jklcpa

It is still trading and not totally worthless. I told my client to sell the shares and get the small amount of proceeds. The loss still ended up on sch D, net of the of proceeds.

I'm trying to decide how long to wait before amending. Return showed a refund of $2,750. Without the credit, this couple would owe $3,750. At least they met an exception to the 2210 penalty. Is IRS sending the refunds on returns claiming this credit and later checking the credit documentation, or are they verifying that the TPs actually qualify for this credit before issuing the refunds?

Don, thanks for the reply. The sale of old and purchase of new were both in Dec 2009. The reason I'm saying they don't qualify is that husband = long term resident, wife = first time owner. Jainen posted a link earlier this season to the IRS Q & A on another scenario. I was rereading some of the older posts last night on the subject. Here is a portion from that Q & A :

Clients picked up return about a week ago. They most likely have mailed it already. I claimed the long time resident home buyer credit of $6,500. Husband purchased former home with first wife in the mid 80s, then divorced her mid 90s and married current wife. Current wife has lived in this home since their marriage, but she was never put on the deed. UGH! They purchased the new home together. They don't qualify for either credit, right? And MFS won't help either, right? If they haven't filed, I'll correct the return. If they have filed, how long to wait before sending the amended? Taking the credit off, they will owe about $3,750. This has been the worst year ever. I hate this kind of cr@p! TIA for any advice.

What else does the K-1 report? Any 179? Is the SE income shown in box 14? You can't assume that the partnership's ordinary income or loss is for SE taxable. As an example, a partnership's ordinary income can include gains on 4797 that are not SE income.

Golden Retriever + Old English Sheepdog = a Golden Oldie!

Dear Client, Thank you for showing up at my house last Sunday morning unannounced. That was a very special moment for me. Also, thank you for twice rescheduling (at the last moment) your appointment to pick up your completed returns. That simple act helped me run my office in the most efficient manner possible. I also appreciate the consideration you showed me when you called my house at 8:30 pm a few nights ago to discuss a prior year IRS notice. What a wise person you are to have come up with the idea of "calling the IRS and playing dumb" to see if you can find out what the notice means. That makes much more sense than listening to your brother's advice, or mine. PS - it wouldn't be pretending when you call the IRS. You ARE dumb. PPS - YOU'RE FIRED!

BS, I am sorry to hear of your diagnosis. I will be praying for you and hope you have a full recovery. MargaretMort, I'm sorry to read your news as well. I'm sorry for the loss of your husband, your cancer and treatment. Thank you for sharing that you are cancer free. I will pray that you continue in good health with no reoccurrence.

Wasn't there some sort of issue with the ATX servers for a day or two in mid-March? I remember this because I had one 7004 that I filed around the 10th, and then saw an issue with the servers around the 13th-15th that made me glad I'd filed that 7004 when I did. The ATX support site only says that on 3/18, one batch of efiles was resent to the Kansas City processing center. What's odd is how all 4 of your efiles have the same DCN on them. Unless you reset the counter before each one, it sounds like a problem with ATX. I'd still check with e-services. Perhaps as michaelmars suggests, that the first ones were accepted.

Were these a batch process? I think I'd try calling the e-services help line @ 1-866-255-0654. Maybe somehow a person there can get the extensions processed for you so they aren't considered late.

I have a couple that wants to file a MFJ return for 2003. The IRS created a substitute return for the husband, but not one for the wife. As I understand it, this is not an amendment to his return, because he never filed. Do I simply file the 2003 on a 1040 with a letter explaining that? TIA

When this season is over, I'm having one bad@ss FRIKKIN' BANANA SPLIT. Later on, I may do some frikkin' drinkin'. Anyone's welcome to join my party.

Not entirely true. The education credits, if any, go to the taxpayer claiming the dependent, regardless who foots the bill for the tuition.

Had one exactly like this last week. Whatever percentage of the soc sec was taxable (mine was the full 85%), that is the percentage of the attorney fees that are deductible. My deduction was $4,505 (5,300 * 85%). Yes, report as misc deduction on line 23 of Sch A, subject to the 2% limitation.

Code sec 453(i) is the section for disposal of recapture property in an instal sale having recapture income from either sec 1245 or 1250 property. Recapture income is the ord income under sec 1245 or 1250 that must be recognized in the year of sale, and any excess of the recapture is reported on the installment method. The return will contain both Forms 6252 and 4797. Form 6252, line 12 is where the ord inc recapture is reported in the year of sale. It subtracts from the overall profit on the sale, and the gross profit and GP% are reduced accordingly.

I wish I was that luck to be able to lump. I am working on a partnership with a theft loss of several pages of depreciable items, most having taken sec 179 on. Each item reported separately. Once I get the partnership done, then I get to do it over again on the each of the 2 partner's returns.

LOL

The original posting was confusing to me, so I chose not to answer. Now, I *think* was OP is saying is that husband's 50% ownership when into the trust where the wife had the right to income from his share during her lifetime, and she (wife) retained her own 50% ownership outside the trust. In that scenario, wouldn't the husband's 50% get the stepped up basis at the time contributed to the trust in 1982. Then the 50% ownership of wife outside the trust gets stepped up at her death. If that is the case, shouldn't the children's basis in 100% of the property be this: 50% coming from the trust at the 1982 value and the 50% coming from mom at the 2000 value?

Before 2008 it was $50 per month per partner. Believe that was capped at 12 mos. For returns due after 12/20/07, raised to $85 per month per partner, max 12 mos. Tax yrs beginning in 2009, it goes to $89, but you should be OK for that year. For returns beginning in 2010, it becomes even more severe @ $195 per partner per month, 12 mo cap. Yikes! don't let them be late again. Without interest, that's $3,000 for each year from 2003 - 2007 and $5,100 for 2008. It's for a month or part of a month, so there's not even a little break for 2008 even if you could get it done by 3/31/10 because we're already in the 12th month overdue from 4/15/09. Late filing penalties will total $20,100 if my math is correct. Interest is calculated on the penalties using the quarterly rates in effect at the time. They could also be charged with failure to furnish K-1s timely. Sorry don't have fresh #s for these handy without looking them up. IIRC, it used to be $50 per K-1. If intentional disregard, that bumped up to the greater of 10% of aaggregate items or $100 with no cap.

Kea's link goes to the home buyer credit. Here's the link to the economic recovery tool: https://sa2.www4.irs.gov/irfof-mwp/start.do Don in Upstate NY also posted this in another thread.

Out of curiosity, how do you all handle the AMT exemption when preparing your clients' 2010 tax projections? Do you use the $45K that it will revert to without a patch, or do you assume that Congress will extend and keep the exemption high?

You need the contract of sale to see exactly what is being purchased. Unless this was structured as a stock purchase, that contract should include the purchase of equipment and fixtures, patient list, goodwill, receivables, any debt assumed, etc. Also ask your client to contact the seller to see if their tax preparer included Form 8594 in the tax return for the year of sale. That form is used to report the allocation of the sales price to the various classes of assets sold or purchased. The seller and purchaser both include this form in their tax returns and the numbers must match. Once you have the breakdown by class, you need to further allocate the total price for fixtures and equipment to the individual assets so to begin depreciation. You also need to breakdown the total assigned to the intangibles to properly calculate amortization. The full $200K is recorded on the books of the purchaser, however it is allocated. $50 cash was paid out, and the remaining $150 is recorded as a note payable.

Crank, here's a link to PA guide to individual taxes that will help you: http://www.revenue.state.pa.us/portal/server.pt/community/revenue_home/10648 Clicking on the first link to a PDF is for chapter 24 of PITGuide. The discussion of cancellation of debt starts on pg 7.

Yes

Yes, the full benefits received in 2009 will appear on 20a no matter what year they are for. The idea of the lump sum worksheet is to calculate the tax as if it had been received in the earlier year. The lump sum calcs are beneficial if the taxpayer is in a lower tax bracket during the earlier year to which the lump sum payment is for. If the taxpayer is in the same bracket for both tax years, usually the tax will be the same using both methods.