jklcpa

I didn't think we were allowed to make the 481(a) adjustment in the final year, but someone posted in another thread about it and a rev proc that said we can. Here is that topic: '?do=embed' frameborder='0' data-embedContent>> You'll have to look at that Rev Proc 2011-14 to see if you think it applies. The pertinent sections are: Scope - Sec 4 .01, sec 4 .02 and especially sec 4 .02(5) and Terms and Condition of Change - Sec 5 .04(3)© for ceasing to engage in trade/business or terminating business, but please see the appendix reference. Sorry, I don't have a whole lot more time right now. I just finished inputting all the details for one last night. I thought was only 46 assets, turned out to be 59(!) and I still have to check all of that. When you say "what do I put or fill out to do this properly?" do you have a specific question on that form 3115? It's really hard to answer a question like that, or do you not know where to even start with that form?

Yes, IRS wants a second copy mailed in.

JM, I do too. Years ago at the last firm where I worked, I had a client actually ask if I had any work remaining unfinished because everything was put away and tidy except theirs.

Gail is correct that the basis in the hands of the donee will usually be the adjusted basis from the donor, but if the FMV of the gifted assets is less than its adjusted basis, then the basis in the hands of the donee is the FMV. If you make a gift of depreciable personal property or real property, you do not have to report income on the transaction. However, if the person who receives it (donee) sells or otherwise disposes of the property in a disposition subject to recapture, the donee must take into account the depreciation you deducted in figuring the gain to be reported as ordinary income. Para 1788 from Master Tax Guide here, and it has the refs to the code and regs- 1788. Gift of Code Sec. 1245 or 1250 Property. The recapture of depreciation as ordinary income when a section 1245 or section 1250 property is sold or otherwise disposed (,-r 1779) does not apply in the case of disposition by gift or to transfers at death (except a taxable transfer of section 1245 or section 1250 property in satisfaction of a specific bequest of money) (Code Sees. 1245(b) and 1250(d); Reg.§ 1.1245-4).182 Upon a later sale, however, the donee will realize the same amount of ordinary income that the donor would have realized if the donor had retained the property and sold it (except in the case of a tax-exempt donee). Also, if the taxpayer contributes section 1245 or section 1250 property to a charitable organization, the allowable charitable contribution deduc­tion is reduced by the amount that would have been treated as ordinary income if the taxpayer had sold the asset at its fair market value (,-r 1062). Danrvan is also correct that if about the recapture. If a person gifts listed property or property that sec 179 has been taken on, part of those provisions requires that the person always uses that property greater than 50% business use, so the gift triggers recapture of accelerated and bonus depreciation and sec 179 because the gift causes business use to drop to 0%. Hopefully you don't have this complication!

Interesting post. I have lots of questions. What type of entity is this business, a Schedule C? How was the value determined? Wouldn't the artwork be your client's inventory for sale, or inventory in process? Does your client record costs as inventory? If so, there are 2 methods a business can use to report a casualty or theft loss involving inventory. The first method is to account for the loss by using the actual opening and closing inventories, and since the items are written off as no longer in existence at the year-end, the deduction is in cost of sales, and you would reduce this by any insurance proceeds received. The other method is to report the loss of inventory as a separately stated item, reduced by any insurance received. If your client doesn't record inventory but instead just has his materials costs, does the portion of the insurance reimbursement related to the artwork exceed those costs for the year? Then it seems like he would have a gain from that portion, and I'd be more inclined to show that as a separate line item and not through COS. The damages to the studio would definitely be reported on Form 4684 with the FMV being ignored since it is related to business or income-producing property. That's without doing any research specific to an artist, but I've had many thefts of inventory over my career with my retail clients, and I've always run it through COS with any insurance received as a reduction.

Yes, that all sounds correct. I'll be moving this topic to the ACA forum in a little while, after I know that you've been back on to see the answer.

I hear ya, and I would be in that same boat if I didn't torture myself extra over the last 2 weeks working until 2-3 am and surviving on about 5 hrs sleep each night. Yesterday I was forced to take a short break because I was starting to feel dizzy. I try very hard to finish a day or more ahead because I don't like working extremely close to the deadline in case of some unexpected event like losing power or some equipment failure. Too bad I can't fly my broom around and help you all out with yours, but I'll be on here to help with last minute questions when I'm able.

I'm almost done! I have 4 ready for pickup on Mon/Tues, and 3 others on extension. Of the extensions, all are finished and ready for p/u shortly after the 15th except for one procrastinator promises to bring me data sometime soon. That leaves one partnership for my brothers' business and their two personal returns. All of their bookkeeping is done except for the 46 assets to scrub from the depreciation schedule and fill out the 3115. THAT is why it is last. On Wed I will be feeling like this:

I'm planning on sleeping late and scheduling a much needed haircut. I haven't had one since late Sept and have been shaping and using lots of hair spray to glue it in place. It's like fake hair that never moves.

Yes, definitely an extension is in order, I realize that, but if it comes to Sept or Oct and your client doesn't have the 1095A then you'll file with what you have and deal with the IRS.

If funding and IRA and/or HSA will reduce the MAGI below the 400% of poverty, please consider doing so. She has only until 4/15 to fund those for 2014 contributions. It is worth considering because not only may she avoid the APTC payback, but she would also be saving for her future medical or retirement needs and reducing her tax liabilities too. That would be a win4 if it works for her situation.

If your client doesn't receive it, you do have all of the information available from other sources. The premiums are from the insurance co and their bills. The ones I've seen also show the premium assistance as a reduction to the amount the client actually paid. You can easily find the SLCSP within a minute or two. It's not rocket science. All of the figures needed are easily ascertainable if the 1095-A is never issued.

Maybe tomorrow I'll take the ol' broom for a spin. I just hope I don't have to unleash the flying monkeys.

No, child can't claim himself unless he is actually entitled to do so. If the parents are entitled to claim the dependent exemption for the child, the child cannot claim himself even if the parents don't. Below are 3 things you could print to show the client, take your pick. From pub 501: Dependent cannot claim a personal exemption. If you are entitled to claim an exemption for a dependent (such as your child), that dependent cannot claim a personal exemption on his or her own tax return. Below is an excerpt from the CCH Master Tax Guide, the 2012 book used for 2011 returns, but this rule wouldn't have changed, only the amount allowed for the exemption has increased. If you want the actual IRC, it is 151(d)(2) - 26 U.S. Code § 151 - Allowance of deductions for personal exemptions (d) Exemption amount For purposes of this section (1) In general Except as otherwise provided in this subsection, the term “exemption amount” means $2,000. (2) Exemption amount disallowed in case of certain dependents In the case of an individual with respect to whom a deduction under this section is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, the exemption amount applicable to such individual for such individual’s taxable year shall be zero.

I was curious about how Drake would handle this so I used one of their training returns to test this. I entered enough NOL c/f to create a negative # on the front of the 1040. The form 8962 shows that on line 3 and has -0-s on both lines 8a and 8b. It allowed the credit, did not require me to check any box to force the credit, and gave no warning notes.

http://drakesoftware.com/site/Products/TechnicalSpecs.aspx

Today was very annoying and I won't get into the details. Let's just say that this might have been me talking to a client: and this one of me contemplating his extension: ^ That one is available for purchase on the internet. I might have to buy it for my office for several reasons, one of which is that the movie is a classic and a favorite of mine.

Have you calculated the return yet? Maybe the IRS didn't bother if her withholding was high enough to cover the tax on the wages, distribution and the early withdrawal penalty all combined.

I had one client a couple of years ago with a broker's 1099 and 3 subsequent corrected forms that followed, the last being received on 4/11 and that was 2 days after we both thought it was safe to file the returns. The broker had this client invested in REITs that would report amounts that were later revised. Client got out of the REITs and the problem with the corrected forms has gone away. I just finished one of my larger personal returns yesterday that involved 9 separate brokerage accounts having a lot of activity and a large pile of other docs from a bunch of bank accounts, mutual funds with Vanguard,IRAs and on and on. Today when I called to set up an appt, the guy tells me that his sister *thinks* there will be a correction to one of the brokerage accounts that involved inherited assets from their mother that died in 2014. Sister is the executrix and is making a total mess of it, and doesn't know if it will affect 2014 or only 2015(!?!). Thankfully sister is NOT my client, but my guy doesn't know what it is that is changing or why!

The first question I ask when clients pick up the return is if they'd like to review it in detail. They all say no, so I go over the highlights meaning that I am using that exact comparison summary page for the review. I point out all of the major changes that answers all of these type of questions. That comparison is always the first page directly behind the letter. I am also now using the very abbreviated letter format that everyone likes a lot better, easier to see, very concise.

I like KC's idea if you do want to override the field. If you are at 100% e-file, you could always change the master form to include that, if ATX allows modification of that field. The software I use prints the 5-digit pin in the signature space of the client's copy, but that would require more effort to coordinate that.

But, but "...the program is working as designed." That's true, right? It just has a design flaw. /s

Does this life estate give her the ability to deduct 100% or 1/2 of the mortgage interest and real estate taxes since the son's name is on everything and he lives there too, but doesn't pay a cent? The deed to the property is now in the son's name, as is the real estate bill. I'll have to ask her about the mortgage because I remember last year she had trouble getting a replacement 1098 because the mortgage co wouldn't talk to her until she sent them proof that she was the administratrix of his estate since her name isn't on any of the home's documents.

She doesn't need an actual document to say that mom has a life estate in the home. It is an operation of the law in Delaware, specifically #3 below. In Delaware if the person dies intestate: SURVIVING SPOUSE (Husband or Wife)/Civil Union Partner The entire estate goes to the spouse/civil union partner if there are no surviving issue or parent(s) of the decedent. If there are no surviving issue but the decedent is survived by a parent(s), the first $50,000.00 of the personal state, plus one-half of the balance of the personal estate, plus a life estate in the real estate, goes to the spouse/civil union partner. The balance goes to the parent(s). If there are surviving issue, all of whom are also the issue of the surviving spouse/civil union partner, the first $50,000.00 of the personal estate, plus one-half of the balance of the personal estate, plus a life estate in the real estate, goes to the spouse/civil union partner. If there are surviving issue, one or more of whom are not the issue of the surviving spouse/civil union partner, one-half of the personal estate, plus a life estate in the real estate, goes to the spouse/civil union partner.

I'm glad it worked. I wish they were all that easy to solve.