Terry D EA

Amen to that! If I hit that lottery I would definitely hire someone else to do my returns. Let them have all the fun they can stand. Heck I might turn into a day trader. Imagine the fun with that!! Had a client today that would rather pay the penalty. What can you say? I gave them all of the information available to me regarding the penalties next year and so on. So... let them choose. Not my job to sell insurance or force them to be compliant to some ridiculous pile of crap like the ACA.

easytax you are correct in the way you are handling this. I was a mechanic for years and did exactly as you have stated until I got out of the business. I agree with Judy the toolbox is another issue but..... the 179 could be the way to go.

I've already done that. I agree I am not involved in the mother's return at all or in anyway and don't want to be and won't be unless she herself asks me to. I just merely made a statement that it seems odd for her to have the right to claim him based on his income and the fact he pays rent which amounts to 250.00 per month. I agree Judy that I would have to use the worksheets and would need a lot more information to actually determine the support issue. Again, and as John said, it is not my problem at this time. I have talked to this young man and have given him his options. Now, the choice is his.

Pacun I agree, there is another child involved but I don't know who she lives with her mother or father or who supports her. If the child in school made a million dollars then I am pretty sure his mother could not claim him and by all logical sense he would be out of the nest. I mean come on here we are using dependents to get a refund that otherwise she would not be entitled to..

You have to determine the support issue. In the Pub 501 there is a worksheet to determine the dependent's support. If I am thinking correctly, college tuition can be a factor if paid out of pocket. But.... grants and scholarships negate that part of it. Don't forget the possibility of the AOC. Here is what totally baffles me. I had to pay for my education due to income limitations. Granted this was back when rocks were invented, but I was refused a grant once when I was unemployed, had to move back home, and my retired father made too much income on his pension. Now, Mr. #$@%^Obama wants to give everyone a free education at any community college. I attended community college once too and had to pay for that as well. Rant over

Tell him to get a higher paying job and take all of those credits away then I bet he'll understand how someone has to pay. Bye Bye handouts and get hand in wallet it is the American way. He must know we tax everything.

Tuition is paid for by scholarships. Pell grant apparently. All receipts and 1098T show scholarships and financial aid. Jack I disagree. There is the one-half support test. I have looked at this several times to be sure. I would think that with his income level he is paying for more than half of his own support. Especially when his mother is requiring him to pay rent. How can she state she is providing more than half of his support when she is charging him to live with her????

This post should have read his "mother" and not his parents. I know these folks and forgot they are just living together. So, she may have filed HOH which in my opinion she is not entitled to either. Again, he doesn't want to cause his mother any problems but the IRS may do so if they either examine or audit her return.

I have a new client who is a full time student under age 24 that has gross income of $24,732.00, pays his parents rent to live with them and his parents claimed an exemption for him and have been doing so for the last couple years. it is very clear to me his parents are not eligible to take this exemption due to the support test correct? His parents have already filed their return and he has no choice but to not claim himself. He doesn't want to get his parents in trouble for what they are doing and this cost him 700.00 that he would have been entitled to. What is the best way to handle this.

Judy you are correct with applying the new rules beginning 1/1/14 and no 481 adjustment or 3115 is needed. As I read this article, I agree that for prior years back to 2012 the 481 adjustment and 3115 is required. I have three major rental property clients. Two are partnerships and one of the partners invests individually. These folks brought me on board from the onset of these businesses and with the new regs, repair expense vs capitalization is the issue I am fairly comfortable with the procedures we have in place and have maintained consistency. I am understanding the regs apply to "materials and supplies" and not to such assets as a roof replacement or replacement of a HVAC unit that can be depreciated as usual and don't fall under the de minimis safe harbor limitations. At the time of purchase some of these properties were in need of serious repairs to get them ready to rent. I always add those expenses to the building basis as they will normally add to the value of the property. Some of my confusion comes in with determining the useful life of an asset. I am working on one new client this year that a toilet was depreciated for 27.5 years. Under the new rules a toilet that costs less than 500.00 of no AFS is present would be expensed correct? This client began rental activities in 2013 and may be one that I choose to scrub. Oh yeah, I seen that little blurb regarding no audit protection under paragraph 8. There appears to be some leniency built into these regs as well especially the exceptions as long as the policies reflect income.

FYI - I did a MFJ/MFS comparison today with a return that did not itemize deductions and it was correct. So, maybe the issue is with the itemized deductions or the last update fixed it. Not sure but either way I hope Dan is available tomorrow to speak with me about this.

For those that have to payback the credits I hope there is a cap in the future. Who does the estimating anyway? Does the taxpayer or is there a calculator to be used on the market place? Just wondering that s all.

Just an update on this thread. I don't know why I was unable to see what needed to be done with this transaction from the start. After taking the advice from my dear colleagues here, the whole thing finally made sense to me. The final outcome is there was a small loss that totaled up to the broker fees and other fees at $41.00. So, thanks again to everyone who posted responses and I hope someday I can be of some help to you folks as well. Thanks Joan for the clarification on the code V. Here are my figures for your review: Gross proceeds 44,434.05 (Cost) Sales 44,434.05 - 40.99 = 44,393.06 (sale price) 44,434.05 - 44,393.06= 40.99 (loss) BTW Catherine there appeared to be enough Wh cause he did receive both a Fed and State refund. Mind you, other things in his Sch A helped as well. Maybe odd but it worked out okay.

Thanks to everyone especially Judy and Catherine for explaining this further. You all help so very much at the most crucial times.

Thanks Catherine. There is still the need for the Sch D Correct? I think I see where the loss comes from and the amount. I guess I have been treating this like any other normal stock sale and I shouldn't have.

In replying to the posts, I am not in my office at the moment to see the documents in order to answer Joan's question. I am still confused with the responses. The transaction has been reported on his W-2 form with code "V" in box 12. The withholding amounts are included in the Federal and State withholdings also reported on the W-2. MS specifically stated that he would not receive a 1099B form. I just need to know if there is any special reporting other than what has already been reported on his W-2. The W-2 does reflect the gain. My main confusion is with how MS's instructions were telling you to report the loss by using the proceeds as cost and the costs as the selling price.

I totally agree with Jack. DO NOT do it. If I remember correctly there is a section in circular 230 that address the issue of using tax preparer bank accounts for client refunds. I know this is your fee and not a refund but it certainly would look fishy to have two different amounts of the refund going to two different banks and one of them being yours could cause you to loose your status with the IRS, face penalties, and loose your business.

I plan on doing the same thing but just haven't had time. Hopefully I will be able to do this tomorrow. have you noticed any old instructions? I am really questioning any of the instructions that I am reading within the program. Just plainly makes me nervous.

I think it odd that we would be able to contact any credit reporting agency and get a freeze removed from someone's credit file. The client may be able to do this but probably not us.

This is an area that I have rarely been involved in. Taxpayer exercised employee stock options and received a form from Morgan Stanley that does detail the transaction. No form 1099B will be received and the form shows a net amount of 20K. The gross amount is reported as well as the exercise cost. The gross amount plus Fed wh, Soc & med tax and State tax is shown as well. These amounts are also including in the amounts on the W-2 form. Here is where I am confused. The instructions on the form from Morgan Stanley tell you to put this transaction as a loss on SchD part I and to use the gross proceeds as the cost and the exercise cost as the sales price which will indeed return a loss on the exercise transaction. Is this correct? Here are the figures if it helps Gross proceeds 44k, exercise cost 20k. The 20k is after the associated costs and withholding taxes. I am confused as to why this is a loss and not a gain? Also, is form 6251 required to report the exercise option? Again, I appreciate any guidance anyone can give me with this.

You are correct. I tried to do a comparison on one of my MFJ returns and sure enough they were each given an itemized deduction that when totaled up was more than the MFJ itemized deduction. I agree and do not like it at all when these kind of things happen. It really does make you wonder what else is going on that we don;t know. Should be a call to support to figure this out. Also, I noticed the program has the 2013 instructions for NC. That doesn't make me happy either.

Judy, I tried that as well and in doing so does allow the Sch A input to NC. But....kills the Federal refund and increases the NC due for this client so it is not a good choice. The old tax law in NC allowed a person to take a percentage of the charitable deductions that couldn't be claimed on the Federal. That is what has changed here and is no longer allowed. Sorry if I made this confusing.

One problem I found here is I am using OltPro (OneDesk) and they have the 2013 instructions which totally confused me while I was preparing the return. So, note to self, don't trust the instructions in the software. Also, the instructions from the NC DOR ( on their website) don't make the distinction very clear. They do lead you to believe that you can take only the three deductions mentioned earlier but don't give you a choice when claiming either the standard deduction. After further reading the three Federal deductions I mentioned are the only ones allowed from the Federal Sch A period. The choice of standard or itemizing comes into play when itemizing Federal only. I plan on contacting OneDesk regarding the outdated instructions.

Correct, only the wife's information goes on the 8962. The EITC levels are higher to further promote poverty in my opinion. Seriously, I don't think comparing the poverty level for determining the affordability of insurance to the EITC is a fair comparison. Plus if the poverty levels for the insurance affordability were raised to equal the EITC levels, there would be a ton of Code A exemptions which would defeat the Government's claim of affordable care insurance plus they couldn't make additional tax revenue.

If I read the article correctly, the former employees with prior conduct issues who were re-hired had new conduct issues. Well Duh, ya think? The ones who had unauthorized access to tax records were re-hired? Now that really bothers me. Unauthorized access would leave one to believe access was gained by unscrupulous methods for possible criminal actions. Geez.