Terry D EA

This is my first consignement store tax return. This client is a Sch C client as this business is a sole proprietor. Where on the Schedule C do you report the amounts paid to the consignors? It isn't an expense so do you just list the gross receipts as the total amount received minus the amount paid to consignors and deduct the expenses from there. I am too tired to think or research and this is probably pretty clear and I am just missing it somewhere. Thanks!

KC our prayers are with you and Don. We will add both of you to our church prayer list.

I agree with the others, amend the return, gain the client, she has to pay back money she originally wasn't entitled to. The P & I she, or you, can ask for the penalties to be abated if she meets all the criteria. Sometimes the IRS is a little forgiving but don't count on it. A very good example why folks shouldn't rely on these programs. I had a friend earlier who used Turbo tax made an entry error and by the time she paid for the return, amendment and all other corrections, she informed me the cost of all that was only $5.00 less than my fee would have been. I did give her some friendly assistance to correct this and gained a client for next year. So, there you go and thanks again to Turdbo Tax for providing such a great deal.

In Ohio, the tax payer will be obligated to pay taxes in the city that is where his place or residence is. Normally, if you live in one city and work in another, the city in which you reside gives credit for taxes paid to the other city. If your guy is a contractor and performs jobs in other locations and receives a 1099 for services provided, there would be no deductions for any city or local tax. He would pay tax on his earnings in the city he resides. Your post is a little unclear but I think this is what you are asking.

Thanks for the reply. I did find the answer. The legal settlement fees are added to the basis of the property.

When a person is in the business of acquiring residental rental property to produce income, are the legal fees charged as settlement costs deductible? I say yes, because the fees were incurred as a normal course of the business, the fees are ordinary and reasonable. Or, are the fees added to the basis of the property or amoritized as start up. If they are deductible as I mentioned earlier, and if someone has a reference, please post.

Tom you definitely explained my question better than I did. That is exactly what I wanted to know. Sometimes I have a habit of not looking at the easy way to handle a situation and think to deeply. I have to agree the IRS probably doesn't care as long as the income is reported. I like Jack's response as well. Common sense and logic would leave one to believe that something marked as "final" is exactly that. But, as has already been established, the IRS doesn't play by the same rules.

Form 1041 was filed for 2010 that included all income to the estate. Financial advisor overlooked one investment and my client received a 1099DIV with dividend income to the Estate. If the 1041 filed for 2010 was marked final return, would that return have to be amended to allow the inclusion of the return for this year? The 1099 was issued to the Estate of with the Estate's EIN number as the recipient which leads me to beleive their needs to be another estate tax return completed. Any other way to handle this?

I got that same message. While I don't call too often, it still urkes me that TRX considers the tax season over and they have gone back to regular business hours. In case they didn't know, it is only MARCH and tax season doesn't end until APRIL 17th. Thats when I get my vacation. TRX did call the other day and e-mail me requesting me to renew at their reduced prices. I did not commit as I agree, I don't know what they are doing. They claim they will have their own software. I think I have a version of it but don't know if I like it or not. Too early to tell. I guess they think we have alot of time on our hands this time of year. I am just glad I got all my S-Corps except 2 done on time. Geez.

Thanks MAS, I know how to do the set up of discount items. I also understand the logic behind a discount expense or income account and the outcome is the same.

I have been using QuickBooks Accountant version and have been a QB Pro Advisor since 2003. With that said, here is my delimma, how do you force QuickBooks to allow you to use a contra Accounts Receivable for early payment discounts? It is easy enough to setup the early payment account as a sub to the AR and if you could post to it, each entry would be a credit entry to offset the Accounts receiveable for that particular customer who took advantage of the early pay discount. However when you setup the discounts to record the discount in the contra AR account, you receive an error telling you that you are posting to an invalid account and that discount accounts are typically income or expense accounts. I have one client that has set this up as a negative income account. Doing this is okay but make the financial statements confusing and out of order. Also, you have to move alot around when preparing the tax return. If anyone know a trick here, let me know. Same problem will exist when trying to use an allowance for doubltful accounts setup.

I do believe you are correct with creating a pdf and attaching it to the e-file. Can't help with the explanation language. Good luck though.

Tom, If you have done a few trust returns in the past, then you should know the importance of obtaining the trust instrument. I would get that first so I knew all of the tax reporting requirements that is outlined to be sure the amendment reflects any reporting that may be missing. I amended ten years of a CRUT return without incident. It did take 4 months to complete but all was well in the end. BTW, charge accordingly. These things can get tricky and time consuming

<<<<<<Client received a few 1099-K's from credit card companies showing what they paid in merchant fees.>>>>> Fees for credit card processing paid to the credit card processing company are expenses and not income if that is what you are saying. The 1099K form is to report income from taking credit cards as a form of payment for services provided which is taxable and subject to SE tax. The sales from credit cards are subject to state sales tax and I agree you need to speak to your client about that as well. Include any payments received from credit card processing in gross receipts for this year.

Well here is my take on this. Post Secondary education is after high school. The summer school community college credits is in question. Is this higher education such as getting a jump start on college while still in high school? If so, then I agree on the education credit. I guess the AOC wouldn't apply as community college is not normally a bachelors program unless it is being used as the first two years in pursuit of a bachelors degree. It would be highly possible for a highly gifted student to be enrolled in both high school and college. So, why wouldn't the education credits apply?

No support test for EIC.

Yep, I like it totally. Good point Jainen

Agree with JohnH totally. Disagree with Pacun totally. Had a guy get mad and tell me it was my responsiblity as his tax preparer to tell him which documents he receives in the mail are related to his tax return and I should have told him which ones to bring to his appointment. Hmmmm, let's see, lights out in the crystal ball and clouds have moved in. Took him off the organizer mailing list apparently he doesn't know what that is either. Oops my bad, I forgot to tell him he needed it. We have all had these kind of experiences. In the heat of the moment, whacking their heads off is appealing along with any other form of get even punishment we can muster. After the dust settles, you will be the better person for letting it go. I agree to send him a bill for your services. Chances are he won't pay and it will be more aggrevation to file in court. Expecting an apology from morons like this is useless. In the past, for every one of these jerk clients I loose, three new clients usually take their place. Good luck and look forward to a better tomorrow.

Perhaps they are looking for the amount invested if any.

Yes all preparers are under circular 230. For all my schedule C clients as well as others, I utilize an engagment letter that contains a paragraph stating that while I do not do an independent study of their records and that by signing they indiciate they can substantiate all expenses and provide the necessary documents should any of the tax authorities so choose to ask for it. I was told sometime ago, that this was the best way to sort of CYA. Again, the new items that Jainen mentions is interesting. I still feel it is appropriate to ask questions when something just doesn't seem to pass the smell test. When I do this, I keep notes of questions asked.

Okay here is the process of getting the client copy of the return to print in the order that you want. 1. Open any client that you want from the Client Profile screen 2. Click on Review to get the screen where you create the e-file 3. Click on the Advance Icon that is next to the incon with magnifying glass. The printer icon is one position left of that. 4. At the bottom of the Advanced Form Delivery window, click on the the "Sets" butoon 5. Click on the set you want to arrange, example: "Client Copy" 6. The forms in the client copy open in the window to the right. You can click on the plus sign by each form to see what is there. Use the arrow keys at the bottom of this window to move the form up or down in the print order. Click apply and that is it. Everytime time you print the client copy, Click on the Advanced tab, choose client set in the window to the left be sure there is a check mark in the print box in the upper left hand corner and click on start job. From this point forward, each time you print the return using the Advance tab, the client set will print in this order. I have the client set as the default setting. Hope this helps those who want to do this.

Has anyone seen any updates to Pub 970? The latest one I have seen is 2010. I had a client call regarding the inclusion of room and board as qualified education expenses to claim any of the education credits. In Pub 970 2010 room and board does not qualify as an expense when calculating the credit. It does, however, qualify as a deductible expense when it pertains to student loan interest.

What supporting documentation do you have to support your position? I am in agreement with Jainen on this one. Look at example 1. Also, I agree it depends with looking at the terms of the scholarship as well. I don't read or see anything regarding a pro-rated calculation. I think the simple answer is you can't claim expenses for tax free assistance.

If you choose any of the above designations on the 2106 then the amount should flow to the 1040 line 24

Yes, I will tomorrow. Just shut the other computer down and am too tired tonight to fire it back up. Try this first, when you are in the review screen, click on the advanced icon. This is located just to the right of the printer icon. This is where you begin to set up distribution sets to print. I chose client copy and then put the forms in the order that I wanted them to print in the right hand side of the window. When I post the steps I will create a file that will have screen shots.