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Why I support preparer regulation


tilt

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From just some of the postings this week:

If they’re a C corp, can they report on a Sch. C?

What kind of questions do I need to ask for EIC?

My client has been taking 179 deductions to increase his NOL for the last 5 years. Is he at risk for an audit? Why?

Can an unmarried couple file MFJ?

How or where do I enter the ST and LT totals from a brokerage statement?

How do I calculate EIC?

How do you set up an LLC Corp?

What is the Franchise Tax fee?

How can I change the due date of a return?

Can I pay last year’s taxes on this year’s return?

When can I efile?

When can I efile without a W-2?

What credits are expiring?

Can I have the client’s refund sent to my bank account?

What kind of printer ink should I use?

Do I need to use a Sch. D or 4797 for a sale?

Where do you enter an energy credit (or property tax)?

When will the tax program be complete?

Each and every one of these questions embarrass me. I am an unenrolled preparer subject to CTEC registration. I must complete a certain number of CPE each year (I far exceed that), register and maintain a surety bond. I am so disgusted that I am going to go for my EA designation. I am a member of many forums (some of which I am more active on than others) but I learn from all. But I have to say that the ProSeries Live Community is, with the exception of several individuals, the most ignorant forum. There is truly no limit to the stupidity of those who are able to post. It is not limited to professional individuals, as it purports to be, but is open to anyone who purchases an Intuit product, such as TurboTax. These postings only show me how much regulation of preparers is needed. I have no fear of being able to past the upcoming tests, but will instead hold myself to an even higher standard.

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I went to the PS Community today and I have to say I agree with you 100%. I had never gone there before, so I used my Quicken password and got right in. I was very surprised that you received so many positive responses to your post there, but nothing from, which I consider the best, this site. I, as an unenrolled preparer, agree with you totally: Each and every one of these questions embarrass me. I periodically hear other preparers at seminars I attend griping about having to take xx hours of continuing ed. I average 40 to 50 hours a year and when I don't, I don't feel completely ready for the tax season. As an aside, I do only individual returns and let others take the Corps and partnerships, etc.

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From just some of the postings this week:

If they're a C corp, can they report on a Sch. C?

What kind of questions do I need to ask for EIC?

My client has been taking 179 deductions to increase his NOL for the last 5 years. Is he at risk for an audit? Why?

Can an unmarried couple file MFJ?

How or where do I enter the ST and LT totals from a brokerage statement?

How do I calculate EIC?

How do you set up an LLC Corp?

What is the Franchise Tax fee?

How can I change the due date of a return?

Can I pay last year's taxes on this year's return?

When can I efile?

When can I efile without a W-2?

What credits are expiring?

Can I have the client's refund sent to my bank account?

What kind of printer ink should I use?

Do I need to use a Sch. D or 4797 for a sale?

Where do you enter an energy credit (or property tax)?

When will the tax program be complete?

Each and every one of these questions embarrass me. I am an unenrolled preparer subject to CTEC registration. I must complete a certain number of CPE each year (I far exceed that), register and maintain a surety bond. I am so disgusted that I am going to go for my EA designation. I am a member of many forums (some of which I am more active on than others) but I learn from all. But I have to say that the ProSeries Live Community is, with the exception of several individuals, the most ignorant forum. There is truly no limit to the stupidity of those who are able to post. It is not limited to professional individuals, as it purports to be, but is open to anyone who purchases an Intuit product, such as TurboTax. These postings only show me how much regulation of preparers is needed. I have no fear of being able to past the upcoming tests, but will instead hold myself to an even higher standard.

I agree with you 100% I too, am currently unenrolled and but for family issues this past summer, would have taken the EA exam. I too, am not concerned about not passing it. I will take it as soon as tax season is over. Bring on the preparer requirements.

I do fear that the IRS will be a toothless tiger in this area. So much fraud is already happening and not being challenged, how are they going to police this?

On the other side of the coin, I make a good deal of money fixing things for people who have had "a friend that does it for me" prepare their returns. The big T-T that spends millions advertising on TV is good for my business and my bottom line.

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I do support regulation too. The main problem that I see for the IRS is the tax preparers that know a lot but don't sign the returns. They will continue to operate since they NEVER sign returns. They are not affraid of exams because they know a lot but simply don't want to follow the rules. I am going to take the EA exam during the summer and be ready for next year.

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Here's a question of an old SEE exam. Started looking at old exams now to prepare for upcoming preparer test so please dont make me feel stupid for asking. How else will I learn things I dont do on a regular with clients. :dunno: They gave the answer but I dont know how it was derived so whomever answers please explain.

Thx!

Tom Brown, who is single, owns a rental apartment build-

ing property. This is the only rental property that Tom

owns. He “actively participates” in this rental activity as

he collects the rents and performs ordinary and neces-

sary repairs. In 2004, Tom had a loss of $30,000 on this

rental activity and had no reportable passive income. His

adjusted gross income, without regard to this rental loss,

is $60,000. How much of the rental loss may Tom deduct

on his 2004 return?

A. $30,000

B. $25,000

C. $0

D. $6,000

PS Thx Bob!!

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Go for it!

Here ya go JRS.... :spaz:

In January of 2004, Mrs. Black purchased an office build-

ing and used office furnishings. The used office furnish-

ings consisted of chairs, desks, and file cabinets.

$900,000 of the purchase price was allocated to the of-

fice building and $50,000 of the purchase price was allo-

cated to the used office furnishings. According to the

General Depreciation System (GDS) under MACRS for

depreciation, what recovery period must she use for the

purchased items?

A. 27.5 years for the entire asset, building and

furnishings

B. 39 years for the building and 5 years for the

used office furnishings

C. 27.5 years for the building and 7 years for the

used office furnishings

D. 39 years for the building and 7 years for the

used office furnishings

Batter up!!!!

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I would go with D. For sure the building is 39 years because it is NOT residential.

On the previous one, is $25,000 because he physsically participates. Even if he didn't physically participate, 0 would not be a good answer.

I wanted to ADD: Please ask any questions on this forum. We are here to help. We were at your level at some point and we understand. I think simple questions get an answer right away. Just don't make it as hard as my warm up exercise because you will not get ANY answers.

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I would go with D. For sure the building is 39 years because it is NOT residential.

On the previous one, is $25,000 because he physsically participates. Even if he didn't physically participate, 0 would not be a good answer.

I wanted to ADD: Please ask any questions on this forum. We are here to help. We were at your level at some point and we understand. I think simple questions get an answer right away. Just don't make it as hard as my warm up exercise because you will not get ANY answers.

Pacun you are a winner winner chicken dinner!!! lol! You answered correct. Yeah I saw you post with the mega tax gumbo! I saw how it started a battle of the witts! lol! Thx for letting me know I'm wanted round these parts! :P There have actually been some questions i have answered correctly for people on this forum but now i must challenge myself to step up those I attempt by researching more.

Ya'll ready for another...I'll try to find one more challenging this time....

John is a furniture maker and carpenter. John makes

half of his income as an employee of Concept Designs,

Inc., a fine furniture manufacturing corporation. John

makes the other half of his income from a personal busi-

ness where he purchases, renovates and then resells

houses. In January of 2004 John purchases a house

that is not his residence for $50,000. He spends $10,000

in materials renovating the house, which he sells in No-

vember of 2004 for $90,000. What is the amount and

character of John’s gain from this transaction?

A. $20,000 ordinary gain

B. $30,000 short-term capital gain

C. $30,000 ordinary gain

D. $20,000 short-term capital gain

I got confused on the "ordinary/short" part ...

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>>39 years because it is NOT residential<<

That is probably correct in terms of the test, but it is not good enough for an actual client. There is nothing in the scenario to suggest the office building was used for a depreciable purpose by the taxpayer, or what purpose that might be. Many office buildings have been converted to residential use, often as "lofts." Even if the property is used for a business purpose, the old furniture might be dumped. The question is not what the property is at the time of purchase, but what it is when placed in service.

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Jainen,

If the problem start by saying that it is an office building and there is nothing that will indicate that the building was converted to another use, I will continue with the version that the problem started with. If the problem allocated a price or value for the other items, it exists the assumption that the items are good unless otherwise stated. There is nothing in the problem that states or indicates that the items were no good and were dumped. If I approach a problem with all possible scenarios that are not mentioned or implied in the problem, I will not have enough time to finish any exam. Same thing happened with the warm up question exercise to you... you asked so many questions and at the end you didn't have time to solve the problem. (Yes, I am still trying).

Taxguy57.

I am trying to answer these questions without any research but I think I am right. The answer is $30,000 ordinary gain because that's his job. If he was not derivying 50% of his income by flipping houses and since he didn't hold it for more than one year, the answer would be $30,000 short term gain.

Maybe we should start a new thread with questions from the EA and give an answer and a little explanation.

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Once again you were right Pacun! :) I see now why it would be ordinary vs. short so thx! As for Jainen, I love reading his indepth analogies of the situations but it does get too confusing, but I know its from my lack of experience of those type of returns. I would love to see him argue a case in tax court! lol!

I'll start another thread later this morning with more problems... I'm really enjoying this! Thanks for participating. I know you guys are starting to get busy with real problems. I'm just alittle fish in the pond and just got finish doing 4 returns and getting them ready for friday's launch! :lol:

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For the test, you will work with the info you have. Knowing what the IRS tests for will help you eliminate extraneous info. Don't confuse investment income with income from a trade or business. I know there's a gray area in reality, but in the EA Exam the info will help you determine whether the question is about someone with a profit motive as the IRS applies that to a trade or business or someone just waiting out the market for a good time to sell.

However, for now during tax season, you have real clients that you can and should question. Your exploration of all possibilities can save your clients money and make you more valuable to them and report their activity correctly on their tax returns and find things they can change during 2010 to help them even more. So, let Jainen play devil's advocate and suggest the questions we could ask to clarify a real client's situation in our mind so we can best help them.

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For the test, you will work with the info you have. Knowing what the IRS tests for will help you eliminate extraneous info. Don't confuse investment income with income from a trade or business. I know there's a gray area in reality, but in the EA Exam the info will help you determine whether the question is about someone with a profit motive as the IRS applies that to a trade or business or someone just waiting out the market for a good time to sell.

However, for now during tax season, you have real clients that you can and should question. Your exploration of all possibilities can save your clients money and make you more valuable to them and report their activity correctly on their tax returns and find things they can change during 2010 to help them even more. So, let Jainen play devil's advocate and suggest the questions we could ask to clarify a real client's situation in our mind so we can best help them.

I like Jainen comments, as a matter of fact, I read all his comments. That's why I want him to try the warm up exercise. YES, I am still trying.

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