Margaret CPA in OH

I just checked that form, too. The client is the sole heir of his sister's estate not a partner so the form does not apply. The meeting I attended today was with a small group of sole practitioners. I raised the question with them. No one had the precise answer but some did raise the question of economic benefit and basis. I think (dangerous) that the estate owned the property after death of owner/sister of client and continued to rent until tenant moved out. Estate sold property and part of the inheritance included a probable gain on the sale. The German document related to distribution from the estate does not specify character of proceeds. He did pay German tax on his proceeds (they have an inheritance tax) but I don't think he gets a tax benefit in US because the proceeds weren't taxed here. The loss on the rental would be like the final K-1 of an estate. He never owned the property, the estate did. What happens here in a similar situation? I don't have a K-1 to input, just this German document. Maybe he doesn't get any benefit from the loss at all. My brain hurts... The client is willing to not claim the loss which may be correct. But if he is entitled to it, I want to do the right thing, whatever it is.

Thanks for replies and my apologies for not being clear. The letter is to document the operating loss on the rental as a rental, not as a sale. The gain/loss on the sale flowed through to the estate. This loss covers the time that the estate was the owner and rented until the tenant moved and the property could be sold to wrap up the estate. There will be no further letters. The client paid a small amount of inheritance tax to Germany on his share of the inheritance. I didn't think that it would be deductible on his US return because there would not be a tax on the US estate. He is not expecting it to be deductible. Doug, I will look at the 8865 later today. Off to a meeting now - thanks for the replies!

I have read the treaty with Germany and gleaned nothing but a headache. Client is an heir to sister's estate in Germany (they were born there but client is US citizen). There is no issue with inheritance so far as I can tell (not so much anyway), but there was a rental property in play. It incurred a loss between date of death and date of sale. Client received a letter akin to a K-1, I believe, showing about 13,000 euro loss. I cannot figure out whether or even how to include on the US return. Any ideas? Thanks in advance!

Federal Unemployment Rate Change effective July 1, 2011 Congress has announced that the 0.2% FUTA surcharge will not be extended before June 30, 2011. Employers have been required to pay a flat rate of 6.2% on the first $7,000.00 of each employee’s annual wages for FUTA. The 6.2% FUTA rate included a temporary 0.2% surcharge that was first added in the 1970’s. The FUTA rate will be reduced from 6.2% to 6.0% effective July 1, 2011. Employers will still receive the 5.4% credit for paying state unemployment on time, reducing the FUTA rate to .6% on wages paid up to the annual FUTA limit of $7,000.00. The IRS is currently revising Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) to accommodate the two different FUTA rates for calendar year 2011. I will begin to calculate the 0.6% rate effective July 1, 2011, and will continue to monitor this issue closely and send additional communication as necessary. To read more about this change, view Section 14 in the IRS Employer’s Tax Guide.

My wariness is when there is a sole S-corp shareholder with a home office. Obviously the sh is an employee and there can be issues with the home office expenses and deductions. I have no problem with a home office for an employee in general. But when one of my S-corp sh/employees wanted everything deducted, well, my research would not suffice so he toddled along to another firm - okay by me!

I have been taking home office for several years using my entire former living room. Last year one part time employee retired as of June 30 so I literally downsized my office in half. For 2010, I entered 1/12 space for home office instead of 1/8 and for 2011 until I retire, it will be 1/16. I did not have to override anything. I am always leery of the home office of an employee of a company, too, depending on S or C. I think the acccountable reimbursement plan Joan has suggested is the better option.

Wow, Jack! In what part of Ohio are you? Here in Cincinnati we just had high winds, heavy rain and a sprinkling of sporadic hail. Oh, and power outage for a while, but nothing that those rocks!

Wow! For no discernable reason other than sheer kindness, some elderly clients just dropped off a loaf of bread still warm from the oven. I am finishing my third piece already (the first was a double sized piece). I love (most of) my clients!

Congratulations, indeed, to the family and especially to your son for this wonderful accomplishment. It's always so gratifying to see young folks these days who are truly motivated and determined to achieve lofty goals!

Thanks, I just signed up. Then I read the article - great spread, Rita. Good for you and continued success. You and I have many similarities in our practices, too. I have used fx in other offices but can't justify the expense - yet! Maybe another year although I am kind of winding down even though 2 new clients this year are in that preferred category. I have an MBA with Taxation specialty and am a CPA so do prefer harder over easier except when sleep deprived! Thanks again for sharing!

I hope they do allow you share what you would share with the additional 5 copies they have already agreed to provide. I don't believe anything you post here for us should be construed as 'commercial purposes' any more than sharing a copy with your friends, family and colleagues in your office. Let's hope they agree!

Congratulations, Lion! For those of us who do not receive this publication, perhaps you could scan and upload so we can read all about you!

Heart and hugs to you Linda. Next year must be better. Hang out here at least occasionally and let us know how you are managing. I find this group a great resource for tax info, certainly, but also comfort, cheer, solace, humor, whatever is needed throughout the year. Hold on....

Jainen, now _that_ is tax planning extraordinaire! You didn't gain guru status fer nuthin'! Just watch out as the housing allowance exclusion is being challenged now. But you and your legal beagle will surely manage to find any other loopholes available. I am in awe of the prowess...

Maybe, to reassure your nerves, check again that you didn't omit that $20 you received for the ride to airport you provided and the $5 bill you found in the park. If you're lucky, you might end up owing a dollar or two to ease your mind. If not, then figure out what you did wrong to allow the gummint to hold all that money instead of having in your pocket! Or, just relax, breathe a deep sigh, smile, and, yes, smell those roses....

Ohio is in the same boat. The Use Tax law has been on the books since 1936 but is increasingly being enforced. To efile now, ATX does have a warning if that form isn't completed Yes or NO. I no longer automatically check it. I make clients, if here, answer and, if electronically reviewing returns, print the page, check and complete, sign and return. Ohio DOT also now wants a check that a taxpayer receiving a direct deposit has read the blurb that it isn't the fault of Ohio if that deposit goes astray. Pretty sure they must have been sued at least once to get that. I also make clients check and sign the form that states, as the 8879, "under penalties of perjury..." I don't want an Ohio return audited and the client come back and say I didn't ask them about online or other purchases. As mentioned more than once this season, retirement looks increasingly interesting. I don't mind asking clients the questions but I really don't want to be an auditor.

I just browsed the IN dor site and read that part year, non-resident returns can, indeed be efiled using Indiana's I-File online free filing http://www.in.gov/dor/3723.htm . There are then options to click through for tax pros, etc. I didn't do that but it could be that one can file directly or find an ero/software that accommodates but not all do. I didn't pursue to the end, assuming that Mike has already done that.

Hey Catherine, don't forget the therapeutic head massage, too! I love that icon and think we are all experiencing that feeling 'bout now. Happy digging - I think I'll be back in June (same Concord client, widower now) looking for some fresh veggies. I'll let you know.

As one who has 3 contractors I can tell you that one option to live is to use lots of credit cards to buy the materials. They are deductible in the year charged but payments may be minimal. I still can't believe the balances due on one of my clients. He has had 2 cards/accounts closed with huge balances outstanding. He has to write a check now for every purchase at Home Depot. I don't see him ever coming out of it and, yes, he owes me some, but keeps up with payments.

I agree, Kea. I had what I thought would be very good clients a couple of years ago until they were unhappy with my refusal to take certain deductions. Then they disputed the bill and refused to pay. In a letter I was told that it was too intimidating in my office because I had a newspaper headline about a tax preparer being sentenced for fraudulent returns. Not really sure they actually got the connection but I am glad they didn't return. Of course I wouldn't have them return without them paying the previous year. Only time I was ever stiffed.

The massages are for a specific medical condition, severe scoliosis, for this woman. She did have a physician's prescription. I asked when she came over so feel good about that. I wanted to be prepared for a, um, discussion, but the prescription took care of that. And the practioner is a licensed therapeutic massage professional. I need one now!

Yes, aren't we/they all special. Kinda makes me crazy when clients don't want to accept certain results even when I point out all the positive things that benefit them. Never enough.

Today, I think I could be competitive.

mwpope - diabolical - I like it!

I have used line 12 for reported points, too. I think the idea is to show amortized points that are deductible whether or not reported. This distinguishes fully deductible points, too.