Terry D EA

Update. All of the descrepancies have been resolved. FYI- The amounts reported on the 1099K form are amounts either swiped, chip read, or manual input from the customers cards. This is a gross amount and not the amount actually deposited. Uber takes significant fees from the driver's which I knew. I think the taxpayer in this case led me down the wrong road by starting this conversation stating that Uber told her these were the amounts she received which was indeed incorrect. After I deducted the UBER fees, the amounts matched the bank deposits perfectly. So, note to self, don't let the client confuse you. I feel a bit embarrassed by this but will use the excuse that this all came about at a time when we were experiencing various technology issues and my brain was partially out to lunch.

Client received this notice a few days ago. This notice of deficiency is referencing CP2000 that my client received last summer. The client is elderly and sometimes forgetful. However, the original CP2000 was for income he did not report from Fidelity. He did not give me the information at the time the return was prepared. After many battles with Fidelity, we finally received the 1099R forms to verify the amounts the IRS proposed. We timely filed an agreement and electronically paid the tax through the IRS pay.gov system. Also, asked for penalty relief for first time abatement and for reasonable cause. The IRS has denied this but thanked us for the payment proposed on CP2000. Yes, I have the payment confirmation and bank statement that reflects the payment. Now the notice of deficiency is for the entire amount from the CP2000 plus additional penalties and interest. I want to respond to the notice of deficiency by sending our position and evidence via the fax number they provided. Other than my fax machine giving me a successful sent report, how can I prove we responded timely to avoid our rights to petition that tax court if necessary. I called the number on the notice and it is all automated. Would it be best to call the practicioner priorty line or just draft the letter of response and fax what we have and keep our fingers crossed? None of this is reassuring to the client. If I send it all in certified mail, who knows when they'll get it or even open it. What a conudrum

Thanks, I will be meeting with this client again on Friday. I will have her log in and look at everything we can find. I post the results.

Once again, I agree. But, the OP doesn't state when the property became available for rent. Can't determine the number rental days. All he says is there was no rental use of the home in 2021. Doesn't say whether it was available for rent any time during 2021. If it was not made available for rent anytime during 2021, then no rental days no expenses. Waiting to see what the OP says.

Yep, thanks

I have the report from Uber and it doesn’t match the deposits. The report does match the totals of the 1099nec and 1099K. There is a huge difference that must be looked into. Again, hard to argue with bank statements

Thanks for the replies. I agree with both of you. I don’t know how this was allowed. The taxpayer is getting me an annual transaction report from the HSA account. Just have to wait for more info. It’s always comforting to get feedback from folks here. Thanks

Taxpayer revc’d 1099K and 1099NEC. So far so good. The amount of the taxpayers deposits received per their bank statement is approximately 26K less than the total of both forms. My first take is use the forms, but it’s hard to argue with bank statements. Yes, have all bank statements for 2021. Anyone know a contact number for Uber? I’ve done some research and can’t find anything. All else fails, I will report the income from the bank statements and wait for the CP2000. Too early in the season for this stuff.

Wouldn’t the donor’s basis be reduced by the depreciation that was taken and should have been taken? Adjusted basis is the Donor’s basis correct? Son gets adjusted basis.

Taxpayer had major medical expenses in 2021. They qualified for a Christian assistance program that deposited funds for the expenses to the taxpayer' HSA. The total deposited is way over the limit at 40K. All of the medical expenses were paid from the HSA so I'm not sure as to what the balance is in the HSA to determine if they will be assess the excise tax. I need to clarify that the funds received are not included in taxable income and appear to be treated as a reimbursement to pay for the expenses. Only amounts the taxpayer actually paid out of pocket could be included on Sch A. However, I don't think they will be able to itemize anyway. Am I correct in my thinking regarding any of the amounts received from the Christian program for the expenses are not taxable income? Bills were submitted to the Christian program and then funds were deposited in the HSA, then the bill was paid from the HSA. In my opinion, it all becomes a wash and the only thing to look at is the balance in the HSA. Thoughts and opinions.

I agree totally. When it becomes available for rent determines when to begin deducting expenses. If it was available for rent all year but never rented, the same applies. So, if it was available for rent in let's say, September and you collected two months pre-paid rent in 2021 to be rent beginning in 2022, the pre-paid is income for 2021 and deduct the associated expensed for 2021 including the depreciation. Judy, can you give a reference for the rule you mentioned?

Yes, definitely bring back the good old days. I don't do the satellite or cable subscriptions to watch TV. Cust the cord many years ago. If you can get the ME TV Channel, they play a ton of the old shows. Spectrum has picked up this channel but mainly it is available on an antenna. I always watch Perry Mason twice a day and of course, he always wins. It is interesting to see the cast of characters who played on his show(s). Will never stop laughing at Tim Conway and Harvey Korman in the Carol Burnett show. Good old clean wholesome shows. Antenna TV is another one. For us, the antenna, a Roku stick with hulu and Philo for a total cost of about 35.00 per month works perfect. I digress.

I agree, but it would be nice if all credentialed preparers, EA, CPA & Attorney's could fall under some type of exception. Granted, just because you have the letters behind your name doesn't mean you are 100% honest. Just with a license on the line, I would one would give deep consideration to doing anything that would end their career. Just sayin.

That is the six million dollar question. Most probably won't even know what we're talking about. It will take extra time, but each person should create an account with the IRS to access their information. It would be nice if the IRS would provide us with a tool to check and verify what the client received. That is, if the information the IRS has is correct. Hence all of the issues with the stimulus payments.

Hi Tom, I'll put my 2 cents worth in. First, I agree with all of the previous responses you received. Personally, I would want to see all of the previous worksheets regardless of what the taxpayer has to do to get them. They were his at the time the returns were prepared anyway. Like you, why does the 4797 exist if there were no sale or a scrapped asset? Abby is correct distributions reduce basis and I don't see how they would release the suspended losses either. It sounds as though the previous preparer may have been confused as well or maybe they were privy to information you don't have. Can you see the K-1 forms from the previous years? That may help with deciding what to do. Your idea of assuming ordinary passive losses and netting the losses against ordinary income in the future would seem to be the best approach. However, I would want to cover my *&^ a bit. I literally hate that word assume.

I used Gleim which is much harder than the actual tests. However, with Gleim you will definitely learn which makes it better in my opinion. I wanted to advance my knowledge as well pass the tests.

Just an announcement, I have passed all three parts and the EA exam and have submitted my application for Enrollment. For those who are considering becoming an EA, I will tell you the three parts are not a cake walk but are not as difficult as when there were four parts. I tried becoming an EA way back when it was a paper-pencil test. Didn't do well so I put it on the back burner until I retired from my teaching job. Fast forward 26 years and here we are. For those who are new or seasoned EA's did you join the NAEA? They are offering a good discount for new EA's just wondering if it is worth the investment. Opinions please.

The exams are administered in a Prometric test center. Nothing is permitted in the exam room. A locker is assigned and everything you have must be placed in the locker. Prior to entering the test room, they use a wand to check for any items just like the airport TSA but just a bit worse. Rolling up your shirt sleeves, pulling up pant legs and if you wear glasses, you must take them off and turn them over and over to allow them to inspect for cameras. The test center admin will give you scratch paper, a $1.00 Dollar General calculator and a pencil. Results are given immediately, either pass or fail. All tests passing scores for all tests range between 105-130. Areas of proficiency are given if you pass and that's it. No idea of what you missed nor what your score is just "passed" which is really all you care about. If you fail, then you are given a score and again, areas you need to work on. Being 100% honest, the test(s) that I have taken have not seemed to be too bad. 24+ plus years prep experience helps. Corps are going to be the tough area for me.

Catherine, I am studying for the EA using Gleim. Yes, it is down to three parts but, Part 2 the business, estates, trusts; etc is the big one that I believe is two of the previous areas combined. I've passed Part 1 and 3 and plan on passing Part 2 before Jan 15th. I know all about the triple negatives. Canidates may seem to have it easier but I don't think so. What bothers me is the folks who are passing the tests and have never prepared a tax return. Wish me luck on the last exam.

Both the excess contribution and the earnings as a result of the excess contribution must be withdrawn to avoid the penalties. Here is an article that will explain things very clear. Hope this helps. Roth IRA Excess Contribution | The Motley Fool

I agree with cbslee to use a common sense approach. it is difficult to tell who uses the most electricity; etc. Personally, I would average the cost between the cabins and subtract out 1/10 of the expenses. Absolutely keep a separate spreadsheet for depreciation of each cabin and it's contents. This will enable you to properly capitalize any improvement costs. With that said, was the purchase all inclusive or were each cabin have it's own acquisition cost? Again, if all were the same or relatively similar size, cost averaging and subtracting out the 1/10 might be the way to go.

Looking at different ways for taxpayers and myself to sign any and all tax forms that are "legal signatures". What legally takes the place of a "wet signature". I'm curious about such items as disclosure consent forms, 2848, 8821 and of course form 8879. We are required by law to provide the client with a "signed" copy of the return. Prior to all of the technology, I used to sign the forms in the presence of the client. How are you doing this? I can use the rubber stamp feature in Drake to do so which is a replica of my "real" signature. Personally, I don't like computer generated signatures. Is docusign the way to go? I recently sold my home and purchased a new home. Only certain documents requiring notarization were wet signed. During the process how was it known that I actually signed the forms and that it wasn't someone else? I know most electronic signature software requires some form of identification or goes through an identify verification but still wondering. Another issue, my elderly clients who have difficulty with technology. I know we could tell the client to print, sign, scan and return it but not everyone has those capabilities. I'm wondering about all of this cause I moved my home and office to another state and am attempting to meet with my established clients remotely. Looing for opinions.

>>>>>> I agree with Deb that a trace may need to be put on the payments if clients' accounts show they were paid.<<<<<<< How do you start this trace? My client in the second scenario has setup an account to obtain the transcripts and information. However, he screwed it up to where the passwords don't work and we cannot get in. I will ask to see if they may have received the debit card and didn't know what it was. This guy is pretty good with his banking and keeping track of it. Another scenario. What to do with a client (namely me) who wants to create the secure online account but their credit is frozen so the ID cannot be proven? One thought, my wife's credit is not frozen and of course, we file MFJ. That might be my only option until I can get through the PPL. Thanks for all of the suggestions and allowing me to vent a little.

I need some suggestions from my friends here. I have two individual scenarios that I am working on. One the client may have failed to provide or did not receive some 1099R forms. They did receive a CP2000 from the IRS. I have gathered the appropriate POA and 8821, plus spoke with Fidelity and found some discrepancies. We're waiting on Fidelity to fax or mail the 1099-R forms. In the mean time, I'm trying to contact the IRS (PPL) and cannot get an answer. Always get the message due to high volume we cannot take your call and to call back tomorrow. This has been ongoing for months. My client is on a deadline and a response is due by July 1. I have prepared a statement of response to the CP2000, will get the client to sign it and fax it to the number on the CP2000. Any other suggestions with this one? Problem number 2. The IRS claims my client received both stimulus payments. I had them gather their bank account statements. The first payment was received via direct deposit. They have not received the 2nd payment. No checks received and no direct deposits. I have their bank statements from Jan 1 thru April 30 and no deposits from the Department of The Treasury. Called the numbers on the notice CP12 and get the same crappy message. Mind you I start calling at 7:00 am, and fail to understand how they're too busy first thing. I think this is a BS routine to not answer the phone. I tried calling Friday and forgot about the new Juneteenth holiday. Different message. Anyone have any other numbers inside the IRS that can be used. I have a few clients, including me, that has not received any stimulus payments and as far as I know, my return for 2019 has not been processed. I have two clients who have not received their 2019 refunds. I wonder if any of the field offices near me are open for walk-in service. Any other suggestions?

I think the two recommendations regarding speaking to the attorney who created the trust, and obtaining the trust instrument before you do anything are the best two answers in this case. Personally, I don't see how you can proceed until you do.