jklcpa

Does this help? From Pub 925: http://www.irs.gov/publications/p925/ar02.html#en_US_2013_publink1000104579 Passive Activity Income Passive activity income includes all income from passive activities and generally includes gain from disposition of an interest in a passive activity or property used in a passive activity. Passive activity income does not include the following items: Income from an activity that is not a passive activity. These activities are discussed under Activities That Are Not Passive Activities , earlier. Portfolio income. This includes interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business. It includes gain or loss from the disposition of property that produces these types of income or that is held for investment. The exclusion for portfolio income does not apply to self-charged interest treated as passive activity income. For more information on self-charged interest, see Self-charged interest , earlier. Personal service income. This includes salaries, wages, commissions, self-employment income from trade or business activities in which you materially participated, deferred compensation, taxable social security and other retirement benefits, and payments from partnerships to partners for personal services. Income from positive section 481 adjustments allocated to activities other than passive activities. (Section 481 adjustments are adjustments that must be made due to changes in your accounting method.) Income or gain from investments of working capital. Income from an oil or gas property if you treated any loss from a working interest in the property for any tax year beginning after 1986 as a nonpassive loss, as discussed in item (2) under Activities That Are Not Passive Activities , earlier. This also applies to income from other oil and gas property the basis of which is determined wholly or partly by the basis of the property in the preceding sentence. Any income from intangible property, such as a patent, copyright, or literary, musical, or artistic composition, if your personal efforts significantly contributed to the creation of the property. Any other income that must be treated as nonpassive income. See Recharacterization of Passive Income , later. Overall gain from any interest in a publicly traded partnership. See Publicly Traded Partnerships (PTPs) in the instructions for Form 8582. State, local, and foreign income tax refunds. Income from a covenant not to compete. Reimbursement of a casualty or theft loss included in gross income to recover all or part of a prior year loss deduction, if the loss deduction was not a passive activity deduction. Alaska Permanent Fund dividends. Cancellation of debt income, if at the time the debt is discharged the debt is not allocated to passive activities under the interest expense allocation rules. See chapter 4 of Publication 535, Business Expenses, for information about the rules for allocating interest.

Reconciling the bank accounts helps ensure that the client has recorded the payroll properly in the subsidiary records or journals, and also that the payments of liabilities have been recorded at the actual amounts paid. If you are doing the bookkeeping, that should be part of the process. If you aren't doing the bookkeeping, you should ask if the client is reconciling the bank accounts, otherwise, how do you know if the transactions are recorded in the proper period and at the proper amounts.

I signed up too. It's free and only an hour so there's not much to lose by listening. With that short a time, I think it will be mostly an overview though, but a good place to start as a refresher before I get into the more detailed seminars on the topic.

It looks like residency isn't the important test. There isn't a clear answer, but if those 10 returns don't constitute a significant business or significant contacts within MD, then you don't need to take the MD test. From the MD website: 3. Does registration apply only to tax professionals physically processing a Maryland state tax return in Maryland, or does it pertain to the personal residence of the employer? For example, if I am a tax professional who resides in Maryland, but I work and process tax returns in the state of Delaware, do I have to register with the state of Maryland? Maryland Registration is not dependent on the preparer’s personal residence, but whether the preparer’s business includes preparing Maryland returns - either in state or out of state. If an out of state preparer is preparing Maryland returns as a significant part of his/her business, then he or she must register. However, those out of state tax professionals who prepare an occasional Maryland return for a walk-in client may not be required to register with Maryland. The legal opinion from the Board’s Counsel states: "[T]he requirement for registration would depend on what professional contacts the individual has with Maryland that concern providing, attempting to provide, or offering to provide tax preparation services in Maryland. If preparing Maryland returns is a significant part of the individual’s business, and the individual has significant contacts with Maryland, then the Board would expect the individual to register with Maryland." Here's the link to the page where I got that from. That page was updated as on 7/1/14: http://www.dllr.state.md.us/license/taxprep/taxprepfaq.shtml

Generally, for a C corp return with no tax due the late filing penalty won't be assessed (minimum penalty is $135 or 100% of the unpaid tax) if the return is filed within 60-day of the due date or extended due date. If you get it done and filed in the next 60 days, there shouldn't be any late filing penalty. See 3rd paragraph "Late filing of return" that references the extra 60 days beyond the due date or extended due date: http://www.irs.gov/instructions/i1120/ch01.html#d0e721 Numbers 4 and 7 here also reference the 60 days : http://www.irs.gov/uac/Failure-to-File-or-Pay-Penalties:-Eight-Facts

The statement made at the seminar makes no sense. The regs were just finalized in Sept of last year and are applicable to tax years beginning on or after Jan 1, 2014, and optionally in their temporary form to tax years after 2011. Why would every return with depreciation be expected to need a 3115?

The article from Catherine's link: 5M Gmail accounts hacked. Change your password *now*! Posted on September 10, 2014 by Dr. Eowyn Fidel Martinez for Fusion.net, Sept. 10, 2014: Time to change your password again. A database containing nearly 5 million Gmail user accounts and passwords was leaked on Bitcoin Security, a popular Russian website devoted to the cryptocurrency. The text file was published on Tuesday night by user tvskit, according to CNews, the Russian news outlet that first broke the story. The leaker claimed that the majority of the accounts belong to users who speak English, Russian, or Spanish, and that approximately 60 percent are active. The passwords not only give access to Gmail, but a slew of other Google services such as Drive and the mobile payment system Google Wallet. Svetlana Anurova, a Google representative, told CNews that the tech giant is aware of the breach and encouraged users to select a stronger password and enable two-step verification, a security measure where users are required to provide a passcode sent to their mobile devices before any changes can be made to their account. The Gmail leak comes on the heels of two other major security breaches leaked on the same Bitcoin forum, which targeted Russian email service prodiver Mail.ru and search engine Yandex. Those two breaches affected nearly 6 million Internet users. Find out if your account was compromised You can verify whether your account was affected by clicking HERE https://isleaked.com/en.php and entering your gmail address. It’s that simple. You can also enable Google’s 2-step verification by following the company’s easy steps. UPDATE 3:01 PM Google issued the following statement to Fusion: “The security of our users’ information is a top priority for us. We have no evidence that our systems have been compromised, but whenever we become aware that accounts may have been, we take steps to help those users secure their accounts.”

Article from Accounting Today - CPAs Sue IRS over PTIN Fees Washington, D.C. (September 9, 2014) By Michael Cohn A pair of CPAs have filed a class-action complaint against the Internal Revenue Service challenging IRS regulations requiring tax practitioners to annually register and pay a fee to the agency to obtain and maintain a Preparer Tax Identification Number. The class action involves more than 700,000 individual practitioners who are forced to pay for a PTIN every year. The lawsuit, which was filed Monday, seeks an injunction barring collection of the fee and recovery of the more than $150 million in fees the IRS has collected since 2010. The challenged regulations were issued several years ago as part of a broad IRS initiative to radically expand its oversight of attorneys, accountants, and other tax return preparers who prepare tax returns for compensation, the CPAs’ attorneys noted. Last year, the a federal court in Washington, D.C., ruled that large portions of the regulations issued by the IRS were invalid because the IRS lacked statutory authority to issue the regulations in the case of Loving v. United States, and that decision was upheld by the D.C. Circuit Court of Appeals earlier this year. The rulings invalidated the IRS’s program for requiring mandatory testing and continuing education of tax preparers. However, the courts allowed the IRS to continue to require registration of tax preparers through the PTIN, but did not rule on the question of fees. The IRS has announced plans to offer a voluntary testing program instead known as the Annual Filing Season Program, but the American Institute of CPAs has filed suit to stop the program (see AICPA Sues IRS over Voluntary Program for Tax Preparers). http://www.accountingtoday.com/news/irs_watch/aicpa-sues-irs-over-voluntary-program-for-tax-preparers-71366-1.html Congress allowed the IRS to require tax practitioners who prepare tax returns for compensation to place a PTIN on the returns to help IRS identify the preparer. The plaintiff CPAs argue that the IRS lacks the statutory authority, however, to charge fees to obtain or renew a PTIN and the IRS cannot use fees it has collected for unrelated activities. The IRS uses only a small portion of the fees collected to pay the vendor who manages the on-line PTIN registration process and uses the bulk of the fees for other IRS activities. Plaintiffs seek restitution of the fees collected by IRS in the past and injunctive relief barring the IRS from collecting similar fees in the future. “If an agency can charge U.S. citizens to fulfill a requirement, then an agency can tax,” said plaintiffs’ co-counsel, Allen Buckley of Atlanta. “Unlawfully, the IRS has been taxing Americans.” The other co-counsel Stuart Bassin of Washington, D.C., said, “The courts have rejected the IRS’s effort to regulate return preparers and it is time for the IRS to return the PTIN registration fees it has collected to support that effort.” The docket number of the case is 1:cv-14-1523. A copy of the complaint has been posted online by Kelly Phillips Erb of Forbes.

re: IRA - https://revenue-pa.custhelp.com/app/answers/detail/a_id/365/~/how-do-i-determine-if-my-ira-withdrawals-are-subject-to-pa-income-tax%3F re: 401K - https://revenue-pa.custhelp.com/app/answers/detail/a_id/273/~/are-my-contributions-to-a-401%28k%29-plan-excluded-from-employer-withholding%3F re: 401K early withdrawal - https://revenue-pa.custhelp.com/app/answers/detail/a_id/1469 Page 11 of the PA instructions contain the same info about the IRA, and also a reference to Tax Bulletin 2008-01 that comes up as an 8-page pdf from PA's website.

I don't think the article was totally clear about how that figure was arrived at. It says 26 fraudulent returns, but it goes on to talk about client copies of returns that show refunds being applied to the following year where this preparer received the funds, and returns that reported balance dues where those funds were turned over to him and never paid in on behalf of the taxpayers. It's very possible that the IRS can't collect on those balances dues from these taxpayers; maybe they are no longer in this country.

Info from healthcare.gov (below), I think your client would owe a penalty of $259. This is based on the excess AGI over the filing threshold of $25850 * 1%. The fee in 2014 and beyond The penalty in 2014 is calculated one of 2 ways. If you or your dependents don’t have insurance that qualifies as minimum essential coverage you'll pay whichever of these amounts is higher: 1% of your yearly household income. (Only the amount of income above the tax filing threshold, $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan. $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285. The way the penalty is calculated, a single adult with household income below $19,650 would pay the $95 flat rate. A single adult with household income above $19,650 would pay an amount based on the 1% rate. (If income is below $10,150, no penalty is owed.) The penalty increases every year. In 2015 it’s 2% of income or $325 per person. In 2016 and later years it’s 2.5% of income or $695 per person. After that it's adjusted for inflation. If you’re uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you’re uninsured. If you’re uninsured for less than 3 months, you don’t have to make a payment. You’ll pay the fee on your 2014 federal income tax return. Most people will file this return in 2015. Learn more about the individual shared responsibility payment from the Internal Revenue Service. Link to page where I took excerpt above: https://www.healthcare.gov/what-if-i-dont-have-health-coverage/ Link to the IRS site for an overview of the shared responsibility payment: http://www.irs.gov/uac/Newsroom/The-Individual-Shared-Responsibility-Payment-An-Overview

Doctors and dentists offices are a good examples of those that will report on the cash basis for tax purposes where tracking receivables is very important since it is usually a very large, or largest, asset that have many adjustments to arrive at the final collectible amount. No way would they want to pay taxes on the initial receivable recorded for services rendered when downward adjustments due to patients' negotiated rates are the norm.

Is the business one that typically would report on the cash basis? If Quickbooks is reporting on cash basis and the tax return is also, maybe that's the way it should be reported. I'd check the return 2 years back. Is it possible that the only thing wrong with last year's return is that the box checked indicates "accrual"? It's possible to use QB to track a/r and a/p while reporting on the cash basis. If that is your case, the QB chart of accounts and trial balance would show the a/r and a/p accounts. Reports can then be run for either cash or accrual.

You're welcome. I didn't see the actual article until I searched for it from here. The source was easy to find by highlighting the first sentence, right clicking, and choosing the option to search for that sentence or phrase.

To be clear, these weren't cbslee's assertions. His post was a direct cut and paste of an Aug 21st article by Ken Berry, CPA that was published in the CPA Practice Advisor entitled "5 Ways to Get Tax Deductions for Local Transportation Uses". I've added the title and given the author proper credit in the OP above.

They have the RACs and the fees that go along with them. Additional $68 in fees if the person chooses to walk out with a paper check. You can choose to receive your refund proceeds, minus tax preparation and processing fees, on an H&R Block Emerald Prepaid Mastercard®, via a physical check or deposited to an existing account. State RAC is disbursed using the same method you chose for your Federal RAC Typically receive your funds within 21 days. Email alerts when funds are available. Federal RAC Fee $34.95 State RAC Fee $13.00 (Additional $20 fee for a paper check) http://www.hrblock.com/financial-services/tax-refund-payment/

Oops, I've never clicked on that field because I thought that was only for offices with multiple preparers, so I didn't realize it had a choice for 'none' to indicate self-prepared. I would have removed the paid preparer designation from my own returns if I'd known it was that simple. I learned something new tonight. lol

Bob, you were clear. When I prepare my own corporate return for the office, and for my personal returns, I leave the paid preparer info on there too.

John, are you doing that in Drake? When I looked at Drake's preparer setup, it requires a separate login for each preparer and must also have a PTIN for efiling. So if you are entering for preparer "..", what is the PTIN entered? Or are you filing these on paper? Seems like a hassle, and I agree with Jack on this and show my paid preparer info on all returns.

And for further clarification, the general chat says "Discuss taxes, software, anything you want besides politics." I think by now all here know that the IRS and taxes are political pawns, and the article does nothing to enhance our knowledge that will help us with the business we conduct with this agency. It was purely a political piece.

Did you leave out a PB, bacon & banana sandwich? btw.....ewwwww at that.

Lloyd, the post count is the # of posts you've made and shows up at the left below your name and avatar. It will probably be a pretty low #, only to make sure that new users are legit real people that are tax professionals that should be participating here, not just the spammers that we sometimes get. If you can already see the new private forum, you don't need to worry about the post count.

Jack makes a good point, and the worksheets will help document the deduction split for our purposes, but those worksheets aren't efiled with the return. Is there a way to document this on e-filed returns so to avoid the notices? The instructions for line 11 specifically say that an attachment is necessary as documentation in this case for a paper-filed return. Since it doesn't specifically address this issue for e-filed returns, I created a document with an explanation of the split and included the scanned Form 1098, and attached this as a pdf to the efile. Specifically, I had 2 new clients last year that purchased a house together, unrelated individuals both filing single, not MFS returns. Both names appear on the Form 1098 but obviously was reported under the first-named's social security number. I efiled the return with the attachment named so to be very obvious as to what it related to, and I haven't received as notice...yet. I did the same thing in a previous year for a divorcee where the 1098s came in the name of the former spouse. Never a notice there either. Instructions for Sch A, line 11, 3rd paragraph only: Line 11 If you and at least one other person (other than your spouse if filing jointly) were liable for and paid interest on the mortgage, and the home mortgage interest paid was reported on the other person's Form 1098, attach a statement to your paper return listing the name and address of that person. To the right of line 11, enter “See attached. Anyone care to comment if my attachment will work to avoid the CP2000 on an e-filed return?

Is the notice coming to the spouse whose name was not on the Form 1098. If so, did you report it on line 11 as instructed, and not on line 10, and did you indicate and supply the attachment to document the interest?

David, I've been trying off and on today to find something for you that says the exclusion is still available to be used against gains on sales by estates or heirs, but I believe Lion is correct. This exclusion WAS available in 2010 only, and that's why the first linked document says "for sales after Dec 31, 2009". As far as I can find, in 2010 this was covered in IRC sec 121(d)(9) , that frustratingly now reads as something completely different. If you look at this site, on page 4 of the right-hand column, in very fine print you'll see the amendments for 2010, the temporary additions of the words that would have extended the exclusion to estates and heirs. It's the last line of that first block in the amendments section. Hope that makes sense. Here's that site for the actual code: http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partIII-sec121.pdf