Terry D EA

I am using a remote office this year and am working strictly off of my laptop. Doing this will prevent me from having to move offices all the time and I can keep the home office up and running during the season and off season. Here is my queston: I am considering installing the ATX program to an external harddrive so it can be used on both machines. I need to put the 2007 program on to rollover the returns and the ton of depreciation that exists. I called tech support and they told me to export and import the 2007 tax returns. Does anyone know of an easier way or is that it. Any opinions on doing the same thing using a jump drive? Just curious Terry D. :scratch_head:

Go to the IRS website and put form 7216 in the search box in the upper right hand corner. All the information you need on consent forms is there including instructions on how to create the form. If you are using Santa Barbara bank this year, they are requiring that every return submitted for a bank product contain form 7216. I think this is what you are talking about. Terry D.

Yes they will charge a penalty for late deposit and depositing the incorrect amount as well. My advice is to deposit the entire amount if possible by the 13th of January. I have been working with the IRS to resolve a payroll deposit issue the IRS created for three years now. I have involved the taxpayer advocate and hopefully the case is settled. This was an overpayment on my client's part and penalties from the IRS because someone inside the IRS lacked the ability to read any documentation we provided. Trust me, you don't want to go there. Terry D.

You are correct with the client's confusing expenses with the balance sheet items. This is the case here. My statement may have been confusing. I have not adjusted any books, created an adjusted balance sheet; etc, and my client shows a loss within his company by deducting the total of the "draws" he took as an expense. I know this is not the way it is done at all. I have come up with the following plan: 1. This whole thing is based on the information regarding the filing of form 2553 and the IRS records regarding the S-Corp status and tax payer year. I agree the client's idea this is a fiscal year really throws me off as well. 2. If my client misunderstood the S-Corp filing year, I plan of telling him we will file the return as a calender year tax payer which will probably eliminate any taxes he may have to pay. How? He started this company in July of 2007 and only shows two quarters of income and expenses which will result in a pretty good loss. His draws will be against his investments in the company and will leave him a small balance in the capital account. This way, no employment tax penalties, no employment tax dues with the only remaining possible penalty is failure to timely file. He will face this with the state as well. Thanks for all who replied. If KC or Old Jack can site a source for the items you mentioned earlier in this thread, I would appreciate it. Thanks, Terry D.

Thanks to all who responded. Old Jack and KC, I can always count on you guys to give a good answer. The books show a loss for the first year. However, that loss is due to the shareholder deducting his "draws". He now shows that he withdrew 56,900 w/o any payroll taxes. I have asked for the documentation from the IRS regarding the S-election. Remember I stated an attorney filed the Articles of Incorporation and the S-election according to my client who says he wasn't told anything. At this time, I estimated the payroll taxes he should have paid, told him I would find out how to correct the the last quarter 941. I know you can't file 941-C with a quarter this year to correct a previous year. So, any help here would be appreciated. I also told him, that I had to proceed in the correct manner and would not advise him any other way. I don't think the $1.00 thing would fly to well considering his draws. He has invested 21K into the business at startup which was financially and some equipment. Take his draws out and the company is profitable. Subtract his investment from his draws, and remove the remainder and the company is still profitable. Thanks again, Terry D.

Single sharehold of a new S-Corp assumed it was okay to take "draws" without being an employee. He has asked me to prepare his 2007 tax return. The company is a June 30 fiscal year company. This will be the first tax return. I have advised him to become an employee of his own S-Corp because he does materially participate. How would any of you handle this? Just record his "draws" as officer salary? He has employees who have had the withholdings done correctly. I am concerned about the red flag this will throw up and don't want to be connected as guilty when it does because I have knowledge of what he has done. My thoughts are for him to pay the required taxes and make the withholding payments by correcting the June 30 941 and face the penalties. What would any of you do?? Thanks, Terry D.

I just got off of the phone with tech support. I am working on a 2006 return that one of my very good clients got a CP2000 claiming items on his schedule D were left off of the return and they are proposing changes, etc. All of the information that the IRS is claiming as not being reported on the original return, were indeed on the return. Here's the problem, tech support says they cannot access any information about 2006 because they changed the server. I asked them for a report that shows the return and line items transmitted to the IRS. THEY DON'T HAVE IT!!!!! I asked the girl, that what she was saying was that they had no information available from the 2006 tax year and how in the $*&^ were we supposed to prove to the IRS that we did transmit the proper information and she said it was true they don't have the information and she was sorry. What kind of crap is this? William provided this information to me a few years back without a problem. Isn't there some type of statute that CCH/ATX has to follow on maintaining information they transmit? How in the world are we supposed to prove what items were on the original return that the IRS received to dispute their claim??? Does anyone have any ideas as to what I need to do with this? The IRS is proposing a change in the amount of 4,000+ due which is wrong. Maybe ATX/CCH would like to call my client and apologize to him and pay this for the client being they can't prove anything! Needless to say that I am extremely upset with this and I really feel ATX/CCH has to have some accountability here. Any ideas please! Terry D.

What RCooper said makes some sense. The only different twist I can put on this is. The partnership ceased to exist when the one partner left. However, the final accounting and distribution of cash and fixed assets would all be part of "Winding Up of Business" and the previously return filed as "final" would need to be amended if it indeed 2006 wasn't the final year and the 2007 return would show the final transactions. I am curious to see others responses on this one as well. Terry D.

I know most of you will think I have flipped by taking classes during tax season but here goes. If 500 shares of $2.00 par common stock is issued to an attorney for organizational fees and the value of the services provided is 7,500. Would the journal entries be debit 7,500 organizational expense, credit 1,000 common stock, credit Paid-In Capital 6,500 as excess in stated value? Some of these stock transactions can drive you crazy and I probably have been looking at this too long. I know this isn't a tax related question or comment but any input is appreciated. Thanks, Terry D.

Thanks for your reply. I did find the answer and yes this partner would have a gain resulting from the liability assumed by the partnership which would equal 5,000 in this case which is the amount resulting from calculating the initial basis which still leaves his basis at zero. Here is the calcualtion (5,000) = 45,000 - 75,000 x 1/3. The partnership assuming the liability reduces basis to zero and anything less than zero is taxable gain. Thanks!! Terry D.

The norm on this should be the taxpayer whose SS# is on the 1098 gets the deduction. However, the party who actually paid the mortage could take the interest deduction providing the taxpayer whose SS# on the 1098 doesn't take it. Terry D.

When forming a partnership, partner a contributes property with a basis of 45,000 and subject to 75,000 liability for 1/3 interest in the partnership. Can the partner have a negative "initial basis" or do the rules regarding transactions reducing basis below zero come into play here? Thanks Terry D.

I have a client who came to me this year with rental property. The previous preparer's, either did not depreciate the rental property or depreciated it incorrectly. The preparer who did depreciate the property, apparently has depreciated the entire purchase price which includes the lot. I know if I ask this client what the value of the lot is, he probably won't know. I know it is not broken down on the HUD-1 either. What would be the simpliest way to find out what the value of the lot is to separate and correct the depreciation. Here's all I got, 75K for the rental property with an acquisition date of 12/1/2001. 02, 03, & 04 no depreciation but $2727 SL taken in 05 & 06 which is the correct amount on 75K. Any suggestions please. Terry D.

Not using ATX Merchant Services. When I inquired about the services, I was directed to the website for information which is what I called sales for. Crappy attitude from sales = lost customer. If you are a NATP member, you can sign-up for thier merchant services through CoCard. It cost me 5.00 per month plus 1.99% + .25 authorization fee. Yes, there are liittle hooks it does cost more if you key in transactions and I think it would be a little cheaper for debit cards with a pin pad. If you don't want to pay for a terminal and pin pad, then they do have a PC based program that cost about the same as ATX. However, I think the support with CoCard would definitely be better. Hope this helps Terry D.

Does an owner/operator get the same per diem rates as a driver who is employed by a trucking company? I have an owner/operator who is an over the road driver. If he is entitled to the same rates, where and on what form are the rates calculated? I am sorry for what may seem to be some pretty basic questions, but this is my first owner/operator and I want it to be right. Also, I have read on another discussion board that all professional software programs will calculate this for you. Where in ATX (I am using Max) can this be done if any? I do see on the entertainment and meals expenses from Sch C the box to check for the DOT rates. Any help is appreciated. Terry D.

You need to look up the regulations to claim moving expenses. Your client must have moved more than 50 miles from his previous residence because of job relocation or to get another job. Your description doesn't sound like he qualifies for the moving expense deduction. Terry D.

Eli, The 1098T form is for tuition paid either from a scholarship, grant, student, or parents etc. This is not income to your client but a deduction. You need to find out what year of college your client is in. The first two years of under grad work the hope credit can be used after that it is the life long learning credit. It is possible for the tuition and fees deduction as well. Box 2 is the number you add to the tax return regardless of who paid for it. Hope this helps. Hope your season is going well Terry D.

I am in the same holding pattern as well. Thanks for the work around ideas. Terry D.

Good morning to all. If a shareholder of an S-Corp loans the S-Corp money for operational purposes and the loan is repaid by the S-Corp with interest, is the Shareholder's basis impacted in any way? My take is the bais is not impacted as this is a "loan" and not an investment. Any help is appreciated. Thanks, Terry D.

Good morning to all! When a shareholder of an S-Corp makes a loan to the S-Corp and receives payment back plus interest, does the face value of the original note to the S-Corp effect the shareholder basis? My take is the loan does not effect the shareholder basis as it is not an investment but exactly what it is a "loan" that is repaid. Any guidance is appreciated. Thanks, Terry D.

I agree with Janitor Bob. I assign the PIN using the client's last five of the SS#. I select ERO entered have the client sign the form and keep for my records as required. One thing I do differently is I use the last five of my tax preparer ID instead of my SS#. Other than that, you are right on the mark. Terry D.

Here is mine. I created this myself with yahoo site builder. Through yahoo basic domain 8.00 per month. Site builder is easy to use. www.qptps.com Terry D.

Here is some good information from NAPT. Some of you may have been aware of this change but I just read it. This will reduce rejected returns. Terry D. Tax Returns With an ITIN/SSN Mismatch Can be E-Filed Tax returns filed with an individual taxpayer identification number (ITIN) reporting wages paid are required to show the social security number (SSN) under which the wages were earned. This creates an identification number (ITIN/SSN) mismatch. In the past, these returns could only be filed on paper. The IRS can now accept these returns electronically. The following steps should be taken when filing these returns: Use the taxpayer's correct ITIN as the identifying number at the top of Form 1040. When inputting W-2 information, the SSN should be entered exactly as shown on the Form W-2 issued by the em

Eli, I read the same alert. I have only transmitted my dummy return and it hasn't been rejected yet. So, I'll look for tomorrow. I hope all is well with you and your family. God Bless Terry D.

I did W-2's in both 2006 & 2007 and did not have that problem. Sorry, Terry D.