Terry D EA

I'm not sure here but if an EIN was applied for the IRS may very well be looking for a 1041. Just sayin

I agree an unreasonably low salary. Remember though that even though the SS is maxed there is still the match which totals the SE tax. Yes he gets 1/2 credit adjustment on form 1040 page 1 which lowers the income but he SE tax is calculated on the pass thru income. That is the only thing I could see that would not be calculated if he indeed incorporated. I have done these comparisons as I mentioned. Taking into consideration the adjustment for SE, Amounts withheld as an employee, and other tax that would be paid out of pocket, the only savings is usually the SE tax. As a disregarded entity he is subject to SE tax but as an S-Corp, SE tax is not calculated on the pass thru.

I'll put in my 2.5 cents worth. I have to agree with Catherine and Jklcpa when it comes to Drake. I flipped flopped back and forth for a couple of years when it came to deciding to use Drake. I bought Drake for 2016 last year and have no regrets. Matter of fact, I purchased Drake again before May 31 to get the best discount. Moving forward, and as long as I am able to prepare taxes, I will purchase Drake. Do as Catherine says, download the previous year and play with it. If all you have used is ATX, switching from forms driven to input driven software such as Drake may be a bit challenging. If you have used other input driven platforms, then the learning curve will not be so bad. There are folks here to help you and I can tell you I am still learning features of Drake and I am amazed at how much easier it has made my life as a tax preparer. Don't forget to look at the secure file pro feature. The document cabinet is also amazing. Thanks to Drake, my office is nearly paperless. I took Catherine's advice and subscripted to signature flow for electronic signatures. All of this flows nicely into Drake. Adding documents external to drake takes a couple extra clicks but it is well worth it.

Gosh Elrod, just wondering what you put in the search box to get that image, I can't watch too long as I become sympathetic.

There are a lot of questions that need to be addressed to determine the best tax strategy for your client. I am assuming he is currently taxed as a disregarded entity and pays self-employment tax on the income minus expenses from the partnership. AT 350K plus income, the 30K savings if it were SE tax may very well be a close figure. It would take some time, but you really need to do a complete comparison with both entities to see the possibilities.

That's a great offer Jack, I only live about 4.5 hours from Knoxville but have to work at my day job tomorrow. I do hope someone takes advantage of this.

>>>>>The way I see this is that the estate should file a final<<<<<< I would prepare a 1041 showing the transactions and distributions as you say. However, I would not check the box as the final return so as to allow time for any unknowns. >>>>> do all the expences associated with real estate become deductible by the heirs<<<<< Why would they be deductible when the heirs were reimbursed as you pointed out in your original post. Out of pocket, and then reimbursed equals a wash. If the real estate sat empty since 2011, when the heirs sold the property their basis for tax purposes would be FMV at date of death. With that said, and due to recent changes in the real estate market, the heirs may have a gain but then again, may have a loss. That is a transaction for their individual personal tax returns. The proceeds from the sale show show coming into the estate and later being distributed proportionally according to the will. Don't over think this seems pretty straight forward to me.

So that's why when I go to someone's home their pictures are crooked. I can't stand crooked pictures or anything else that is crooked for that matter. I wonder if there is a pill for crooked picture people. Wouldn't you just love to have a pill you could take so you wouldn't give a sh@# about anything when needed.

I agree here as well. Forgot to answer your question. This company has always been an S-Corp. The CFR gives you the necessity of the AAA, OAA and AE&P for both entities. A bit confusing read.

Thanks BHoffman. I have done the same thing with the equity accounts. I give instructions to these folks every year after I make all of the necessary adjustments with the hope they will do as I say. More often than not, those directions are not followed. As I look at what they have done so far this year, they are doing the same things. But, I will ask them to go back and fix their errors with instructions on how to do so. I have even done screen shares with these folks to help. Each account in the COA has what it is used for in the description as well. So, as long as they are willing to pay me to fix this each year, then so be it.

Ok never mind with the first part of my post. I just realized I am way over thinking this and getting confused with account naming and posting. QB online will not allow the creation of the proper sub accounts. All I need is to be able to adjust the beginning RE so the year ending RE will reflect the proper amount. Sorry for the clutter.

To all QuickBooks experts I am in need of some assistance with QB. The client I am working with is an S-Corp client who has been using QB online. While this is my first time using QB online, it is very similar to the desktop version. My question is not relevant to any particular QB version. I apologize for the lengthiness but here goes. First, I started this QB file for these folks in 2013 and they have screwed it up immensely. I normally tell folks that no matter what they do I can generally fix it. So much for putting my foot in my mouth. During their learning curve, the only thing I have used their file for is income and expenses. I have been preparing the financials separately each year. I have spent the summer trying to get their QB to match my records per their request and I agree it should. I know QB can automatically close the books at the end of the year and when it does, all it does is finalize to retained earnings. I am not sure if this can be done manually in QB. I have created the AAA account and the OAA accounts but QB online will not allow these as sub accounts to Retained Earnings. Isn't creating sub accounts to RE the the right way to do this? Also, how do I adjust the Retained Earnings to show the income/loss at the end of the year? Which accounts are used to make those entries. The bookkeeper created an account called "Taxes Paid" as an expense account for the shareholder withdrawal and credited the cash account to pay the taxes owed for the year. Yes, Retained Earnings were more than sufficient to make this withdrawal. I made an adjusting entry to DB Retained Earnings and CR the "Taxes Paid" account to correct this entry. My confusion here is the IRS ordering rules which state this withdrawal comes from AAA first. How do I show this in QB? I am at the point to just forego tracking this is in QB and track it as I have been which is accurate. Any help anyone can give me will be appreciated.

Well what do you do with a machine that has windows 7Pro that won't update due to Microsoft issues that they have not launched a fix for. I'm talking about the infamous checking for updates for an eternity and never completing any updates. I have research extensively trying to fix this problem which is one reason I went to a Windows 10 machine.

Thanks Max for the clarification. I am working with a client who filed 2006 & 2007 very late, the IRS had already assessed. We amended and corrected the tax due for both years as a result of the IRS not having all of the information for the return. It is now 2017 and the IRS is still actively seeking collections. So, again, the idea the debt disappears in this case is incorrect. As you say, the statute clock begins with the assessment. I was unclear in my post as to the start dates. I would hope no one would think if you ignore the tax for ten years it vanishes. >>>>>>In the case where a particular year is ready to expire, there should be no reason pay on it, but other years can be paid<<<<<<<< I agree totally here.

Pacun not sure I agree. Once the IRS has started the collection process I don't believe the debt ever just disappears. The IRS has 7 years from the date of the filing of the return or when the return should have been filed to collect on a debt. I too had a client that had 10 years of back debt and was in the collection process. The IRS also prepared returns for this guy and the clock began to run when they prepared the returns. The only way that I am aware of to make a tax debt go away, but not in its entirety, is to file an offer in compromise. What you might be saying is if the IRS has not started the collection process in 10 years then don't attempt to pay anything on it if the expiration is around the corner. Just wondering.

My niece does not work there any longer so there is nothing for her to worry about. My thought were the same as everyone else's that this could indeed open an IRS investigation. I covered that with my niece and family. My niece was given a weekly schedule just as any normal employee would be given. Due to the filings taking place within the last month, I am going to wait a few more weeks before moving forward.

Ok busted, the amount on the 1099 for 2015 is $1208.00 and the amount for 2016 is $610.00. Also, I will disagree that amounts in box 7 of the form 1099 MISC automatically constitute SE income based on the two items below. The correct way to do this from the onset was for the preparer to include the amounts on line 7 form 1040 and complete form 8919 which connects with line 58 of form 1040 for amounts of unreported SS and Medicare tax. This still would return an amount due which would only be the 6..25 and 1.45 percent and not the total 15.4. So I still say amend the return to get the excess paid back. Also, the IRS penalized for failure to file and late payment. The company failed to provide the 1099 MISC in a timely manner. Ok, I know that doesn't relieve the client from the responsibility of the tax but hopefully we can get some of this abated. This is my niece and I had no intentions of charging her. I do agree that sometimes it is better to leave it alone if correcting things cost more. However, we still cannot forget the taxpayer has a responsibility to file an accurate tax return. Box 7. Shows nonemployee compensation. If you are in the trade or business of catching fish, box 7 may show cash you received for the sale of fish. If the amount in this box is SE income, report it on Schedule C or F (Form 1040), and complete Schedule SE (Form 1040). You received this form instead of Form W-2 because the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax. If you believe you are an employee and cannot get the payer to correct this form, report the amount from box 7 on Form 1040, line 7 (or Form 1040NR, line 8). You must also complete Form 8919 and attach it to your return. If you are not an employee but the amount in this box is not SE income (for example, it is income from a sporadic activity or a hobby), report it on Form 1040, line 21 (or Form 1040NR, line 21). Question: I received a Form 1099-MISC instead of a Form W-2. I'm not self-employed and don't have a business. How do I report this income? Answer: If payment for services you provided is listed in box 7 of Form 1099-MISC, Miscellaneous Income, the payer is treating you as a self-employed worker, also referred to as an independent contractor. You don't necessarily have to have a business for payments for your services to be reported on Form 1099-MISC. You may simply perform services as a non-employee. The payer has determined that an employer-employee relationship doesn't exist in your case. If you weren't an employee of the payer, where you report the income depends on whether your activity is a trade or business. You're in a self-employed trade or business if your primary purpose is to make a profit and your activity is regular and continuous. If you're in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship), or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). If you're self-employed, you'll also need to complete Schedule SE (Form 1040), Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment of $400 or more. There's no withholding of tax from self-employment income. As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities. If you're not an employee of the payer, and you're not in a self-employed trade or business, you should report the income on line 21 of Form 1040, U.S. Individual Income Tax Return, and any expenses on Schedule A (Form 1040), Itemized Deductions

A family member (teen age Niece) had her tax return prepared. The company the girl worked for issued a 1099 when they should have issued a W-2. The amount is very small. The preparer put this amount on line 21 subject to SE tax. I am of the opinion this is incorrect. My niece is not in the business of being self-employed at the age of 17. Also, she was given a work schedule which makes her an employee. The IRS has accepted her 2015 return and assessed penalties and interest. I have instructed her parents to pay the amount due and then we will amend the return based on what I stated earlier. Anyone agree or disagree?

Gail, I am so sorry for your loss. Everyone else has already given the best advice and wise comments. Prayers for comfort to you and your family as you all go through this difficult time. Update, Again, thanks to everyone for the prayers and thoughts for my mother. She is in a nursing home now and is doing a bit better. However, she will not be able to go home unless of course some miracle takes place. This is bittersweet for me as I know there are folks looking after her daily. I just returned to NC so time for some much needed rest.,

That seems to be the way with NC. You call them and they won't know either.

I'm not sure I agree. The paragraph doesn't mention whether the spouse itemized deductions were for federal or NC. Just sayin. If you are entitled to and claim the standard deduction on your federal income tax return, you MUST claim the N.C. standard deduction on your State return. If you itemized your deductions on your federal return, you may claim either the N.C. itemized deductions OR the N.C. standard deduction on your State return unless you are not entitled to the N.C. standard deduction. The N.C. itemized deductions are not identical to federal itemized deductions and are subject to certain limitations. If you are (1) married filing a separate return for North Carolina income tax purposes and your spouse itemizes deductions, (2) a nonresident alien, or (3) filing a short-year return because of a change in your accounting period, you are not entitled to the standard deduction. . Note 1: A Nonresident alien who is a student or business apprentice and a resident of India is entitled to a standard deduction. Note 2: A short-year return does not relate to a taxpayer who files a return as a part-year resident. The N.C. itemized deductions are not identical to federal itemized deductions and are subject to certain limitations. Note 3: A short-year return does not relate to a taxpayer who files a return as a part-year resident.

Thanks to everyone for the prayers and continued prayers. My mother is doing good for the condition she has. Unfortunately, she will continue to deteriorate. She will be given quite a bit of physical therapy. Right now they are controlling blood pressure as it keeps spiking and going back down. She is now in a nursing home which is bittersweet for me. I know there will be eyes on her everyday and most of the day. On the other hand, I hate it but there is no choice. Believe this, I have just finished filing two extensions and waiting on one client to say hit the button. A few others already on extension thought I could get theirs in at the last minute including an S-Corp. of course my response was NO!! My thoughts "Are You KIDDING ME?" An S-Corp??? Sorry but I'm not good enough to get it done in one evening. God and I aren't communicating on miracles of this sort. Geez!!

It is a good feeling to know that I just filed my last extension and return. So, I am done and closing shop. I would like all of my friends here to pray for my mother. She is 86 and has just been put in the hospital which is why I 'm closing now. She has PSP (Progressive Supra Nuclear Palsy) and can no longer keep her balance. This mixed with a pretty bad UTI is taking its toll. Undoubtedly, she will be moving to a rest home. PSP is a debilitating disease that is very similar to Parkinson's without tremors. The limbs become almost rigor mortise like, she will loose her voice and her eye sight is affected by limited eye movement and more than moderate sensitivity to light. I hope each of you has had a very prosperous tax season. Take some time and rest up we all deserve it. Thanks,

Well I have escaped this one. My win 7 machine, which is not my main machine, won't update due to the update problems windows has had for the last two years. It tries to update but just spins for ever and a day. If anyone know a quick fix for that problem I'd be interested in hearing about it.

That's like writing off the lost rent when the property is vacant.