jklcpa

My initial knee-jerk reaction to the idea of the annuity is why have a tax deferred annuity within a tax deferred account? There's also the potential to lose out on potential growth in years where the market is doing well, and possibly higher exit fees for early withdraw. I would agree with mcb for now that buying a CD isn't a bad idea, especially since many banks are offering the highest rates on the shorter term CDs, so the investor isn't locked in for very long at all.

Someone in another topic suggested this for a good strategy specifically within an IRA. Most here aren't investment advisors and are precluded from giving investment advice to our clients beyond possibly helping them determine their risk tolerance or, for example explaining how different types of investments work, but this may be an interesting discussion of these types of investments, especially having this within IRAs and other retirement accounts.

Interesting answer, not that I agree or disagree with it. For anyone interested in discussing, I'm going to start a separate topic with the idea of this type of investment in retirement plans.

As Patrick Michael described above I, too, use the "Account Transaction Summary" page created by Drake for all transactions involving the client's bank, and I always review it with the client and obtain the client signature(s) in the area at the bottom of that page. For those states that rely on the federal 8879, including my own resident state, this is the only place that contains all of the entire information in one place including the name of bank, routing and account number, the amounts scheduled direct deposit or withdrawal, and signature lines. For the withdrawal transactions, this summary page also includes the date withdrawal will occur.

So that this topic can continue with advice on solving the original problem, I've started a separate new topic for best practices of verifying and using client banking information. I did this quoting the various posters to keep them in the order they appeared, and I've hidden or edited posts within this topic to not derail it further. New topic is here

All of the above was taken from a topic where the poster had used another client's banking information for a direct withdrawal. I've edited and moved those portions of the comments to this topic for best practice for using and verifying clients' banking information.

That would potentially solve the penalty issue, and while it may not be an ethical violation to take the client's funds in payment of their tax bill like it is for preparers to negotiate deposits of refunds, I think the client that should have paid would be suspicious and would want proof that the taxes were actually paid if their payment was to the preparer and not the IRS. Plus, the preparing firm shouldn't want its funds mixed up with those of clients in any way, and there's no way for correct client to pay harmed client directly without divulging harmed client's name because that would be an ethical violation. Either way, both clients will be unhappy no matter what the solution is. Hopefully for the OP, the disgruntled client wasn't angry enough to contact IRS with a complaint of preparer error, and if they did, that the agency would see this as an innocent mistake, but we don't know that because we are supposed to be safeguarding information like this.

Has the incorrect client with money withdrawn contacted their bank? That is a start, because that bank should have refused if the name IRS was using didn't match the account information. Next, below is a link to an IRS page for payment options, and at the bottom is a section for cancellations, errors & questions, and that section contains a phone number that may have someone to provide additional guidance. I do know that with errors such as this that involve direct deposits of refunds, the IRS clearly states that it takes no responsibility for incorrect information supplied to the agency by taxpayer or preparer. https://www.irs.gov/payments/pay-taxes-by-electronic-funds-withdrawal At a minimum, your firm should pay or share in any late payment penalties and the amount charged for the invalid returned payment (like the returned/bounced check fee).

My comments are in color. I haven't had one either, but from what I understand, for what it's worth:

Thank you!

I am still waiting on one client that hasn't given me anything directly. What I do have is what I got from the year end W-2 runs from his company's payroll processor and the 1099s directly from his broker for just a few of his many investment accounts. I've had all of that since Feb or March and that part was input long ago. All of the missing stuff, he handles himself! I'm really tired of beating my head against a wall every time I try to get some data. I can't even work on it.

True, I assumed Catherine was aware of that. The reason I mentioned it is because it still has to be reported, and the taxpayer already received a letter from the state looking for the transaction. So if a loss, then the entire sale(not installment reporting) would be on the 2021 Form 8949 showing total sales price, basis, and using code "L" for the disallowed loss from other than wash sales.

Oh boy, my first thoughts are these - First, you have to figure out the basis to know whether you're dealing with a gain or loss since the sale price is so low. If a loss then you would report the entire in 2021, the year of the sale. If a gain, was this family cottage ever rented with depreciation taken? Then you'll have the recapture in 2021 and (possibly) no income again until in 2024, but with it being a sale to related parties you need to know if the brothers have already disposed of it before she got all of her money. If they have already disposed of it, then this client must recognize what they realized as if she received it herself. You can check out the IRS Pub that deals with installment sales for more on this. Also, if the transaction results in a gain, then you definitely have to use installment sale reporting which is the default method of reporting. The opportunity to elect out of installment reporting is gone because that election has to be done on a timely filed tax return, including extensions, for the year of the sale. Will this woman ever receive the money from the brother that is technically in default, or will his non-payment ultimately result in the terms of the installment sale being redefined? With installment reporting, it sounds like you are looking at 6252 and Sch D for 2021 to document the transaction on the return with no payments in that year, and then in 2024. If it was ever rented and depreciated, then you possibly have recapture income for 2021 and add 4797 into the mix. If no installment reporting because it's a loss, then only 2021.

I'm not sure why you are mad, and not to be wise, but it is a business income deduction. In general, it is a deduction based on business income, REIT dividends and qualifying income from PTPs. Do you have any other business income or sec 199A dividend income that would qualify, or did the PTP have any qualifying income or from a REIT?

My method is much like that of kathyc2 except that all payments are deposited into the bank including the cash. I hardly ever get cash anyway and very few pay by credit or debit, even from the younger ones, and since I've known a large percentage of the clients for my entire working career and some since childhood being in a small town, I'd venture a guess that they don't feel the need for the "insurance".

"Your sister" Knowing this poster's history of mostly posing hypothetical questions, I suspect that this is another one. In this context, "sister" could be replaced by any other name, especially with the title asking how we would advise clients on their options and tax consequences.

Read this topic through to the end, including the linked article.

Have you seen this? https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/military-and-clergy-rules-for-the-earned-income-tax-credit#ClergyMemberOrMinister If you decide that the income should be included in the calcs, maybe you are missing a checkbox somewhere.

I suspect Kathy is correct, but are you able to elaborate on what was stated on the form you were asked to sign? I know that, for example, Tele-Check's system has an authorization slip that the payor signs to allow Tele-Check, as the processor, to present the "check" to your bank for payment. It's a service that the business pays for to have that processor handling its deposits and helps minimize losses for the company. Also, to be clear, it was the practice owner's decision to present this; the lawyer can't make the owner do anything he or she doesn't want to.

Agree with both ILLMAS and BulldogTom above. Also, when you have the amounts pinned down, be sure to issue 1099s for each year the theft occurred. Embezzled funds are taxable income to the thief.

Allocate the total of the appraisal and broker fee ratably to each of the assets purchased and use the appropriate lives allowed for whatever type of asset it is. Some will be allocated to land that is obviously nondepreciable. Remember you are also supposed to attach the 8594 to the return, so I would also include a schedule showing those amounts and then the allocation of these additional costs to arrive at the totals of each category. On this reconciling schedule, I'd use a generic label for these additional costs, something like "other acquisition costs capitalized."

These fall under § 1.263(a)-5 - Amounts paid or incurred to facilitate an acquisition of a trade or business, a change in the capital structure of a business entity, and certain other transactions. Here's a link to that: 1.263(a)-5(a)(1): and the please see 1.263(a)-5(e)(2)(i) in the same linked page above regarding the appraisal that falls within the definition of certain acquisitive transactions that are considered "inherently facilitative", meaning that these appraisal costs must be capitalized no matter when they are incurred and one cannot use the bright-line date tests outlined in 1.263(a)-5(e)(1)(i) and (ii)

Patrick, that is good news then! Sorry I was wrong about that, and thank you for sharing that. It may be that after Drake was bought by the larger company, that it made e-filing of the 114 through the software possible where Drake interacts on behalf of its customers.

I no longer use ATX, but I'll suggest that you look at the fixed asset input to see if it's possible to generate the 3468s from there since asset basis is required on the form. Sorry I can't be of more help, but it certainly should be possible since, as you say, more than one 3468 is required by the IRS in this circumstance.

It should, but Darlene was questioning specifically where to enter the dollar amounts from boxes 8 & 9 which show the portion of the farm income that is QBI-eligible income. Drake has a screen specifically for entering every amount from all the boxes on the 1099-PATR, and also has a section on the Sch F input to designate items affecting QBI or how much of it is QBI eligible. I'm really very surprised that ATX doesn't have something similar. In any case, I don't think it is wise for the OP to enter anything directly on the 8995.