Terry D EA

Thanks to everyone for the support. My client inherited some land or lot, if you will from his father, on that land or lot is some rusted out worthless equipment that an agreement is being reached with a scrap dealer to remove it at scrap prices minus a removal fee. No, this has never been used by anyone who inherited it for any purpose. The land was not investment property nor was the left over scrap equipment used for anything other than personal use by his father. The scrap equipment was not itemized in the will. Only the lot/land was part of the estate. No values for the scrap equipment had every been established. Please provide references to the case law you mention so I can see if this fits. I do agree with your statement if it was a residence that was never rental property or anything else. If that property was sold, then FMV is basis at date of death Any gains are taxable to the heir(s) Loss is deductible if the property was never converted to personal use by the heirs before they sold it. In my case, I still don't believe a loss is allowed. I think to do so, these items would have to listed as an inheritance and FMV determined. Then maybe. As far as I can tell, the FMV established of the land this junk is on was included the value of the land only. I will still be interested to see the case law and how this maybe determined to be investment type property. On another note, I just received a phone call from a gentleman in the US from the Comcast fraud division that has escalated my case, says I need to do nothing else and that upon completion of the investigation all three CB's will notified to reverse the entries and clear up any damage this may have caused me. He also stated that in his position he could see the notes from the other fraud agents that I had spoken with, listened to the recorded conversations and those employees will be "coached" as they handled it completely wrong. HIs words not mine. However, there was no disagreement or sympathy from me. He was also interested in the fact the credit was granted without proving the identity of the person applying for the credit was actually me when an extended fraud alert was placed on my credit. They will be looking for the employee who was involved in that transaction and correct that problem. Now, do I believe all of this????? I want to so I can rest better but I will remain skeptical. When I get the final results in black and white, my credit restored, and the collection dogs called off, then I will finally rest. I thought it was really bizarre that every time I called the fraud division, they asked if I was a subscriber and if not would I want to be. Are you kidding me???? Burn me, rake me through the coals so I will over jump through every hoop possible to get your services. NOT!!!!! Thanks again to all for listening. You guys are indeed the best!

Wow, I'm gonna say this at the risk of offending someone. The responses to this post have gone all around and away from the original question. Judy pretty much summed it up. If this property is personal then no loss. That was the only thing I was looking for. I initially took the wrong road and was not thinking about the character of this so called equipment. I do apologize for that bit of confusion So, I am at the point of saying that the day the scrap dealer picks up the junk or equipment or whatever it is, the price received is FMV because this is indeed personal property and therefore a wash. No gain and no loss. Plain and simple by the code, basis is FMV on inherited personal property at the date of death. I can't believe the trip this post had taken. It turned into various scenarios and ended being compared to logging transactions. I mean really, all of us, and me included should stay with the facts stated in the original or updated post to help the poster. Even if there appears to be missing information or more information needed, it is better to ask for the additional information than to put one's spin on it or making it a contest to prove one's position. I must say some of this was not helpful. Now, shoot me for my opinion. I'm trying my best here. I am not angry at anyone and if I come off that way, I apologize. I have been dealing with my identity being stolen for the 4th time in a year and a half. Dealing with Equifax is like dealing with 3 year old children. I don't think they have anyone located in the US answering the phones. When they do, if you can find a number, they're dumber than a dead rake. Experian, no problem, dispute settlement crap removed from my credit report. Transunion, no problem same as Experian. Equifax, don't ask. All I know is my credit is now frozen everywhere. One week and three days of dealing with idiots on the phone is mentally exhausting. I asked Equifax the magic question. It is MY credit, I cannot access it, get denied every time online. The so called security questions are wrong and bam I'm locked out. But.....the thieves can get it like nothing. I have better luck seeing a friend at the bank to get my credit report from Equifax. They can get it and I can't. Yes, I can get it in fifteen to 20 days. By that time the dispute clock will time out. I mean what the hell? I need to know if I can sue the crap out of Comcast for granting credit in my name when there was a 7 year fraud alert placed on my credit with all three bureaus, with a contact number to verify if the person applying for credit is actually me. No, they never contacted me. Just the collector did when the bill was never paid. I would think this activity would violate some fair credit reporting act or something. Probably another inside job. Here's the best part, Comcast doesn't even offer services where I live in NC. Okay rant over, I'm sorry to bore you all with this so I am going to bed now.

Yep exactly. Know a couple where the guy purposely failed to report income so he didn't have to pay. Filed the MFJ return without the spouse's knowledge or signature. During the divorce the court ordered each to share the tax burden. This was CA and the guy's lawyer dug up all this crap in court regarding community income, community expense; etc. I worked with the spouse in this case. Without getting into lengthy details, we filed equitable relief with the IRS with all the claims of fraudulent signatures; etc. Took a while but, the IRS ruled the spouse does not have to repay any of the tax bill. The guy had 90 days to appeal the decision. He appealed and the IRS still ruled in her favor. I loved it.

If that property is available for rent 365 days, I agree with Max totally treat it as any other rental property. It does not matter how long the tenant stayed or what the tenant's intent was. I think Edsel stated the tenant's intent very well. It would appear the owner's intent from Edsel's later reply was to turn the property into rental investment property. All depreciation and expenses can be taken regardless of whether the property was actually rented or not. It just has to be available for rent.

I cannot put names to these items as I am unclear as to what they are. I merely stated what the transaction was going to be. Are these items personal? I am going out on a limb and saying yes. My client inherited the land and the so called equipment when his father passed approximately 3 months ago. The reason for my confusion is there is a commercial lot involved in the inheritance as well that this so called equipment is on. It is highly possible his father just owned a piece of commercially zoned property and not actually operated any type of business. With all this said, I still feel, and I will clear it up, this equipment was personal and not business use equipment. I know the guy was a farmer, but I think it was his personal property. I guess I was not clear enough in my original post.

My client has inherited (real) property from the death of a family member. Located on that property are several pieces of old, worn-out, and rusted pieces of equipment. He is looking into selling this equipment to a scrap dealer. I am aware his basis in this equipment would be FMV at date of death. The scrap company has agreed to remove the equipment for 50% of the value. Other words if the scrap company says a piece of equipment has a scrap value of $100.00, the will remove it at 50% or $50.00. I see this as an expense of the sale and appears to be a potential loss. Correct? I don't see there is any way to assign a value or have this stuff appraised and am assuming (dangerous thing to do) that the scrap price is determined by weight at the current scrap rate. If this is indeed a loss, then report on Sch D correct?

Maybe check and see if your client has a my social security account. If he does, then you should be able access all the 1099SSA forms from his account. If he doesn't have an account, I would have him create one. Could save some time and aggravation.

I agree with Abby Normal, check your mouse settings. Sounds as though they are set to sensitive

If you don't get anywhere with ATX to resolve this issue, then switch to Drake. They can take your ATX client files and convert them to use in their software. Trust me, your problems with be over and you won't be sorry you made the switch. Yes, there is a learning curve but it is minimal. Good luck!

Exactly, and Gail is spot on. Setting up the asset with a 179 expense will return the same result as a normal expense. I, like Judy, practice by myself and I have to do it right regardless. 21 years and have not done it any other way. Through the course of time, I have made mistakes due to lack of understanding but have always corrected them. I agree with Pacun too, regardless of what the auditor or anyone else says, do it right. Thanks to all!

I agree. A single member LLC can be considered a disregarded entity thus the Sch C. However, I don't understand the rationale either. Also, wondering about Judy's response as well. What is the nature of this business?

I have nothing to add other than I totally agree with Catherine. I used signature flow as well. Works perfect and the cost is based on the authentication protocol as she said. Well worth it.

Thanks cbslee. I will prepare my letter as well. I agree with the statement about the new "post card" tax return being a political talking point. However, it has left the general public to believe that tax code has been re-written and simplified making the old form obsolete. As I see it, this is a redesign of the form and what makes up the content remains complex.

Correct! Perhaps a better explanation would be no tax deduction for the payer as child support payments are never tax deductible and child support payments for the recipient have never been included in taxable income. Now alimony works the same way only for agreements entered into after 12-31-2018.

Abby Normal you are correct. Moving forward, I guess I was not overthinking this scenario. I was aware of adjusting entries for prior closed periods. The check my client received was a refund for a prior period as I stated in the OP. This refund now causes the WC expense for the closed period to be overstated. I just couldn't remember the JE to correct a prior period reporting error. This helped trigger my memory. http://smallbusiness.chron.com/book-prior-year-adjustment-accounting-77570.html Now, the need for an amended return. With this client, I have discovered a few small errors that would cause an overstatement of operating expense and some an understatement of expenses which very well end up in a wash. When I finalize all of this, statements will be included in the notes that identify the adjustments with the outcome and determine the need for an amended return.

Thanks rfassett, your response was my original thought and as you said, I began to overthink it. This guy is normally very good and I do all of his WC audits and neither of us had any idea this would have been overpaid. The audit always takes place in June, he received this check in February. ILLMAS, I would love to see someone's prepaid insurance worksheet. This client's WC premiums are for three employees in an auto repair shop at a direct expense of 100% so no real involved calcs. However, I have another client who tracks their own WC insurance and I know they screw it up every time in their QB and I have to fix it. Thanks!

Regarding workman's compensation insurance. To simplify things a bit, this client's workman's comp insurance is paid for periods in the future. Example; premium paid in June 2018 covers the period from 6/18/2018 thru 6/18/2019. This is an accrual basis client. I always debit the WC pre-paid insurance account and calculate the period ending adjustments. The client received a check in February 2018 from the insurance company as an overpayment as a result of an audit credit. The stub with the check does not say what period the credit is for. Apparently, and I think it is safe to assume, this is for the period of 6/17/2017 thru 6/18/2018. I'm probably overthinking this but where do I apply this credit? It seems to me this credit would be applied to the previous period and therefore effectively reduce the insurance expense for the year ending 12/31/2017 which results in overstated insurance expense, thus requiring the tax return to be amended. Is there a better way to handle this?

No, just the 500.00 prior to 1/1/2018.

Thanks rfassett, No I am not picking up the 2700.00 as income. Your response was my first thought. But, the bartering thing made me wonder. My client provided services ( repair of vehicles which is his primary business) in exchange for the balance due on the container. I don't have any information regarding the repair of the vehicles or what parts he purchased to facilitate the repair.

Client purchased a storage container for his business in June of 2017. The only thing I received from him was a receipt showing 500.00 paid as rent for the use of this container. He has now purchased the container and told me the original deal was rent with the option to buy. Because I expensed the rental out last year ( I was not told about this deal) for 500.00. Do I put this on the books for total purchase price of $3200.00 or $2700.00? $3200.00 (original agreed upon purchase price) - $500.00 rent paid = $2700.00 balance due. It appears my client had every intent of purchasing the container. I have looked at all of the lease w/options scenarios. This is a portable container (RR Car) and i don't feel it fits any of those scenarios. Normal rent was $75.00 per month. Client said the $500.00 rent paid was like a down payment. Receipt noted the rent received covered a period of 6 months. Now to muddy the waters a bit more, my client bartered the remaining balance. He repaired the container owner's vehicle(s) in exchange for the container. 1. I am almost positive that we cannot depreciate the full amount due to the rent expense for 2017. 2. Do I amend the 2017 schedule C, remove the rental expense, add the container to the assets and begin depreciation for the full price? 30 The only cash used toward the purchase of the container was the 500.00 rent. Any suggestions on how to handle this please?

Sorry it took so long to respond. I am using both Win 7 and 10. I am using a laptop that has Win 7 for my elderly clients that I travel to. Win 10 in the office. Drake on both operating systems were affected.

Just thought I would let everyone know, that apparently the last update from Microsoft for Win 7 & 10 really screwed some things up. I was not able to print anything from with the software. Drake users need to check their print settings. All of mine all the way back to 2014 were changed. To check the settings, go to setup, printer, print settings. Click on F8, select your printer. Be sure ALL of the printer tray settings are set to automatic. Click update and then save. Once I did this, all of my print functions returned to normal.

Sounds like this was a really great time and I am so sorry I missed it. I had to attend to issues with my mother who is in a skilled nursing facility. The last 14 months have been a roller coaster ride. However, I hope I can get meet the folks here at some other gathering.

Okay, there is one thing I already have found. I shouldn't listen to the bank. Under IRS guidelines, there can be two owners of a sole-proprietorship. When I registered the business numerous years ago, my wife and I both were listed as the owners. Also, an LLC cannot qualify to be a joint venture unless you are in a community property state. Yes, I like the idea of the liability protection under the LLC and as we increase our client base, it very well maybe the best thing to do. But for right now, I can continue to operate under my EIN as a qualified joint venture. I am busy enough at this time without having to deal with re-structuring my own business. Any advice or suggestion will be appreciated.

I need some advice here. I began preparing taxes on my own 21 years ago. I have always been a one man show. My wife has always booked appointments and performed various secretarial tasks. Since day one, I have been a sole-proprietor with me being the only person identified with my existing EIN. As we plan for our retirement years, we are making several financial changes. One change is to include my wife on the business bank account. The bank is requiring a partnership agreement and is asking for the articles or organization from the NCSEC. I really don't have any issues forming a LLC. I'm not quite sure the laws or requirements in NC to make the election for a qualified joint venture. I want to do this to avoid the form 1065. My main question is will I have to obtain a new EIN because of the LLC? I thought I have read somewhere that only one EIN can be assigned to an individual. I think I do which will be somewhat of a pain to make changes. Also, if anyone has any experience with NC with this, please chime in with your advice.