Pacun

"I believe you are the one that's confused. Lion's and jainen's comments, in my opinion :~), are correct." Give me a good reason why you wouldn't deal with this client? He is reporting 100% and he doing everything correct, except that your colleague who filed his taxes, didn't file Personal Property Return, as a Domestic Limited Liability Company, with the fee. If he is mixing the money, he will not be covered by the LLC if a problem arises and I have told him that. Anyway he doesn't need any protection because he BROKE.

Wow, you and Jainen seem confused. The LLC and himself work for only one employer. That employer gives the LLC a 1099misc. There is no way he will under report income. That's not the issue here. The issue is that his prior preparer never filed anything for the LLC and I do believe it is required for MD for INFORMATION PURPOSES and a $300 yearly filing fee. I am waiting for Diane to confirm it since she is in MD. Schedule C has been filed properly in the past.

Lion, You are right. I will explain to him that since he doesn't have any wealth, he is protecting nothing by having the LLC. I will also wait for Diane to reply to my previous post and move from there. This is a new client and I am still deciding if I will be doing business with him.

If MD Administrative Release No. 25 is active, that will answer my question. I just tell my clients to keep the LLC separate and the consequences if they don't. If this person is not following that, my responsibility is that he reports all income. Since he only works for one company and he gets a 1099misc, I don't see a big issue.

Diane, I found this on that site: Administrative Release No. 25 Subject: Income Tax Treatment of Limited Liability Companies Revised: September 2008 IV. Maryland Income Tax Treatment of LLCs A. In General Effective January 1, 1997, the IRS promulgated final regulations which significantly change the way some entities are classified for federal income tax purposes. These “check-the-box” regulations generally provide that an eligible entity with two or more members may elect to be classified as a corporation or a partnership. An eligible entity with a single member may elect to be classified as a corporation or to be “disregarded” (treated as not separate from its owner). Maryland follows these Federal regulations; therefore, the Maryland income tax treatment of an LLC depends on the classification of the entity at the federal level. If an LLC is classified as a partnership for federal income tax purposes, it will be treated as a partnership for Maryland income tax purposes and must file a Pass-Through Entity Income Tax Return (Form 510). If the LLC is classified as a C corporation for federal income tax purposes, Maryland will also tax the entity as a C corporation and it will be required to file a Corporation Income Tax Return (Form 500). Also, if an LLC has elected to be classified as a disregarded entity for federal income tax purposes, then the LLC will be treated as a disregarded entity for Maryland income tax purposes and will not have to file a separate Maryland income tax return. Instead, the profit or loss of that LLC will be reflected on the personal income tax return of the owner of the LLC. For example, if the owner is an individual, the income and loss of the LLC will be included on the individual’s Maryland income tax return. If the owner is a corporation, the LLC will be treated as a division of that corporation and the profit and loss of the LLC will be included on the corporation’s Maryland income tax return (Form 500).

Granny Coral, What Operating System is installed on your new computer? I have Windows 7 Pro 64bits but I have not transmitted yet. I have one ready but I was waiting until tomorrow. I wonder if I will have the same problem you are having.

Jainen, I was hoping you were going to say that the LLC was killed by his actions and therefore, no filing was required. When people come to my office, I ask them if they have a house, cars, inheritance coming, favorable law suits pending, etc. If this person had come to me, I would not have suggested an LLC because he doesn't need protection. His whole wealth are the cars. "Basically I think the guy is a fool to let someone else work construction under his name with such a goofy setup." Not really, he makes a little profit when he has the extra help and he issues a 1099misc to the other subcontractor (NOT employee).

ALL four have good answers. That's why I love this forum, THANK YOU. About a year ago, I read exactly what Jainen said but most preparers don't file LLC forms for MD. Maybe because $300 is a lot for (most of the time) nothing. The owner of this LLC works only for one drywall company and the LLC gets a 1099misc. The owner is a tenant and has 3 cars with FMV less than $15,000. When he gets extra work, he gets another subcontractor (to whom he issues a 1099misc) and they work together. For the next 3 years, owner believes his employment situation will not change. He is under a payment plan with the IRS and MD from last year's schedule C taxes. He has a two checking account, one for the LLC and a personal one. He told me that when he gets paid, sometimes he goes to a licor store to cash the check. Then, he splits the cash in three parts, one goes to his pocket, the other goes to the LLC checking and the other goes to his personal checking. Who in the right mind, will suggest to this person to register an LLC and pay $300 yearly! Please comment on any of the above. Let's say that he has had the LLC for five years and he decides to close it, do you think MD will force him to pay $300 for each year the LLC was active?

correct.

Not only that, if that person had 2 jobs, both employers are short and that tax liability will be higher. AND please don't make me start with the ones who had two jobs and they were short to begin with. Those tax payers will not be happy campers this year and that unhappiness is transmitted or blamed to the tax preparer.

I have a new computer and all I did was to install the program on the new computer, then I copied the database and backup folders from the old computer. Make sure your fire wall is not blocking anything.

I have a new client who is the only owner of an LLC in MD. Previous preparer filed sch C (using FEIN of LLC) and 1040. For MD, he filed only the regular personal forms. I have read that LLC has to file with the state where they are registered. I have dealt only with LLCs with two partners and I have filed for the LLC and distribute K1s to partners. Do I have to file with the IRS and/or the state (MD) for this pass-through disregarded entity or continue doing what the previous preparer did?

"A taxpayer may change an election to claim the standard deduction at any time before the period of limitations has expired. Sec. 63(e). Insofar as the record shows, petitioners have not sought to change their election to claim the standard deduction. In any event, on the record before us it would not appear advantageous for petitioners to do so." This is what I understand what the court said: Since you didn't itemized before 3 years, and because maybe with the extra $1,100.00 in itemized deductions, you still wouldn't beat the standard deduction, we are not going to allow you other losses, except that we are going to adjust your basis on the day you won. Your basis on your winning day was $900 and you won $2,000.

"A taxpayer may change an election to claim the standard deduction at any time before the period of limitations has expired. Sec. 63(e). Insofar as the record shows, petitioners have not sought to change their election to claim the standard deduction. In any event, on the record before us it would not appear advantageous for petitioners to do so." Sorry KC, I go with Jainen et all after carefully reading the case again.

How about if you charge per line and you program it to charge $30 for the first line and $1 for the next lines?

This is a continuation of the "GAMBLING: Court accepts IRS Rules" post "A taxpayer may change an election to claim the standard deduction at any time before the period of limitations has expired. Sec. 63(e). Insofar as the record shows, petitioners have not sought to change their election to claim the standard deduction. In any event, on the record before us it would not appear advantageous for petitioners to do so." Sorry KC, I go with Jainen et all after carefully reading the case again.

"I have to remember that Jainen always has a point, but he disguises it well" That could be true on other posts but he was clear on this one. Now, depending on how much business they will have in the future, they might want to keep the S status.

Fighting the IRS Your chances of winning a fight with the IRS are about as great as your chances when fighting City Hall. National Taxpayer Advocate Nina Olson, in her recently-released annual report to Congress, listed the 10 tax issues most litigated in the federal courts. Of the 923 cases involving those issues, taxpayers prevailed in whole, or in part, in 132, or roughly 14 percent. Taxpayers who were represented by counsel did somewhat better when the numbers were broken down—they won 20 percent, or 54 of 265 cases; pro se taxpayers prevailed in 12 percent, or 78 of 658 cases. Full report http://legaltimes.typepad.com/blt/2010/01/fighting-the-irs.html IRS commissioner doesn't file his own taxes By Bob Cusack - 01/10/10 11:54 PM ET IRS Commissioner Douglas Shulman does not file his own taxes in part because he believes the tax code is complex. During an interview on C-SPAN's "Newsmakers" program that aired on Sunday, Shulman said he uses a tax preparer for his own returns. "I've used one for years. I find it convenient. I find the tax code complex so I use a preparer," Shulman said. Pressed on how he would make the tax code simpler, Shulman responded, "I don't write the tax laws. Congress writes the tax laws so that's a whole different discussion." Full report http://thehill.com/blogs/blog-briefing-room/news/75119-irs-commissioner-doesnt-file-his-own-taxes

That's why I used OR.

Leap year.

"At the end of the year you add all your daily gains (up to 366 of them) and put the total on line 21." If it is up to 366 days, it doesn't go to line 21, it should go to schedule C or you need to call the gambler hotline for help.

On previous posts, I wanted to comment on Catherine and Margaret bonding and I thought it was by coincidence. Now I have my answer. As for the funny portion of this post, I think Bulldog and I were right on the money. It is funny after all.

You don't elect to itemize or not itemized. You make entries on sch A and if you don't have enough to itemize, you take the standard deduction. If the IRS takes away some from another part of my return, I should be allowed to go back to sch A and amend. I see the problem as KC sees it but again... that's why we have this forum to help us. Let's say that I am single (tax year 2008) and my itemized deductions are only $4,500 and salary $45,000. I had education expenses for $5,000. By mistake I take the hope credit eventhough I already claimed it for 2 years in the pass. The IRS disallow my hope credit. I should have the opportunity to go back to schedule A and itemize.

Welcome back. Who needs a book with this forum.

I couldn't resist either. The taxes are being done by the engineer himself. He just charged Catherine with the task of looking for a "good financial planner" because the engineer is busy. SORRY Catherine... I couldn't resist either.