoths here in Charlotte would get that message. So far, the two biggest ones are tone deaf. Unfortunately it seems to be working quite well for them.

Yes, a very good article. It got me thinking about my experience over the past few years. About 9-10 clients have died and I'm still preparing returns for the spouse now. I have 4 situations in which a rellative is bringing the client's info to me and I have copies of a durable POA on hand - 3 of them have full-blown dementia. I have another 2 or 3 for whom I have a POA in the file because although they still bring their info to me, they want me to keep an adult son or daughter informed about their tax affairs. My clients are getting old - good thing I'm staying young. The article makes a great suggestion about being aware of the signs that a client is slipping, and bringing up the topic early. I think age alone is a good enough excuse to bring it up, unless there is a spouse still living. Sometimes it can be uncomfortable, but usually they are willing to talk with their tax preparer more quickly than with a relative. Better to get the conversation under way before it is too late, even at the risk of losing a client if they take it the wrong way.

Yes, I would trust them completely to report the income.

There is no W-2 filing requirement if you pay the household employee less than $1,900. You are only required to refund them the withheld taxes and you both go on your merry way.

Late filing penalties are based on the tax due, so if there's no tax due then there is no penalty. If her income is clearly below the filing threshold then she has nothing to worry about. However, if there are any ambiguities and there is any chance that she might owe tax in any significant, then the SOL has never started and it never will until she files. Any chance she needed to file a FBAR?

OK, so I timed myself. Joint return with 3 dependents took an average of 1 min 27 seconds. Double that to 3 minutes per return, and it's a snap to enter 60 clients in 3 hours. So my estimate of 3 hours to enter AND cross-check was ambitious. So I'll double the total time to 6 hours on task. Allow for breaks, lunch, and a little time to gossip, and it's still a one-day task at most (if we double all the times). Another factor is that I did these entries by looking at paper and typing the info by hand. Using dual monitors, it's possible to "copy" and "paste" the names & addresses using the mouse right-click, which would speed things up. The only thing I'm not sure about is the fact that Drake allows me to tell it to skip directly to zip code after entering the street address. (Entering the zip code will autofill the city & state). I'm not sure if ATX does that. Aside from that, and the fact that Drake saves and moves from screen-to-screen instantaneously, I still think the task can be accomplished in ATX in a very short period of time - less than a day in the right hands. And by the "right hands", I'm talking about a good typist, not necessarily a tax preparer.

Cartridge in a bare tree

Last year I was surprised at how quickly I was able to input basic data on my clients. I switched from ATX to Drake in late January, and I didn't bother with conversion - just entered them on the fly. Using dual monitors, I never touched a piece of paper for the most part. Even though Drake runs circles around ATX in all other areas with respect to speed, I suspect this basic task would take about the same amount of time in either direction. Just for grins, I may time myself next week on a couple of typical returns. Now I'll jest - if someone were so slow that it took them 3 days to accomplish this task, I'd want to know that in the off season so I could fire them before I got really busy during Jan-Apr.

If they are easier returns as you say, then you could have someone input all 60 clients manually in about 3 hrs (including time for a second person to double-check the data).

I assumed you'd probably exhausted that one, but thought I'd mention it just in the interest of being thorough. Guess he could fire the guy, then hire him back after 3-1/2 years. Probably wouldn't make the employee too happy. On the flip side, I had a client one time who had to put money into a SEP for an employee whom he fired at mid-year after the guy stole from him. It was either give the thief a 15% bonus or deprive himself and his other employees of the benefits of the SEP that year. Talk about a client who was upset with his financial advisor and with me...

Thanks Joel for calling my attention to the error in my thinking on the $3K - I stand corrected. And thanks to you and OldJack for the opinions on the $12K. I appreciate both of your responses. This mirrors my experience in researching it thus far - there is no clear guidance and varying opinions. Another complication is the fact that this K-1 had $16K of COD income in the year of disposition. I've found conflicting information on whether the COD income (which is reported on Line 21 of the Form 1040) can be added to the cost basis in calculating the loss on disposition of the partnership interest.

He could exclude the employee for up to 3 years from first year of service and still use the SEP (unless he has already exhausted that option.)

Joel: I'm actually glad to hear you say "What difference does it make?" I'd like to see him get the benefit of the $12K, but I had been operating under the assumption that he was required to use it against other passive income in the year it is possible to do so. If he is allowed to choose not to use it and retain it in basis, that solves a problem. My thought process followed the $3K-per-year requirement for capital loss carryforwards, which must be used even if there is no tax benefit. But if this is a different set of rules, I'd be happy to include the $12K in basis if he can do so.

I ran into an odd situation today and would appreciate any input. Client has owned an interest in a limited partnership since 2007. (This is not a Publicly Traded Partnership). It lost money every year and finally closed its doors in 2013. In 2008, he reported significant income from disposition of a second limited partnership (also not a Publicly Traded Partnership). He could have offset about $12K of the accumulated losses from partnership #1 against the income from partnership #2, but he didn't do so because he thought the Publicly Traded Partnership rules applied. Since 2008 is a closed year, he can't amend. But we are discussing whether he can retain the $12K as a part of his passive losses (added to his basis in calculating the total loss on partnership #1). I don't think he can do it, but would like to ask if anyone has a differing opinion.