Margaret CPA in OH

I noticed that on my own and wonder what to do with a client that also has interest income and laundry income with their rental property. I have put those as other but it seems now it will all be rent.

Buuldog Tom, thanks for the direct line to Express Answers. I haven't really used it before, preferring QF, but this time it is perfect! Thanks to all for the help. I hope not to see another one of these but feel much better about how to handle the data if not the client!

Thanks again, Jack from Ohio. I think the pub is 4681. I just want to be sure about terminology before laying the bad news on the client. You make too much sense to be wrong! Here is the link I found from prior year posts here on the subject: http://www.fogelcpa.com/Pages/TaxArticles.aspx The first line is the flowchart to download. Thanks again!

Jack from Ohio, thanks for chiming in. What you write makes more sense to me but doesn't fit with the flow chart by David Fogel. You must know that the 1099-A box 2 says "Balance of principal outstanding" not "amount of mortgage that was cancelled." Is this the same thing? If this is the correct handling then he gets hit with a $26,080 capital gain now and potentially a debt forgiveness later, Fannie Mae depending, of $48.097 as ordinary income? If that happens then he may qualify for the Sec. 108 exclusion? When client told me about this, he said an attorney friend said it wouldn't be taxable. How do I tell him that $26,000 is taxable now even if a COD, should it happen, may not be as it could be excludable? He will be a hurtin' buckaroo, for sure! This seems the kind of thing that drives folks to bankruptcy, eh? Anyway, his situation seems to fit exactly your last observation. I don't think he has the money to pay, though. And his daughter is supposed to start college next fall. Maybe not.... Thanks again!

Thanks, Joan, the link you provided is the one I found earlier from posts last year. I have read over several of the articles and printed the flow chart. My question mostly relates to inputting the figures in the right place to get the right outcome. I suspected there might be a COD later with the check that it was recourse. When I follow the flow chart with the bifurcation between g/l and COD, I get a loss of $22,017. It just seems strange to put the 'selling price' as the fmv into the disposition data field but that's how I also end up with the loss on 4797. I guess I'm just looking for a bit more security that the numbers are going in the right places. This 'seems' right based on the figures that flow and I guess I need to prepare him for the balance of the debt to be demanded. So there may not be any COD. Hope so for his sake! Thanks again!

grandmabee, the client is not claiming exclusion. I may be based on things I have read, especially a flow chart that mentions that COD may be excludable under Sec. 108(a)(1)(D) for rental property and to claim it on Form 982 and reduce the basis of the property. As I wrote, however, he has not received a 1099-C. It is recourse, marked on the 1099-A, so it may not have COD. Don't yet know. cbslee, I have requested all the documentation, not just the 1099-A, so will see. I assume, since the 1099-A shows in Box 1, Date of Lender's acquisition or knowledge of abandonment 12-18-12, that it is finalized and title passed but will clarify. I honestly did not expect to have to deal with any of this at all with my client base so was not fully engaged in learning all the ins and outs. This one took me very much by surprise. I will know more, hopefully, with the documents I have yet to receive. I figured it would be a loss but then he would have COD for income but maybe that would be 2013. I just want to be sure to put the right data in the right places the first time. Thanks!

I have the first and only foreclosure of a client. It was a rental property for 6 years after personal residence. When last tenants moved, he couldn't rent to cover mortgage so let it go to foreclosure. I know several here have done these in the last couple of years so would appreciate help. I have read quite a bit and am fairly sure I understand what should go where but don't readily see how to do it using the disposition tab in fixed assets. The balance of principal outstanding was $209097 and fmv was $161,000. He said he tried to rent on Craigslist for several months but gave up and the date of acquisition is Dec. 18, 2012. He has not received a 1099-C but I think he can claim exclusion on Form 982 as it was rental property. Thanks for any assistance!

Wild guess here - duplicate the return. It is an option on an unopened return. Maybe the duplicate can be opened. Good luck!

Before changing out the 1040 for a 1065, you could duplicate the original so as not to lose the 1040 info. Then choose which one to use as 1065 and which is individual return.

Very good, Tom! I like it.

Here in Ohio, non-profits are not required to withhold tax for residents of another state. As a church treasurer, I discovered that when we had employees from KY. They had to file for Ohio refund and use that to pay KY tax. It was a matter of small church resources, volunteer efforts and getting a withholding account set up in a foreign state. As a nurse, it may be possible that the client of the OP works for a non-profit and/or doesn't want to pay the service for the additional state handling. There is a cost involved.

FYI knell (not knoll) /nel/ Noun The sound of a bell, esp. when rung solemnly for a death or funeral. Verb (of a bell) Ring solemnly, esp. for a death or funeral. I truly hope it is neither. I am not ready to retire (famous last words) and really don't want to get a new program. I think we should all be prepared as best we can, though. So far, knock wood very loudly, I have had no problems that time and updates have not cured.

I just did this when I noticed that my previous lists for NOL carryovers on local returns did not appear as a tab on the bottom as in the past. One local return actually brought up the previous list without numbers, the other one I had to recreate. I just checked to see if they showed up on the print list as the locals want that. Sure enough, they are there!

Thanks, Jack. Rationale being protection of income, I presume.

A self-employed client severely injured while working filed for and finally received SS benefits. He calls it disability but it is a normal SSA-1099. It shows Attorney fees fo $6000 under the description of amount in box 3 (along with payments and MC Part B premiums). It also includes $7898.14 paid in 2012 for 2011. He said he did not begin receiving benefits until June 2012. What, if anything, to do with the attorney fees?

Ummm, yes, I think I'm right about this, too, or not...

Same here. Some of us just work in certain ways and really have trouble changing easily. I have had (knock wood) very few issues and really cannot complain. And now I hope I have not jinxed myself! I do fervently hope that ATX not only makes it through this year but is around for the next several years until I retire.

Just note the risk of scanning and emailing that any document with SSN and other identifying info without encryption is fodder for id theft. I have personally had very little deterioration with faxed documents perhaps in part because I don't print them on paper, they go directly to pdf. If there is a document with an issue I either ask for a resend or clarification of whatever is the issue. Obviously Jack's experience is different from mine and our preferences for client sent documents is different. His over 100 clients may have encryption capability readily available along with the knowledge to use it. Most of mine don't but do have access to a fax machine. Diff'rent strokes but room for all!

My clients from as far as Switzerland and Australia fax to my dedicated fax where I 'print' them to pdf so paperless. Others in MN, MA, and NC also fax but one does send as pdf encrypted email attachments. Most folks don't have encryption capabilities on their home computers and/or don't know how to use but that is how I send virtually all my returns back to clients to review and return Form 8879 to efile.

So what to do when the student qualifies but software calculates no? Time to play around, I guess.

I am baffled by this worksheet as it says (#4) if the student has claimed the American Opportunity Credit for any of the 4 prior years they are no longer eligible and must take Lifetime Learning Credit. But if 2011 year was the first year claimed and ARRA extended it through 2012 (per IRS website), why cannot the student take it for 2012? I must be missing something, I guess, but this doesn't seem right at all.

Here's the scoop: I had to hire an attorney to help sell my house because: My real estate agent, BY with Comey and Shepherd was negligent in enforcing the terms of the listing contract on my behalf. I was not informed of a change in buyer financing from FHA to DOA until the loan was denied by the DOA, 5-6 weeks after listing contract was signed. The change from FHA to DOA required my signature on a contract amendment. All this caused a 4-5 week delay in closing. The buyers eventually got an FHA loan approved. It was at the point of learning (March 17. 2012) that the buyers had applied for a DOA loan without my approval of this change that I hired an attorney. Although I met every timeline specified in the contract for the seller, most of the timelines specified in the contract for buyers were not met. The negligence of BY led to her paying my rent from March 24? (I will get you date) - April 6th so that I would not lose the house I rented due to delays in closing on the house I sold. My attorney had to talk with landlords to work out this agreement, and also to get penalty fees waived for late rent and the breaking of the lease at one point (which did not actually happen) after buyers' loan was not originally pproved. There is a ton of documentation to show the negligence - communication between my agent, Comey and Shepherd broker, Title Company and me; and between my attorney and the Comey and Shepherd Attorney. SA of Comey and Shepherd had KB, the attorney for Comey and Shepherd, put a lien on my house on the day of closing just prior to closing. My attorney took legal measures to get this lien released. The reason the lien was put on my house, according to VL who was the attorney who represented the Comey and Shepherd agents, is that I was not going to show up at closing. I had, however, signed the contract addendum that to appear at closing on April 10th, 2012 at 4:00 pm and all parties had a copy of this addendum that I signed. I always had every intention of attending closing and told no one otherwise. My attorney attended closing with me to protect my interests: He asked KB at closing if he was legal representation for Comey and Shepherd in matters related to the sale of my home and KB replied, "No." We learned, however, that KB was representing Comey and Shepherd on the lien placed on my house. So, he directly lied to my attorney. When asked by the Title Company at closing if I had any liens placed on my home, I replied "No". However, the lien had been filed on my home just prior to closing by KB, representing SA. BY knew about the filing of this lien. All 3 Comey and Shepherd folks were silent during me being questioned by the Title Company about whether were any liens on my home. My attorney and I did not find out about the lien until April 11, 2012 when a copy of it arrived in my mail box. So it appears as though Pacun has the answer as this was directly related to buying or selling an investment, her house and could reduce capital gain, if any. Sadly that will not help as she already has a small loss. Thanks all for this exercise. I feel for her but it is what it is. Profound, no?

Thanks, Pacun. Rationale? Cite? Other attorney costs on the closing are expenses of sale. I will find out more as to the reason yet.

Thanks again, MAS. I think I need details as to exactly why she had to hire an attorney. If it was just an issue with a particular realtor and maybe not good marketing or disagreements about Open Houses or some such, well, need more info! If an expense of sale there is no difference. If itemized deduction, a change from owing $600+ to a refund of $100+. So it matters.

Thanks, MAS, I knew that much. The question relates to whether this goes directly to the sale of her home because it isn't on the closing statement. She did have a home office so the point may be stretched, really thin, that it was protecting business interest but I don't like that. I really don't think it goes anywhere but always look to this board when in doubt and cannot find specifc, on point references. And I do look first... Thanks again!