Margaret CPA in OH

Imagine a dope slap here, at least I think so. Thanks for that reminder and I will check on that. Makes sense.

Thanks, OldJack, I know all that you wrote. The problem, as I thought I stated, is that when I input this into the shareholder's personal return, Sch E page 2 has the legend "Recognized gain on shareholder loan repayment." I think there is additional data entry or some carryover that is missing. I just noticed a Basis Worksheet form so will work on reconciling the proper entries. I know what the outcome should be; it's just getting the right numbers in the right places as ATX continues to improve the flow of prior year data and reduces our manual entry. I may have missed entering something on last year's return. Will check.

I'm finishing an 1120S. Single sh loaned corp money to survive (cash flow issue for contractor) and repaid most of that loan over the course of the year. When I put in the amount repaid in ATX it flows through as a recognized ordinary gain (Line 16E on K-1). I am struggling to reconcile the repayment of this loan as a taxable gain to the sh. Surely something is wrong with the data entry, right? (Retirement really is looking good)

Fading away here...my biggest income clients are two elderly folks (one is 98) for whom I do major trust work. When they pass, my income will be about half the current amount. I stopped taking new business clients when my other CPA retired 2 years ago and, finally, I can pay 'retired' membership rates for Ohio Society and American Institute of CPA's due to decline in hours and having reached full retirement age. I really don't want to sell so will probably just have natural attrition. But I am now no longer concerned about losing ANY clients and am quite relieved about some who have left within the last couple of years.

Well, bless his honest heart! And it is reportable income although, because it is less than the $600 reporting threshold, he may not receive a Form 1099. If he is not in the business of writing copy, he could report it on Line 21 of Form 1040 as Other income but, because it is over $400, it is subject to Self Employment tax so he would also file Schedule SE. If he had any expenses related to this income, he may instead be better off with a Schedule C-EZ, not too complicated if the expenses are easy, and Schedule SE. If he is truly not in this business, he may just report it on Line 21 and pay only income tax, not self-employment. As always, it depends and you will likely receive other suggestions, too.

This must be about the funniest descriptions of women and men I have ever seen...so vivid, so true!

If he, as so many now in the military, has email access and can print, fax, scan or email back, you can send him a copy of the return including the 8879 so he can sign and return it himself. I have several out of state clients and one in Switzerland and it works for us. He should return the signed form also encrypted or fax to you, though. It may be that a parent already has POA for such things. As he was going to a combat zone, it might have been one of those covered items prior to deployment.

Yes, congratulations to all who have passed this test and the EA and CPA exams and to all who have managed to maintain some semblance of sanity in this wild and crazy profession. Indeed, we are all "special" because we keep at this and actually enjoy it, at least most of the time!

So you are filing the 2011 return? If everything was held jointly as you wrote, wouldn't it simply be reported on the 2011 joint return? Also, in my Handy Dandy QF, it mentions that interest earned IRD can be reported on Form 1041 or beneficiary's return.

Congratulations - celebrate this weekend!

Woo Hoo! Congratulations!

Update: my client described the transaction. And, the purchase of the single client: I used to work as managing editor at XYZ up until 2008. After I left, clients began to dwindle, which probably had something to do with the economic downturn. In the fall of last year, I heard from XYZ's owner, who said he was down to two clients, both accounts which I used to manage. He wanted to shut down the publishing side of the business and concentrate on the entrepreneurial training side and asked me if I wanted to purchase the clients. I said that I did. One of those two clients ended up falling through because he did not contact them to tell them what was going on. The other was ABC Insurance, which transitioned successfully at the beginning of this year. The names have been changed.... I believe Section 197. I don't believe the client filed Form 8594, I have recommended it be filed and I doubt the seller filed. I have booked it on the balance sheet and will amortize as it clearly was that portion of the business and all of it.

Thanks again, jainen, but I think I will need more than a magnifying glass to see the verbiage to which you refer. I'm looking on page 10-23, 4562 Depreciation Section 179, of the Premium Quickfinder Handbook for 2011 tax year, left column, center, titled Intangible Assets-Section 197. I honestly do not see a little bitty #1 or a footnote of any kind on the page. The paragraph reads: Fifteen-year amortization beginning with the month the asset is acquired applies to the following intangible assets that are purchased by a taxpayer (not self-created) in connection with acquiring assets that make up a trade or business or a substantial part of a trade or business: [iRC Sec 197(a)] Goodwill, going-concern value or workforce in place. Covenant not to compete. Copyright or patent. Franchise, trademark or trade name. Customer based intangible (for example, composition of market or market share). Supplier based intangible (for example, favorable contracts or shelf space at retail outlet). License, permit or other right granted by a government unit. Business books and records, operating systems or any other information base. Computer software acquired in connection with the purchase of a business and not available to the general public. The 15-year write-off period does not apply to movie or book rights that are not included in the purchase price of a business. Purchased mortgage servicing right can be amortized over nine years. [iRC Sec 167(f)(3)] So I don't see an itty bitty #1 or a footnote but thought that the 'substantial' referred to the asset purchased as being a substantial part of the seller's business, not the buyer's. Regarding disposition, how would my client know for sure that this purchased client was no longer an asset (and therefore a disposition identifiable for documentation) without some sort of termination letter? Just trying to do the right thing. Thanks again - I'll keep looking for it.

Thanks, John, for chiming in and the calculations. I have no fear of losing this new client, a woman, by the way. I just want to be sure to do the correct treatment of this purchase, whether amortizing over 15 years, expensing or leaving on the books until disposition. I still don't know what would constitute disposition. She is just beginning this business and will be lucky to be in the 15% tax bracket. I do like the comment about a revenue stream from the acquisition for however long my client retains her purchased client. What would disposition look like, though? As I asked, would my client have to send her purchased client some sort of termination letter at some point (or vice versa)? Would my client have to 'resell' this purchased client to another agency? Clearly I have more questions than answers. One thing I intend to do is question my new client about 'industry norms.' Is it common to purchase a single client or a few from another agency? It seems a bit strange to me but that may be a very common occurrence. Stay tuned!

Thanks, jainen, for chiming in. That term, customer based intangible, came right out of my handy dandy Quickfinder section on intangible assets-section 197, where it states this intangible (IF that is what a single client is) is subject to the 15 year amortization. I do, however, also see that it refers to acquiring assets that make up a trade or business or a substantial part of same. So should my client contact the seller to see if this single client is a substantial (whatever that means) part of their business? I wonder what constitutes disposition of this asset. Would that be a formal termination of a business relationship from my client or from this purchased client? This seems a kind of crazy situation. Would you happen to have handy some additional references to substantiate this so that I can report same to this client (who won't be too happy, for sure)? I will research on my own in a few weeks but do appreciate this direction, even if it doesn't seem 'fair.' Thanks again - always learning....

Indeed, congratulations on proving you are qualified which we all knew well! Have a great summer!

I am aware of this form but one client isn't "a group of assets" so this didn't seem to fit. It isn't a client list, just one client, and isn't goodwill. I'll dig deeper. There is time as it was a February 2012 transaction and I have alerted the client that is likely will be amortizable. Thanks for the help!

A new client of mine does writing for advertising, etc. She 'purchased' a client (not a client list, just one) from another such agency for $3165. This is new to me so not sure if just an expense or needs to be capitalized and, if so, for how long. I think it would be a customer based intangible, just not certain. Any guidance greatly appreciated!

A shred of humanity does exist within the service! I wonder when this thinking, caring person will be fired...

Thanks to both of you. There is no trust and the attorney fees are related to getting dil confirmed as legal guardian. I believe he also submits reports to the court as required. All fees were paid from fil assets. Dil paid nothing out of her own pocket. Given the circumstances for each, as I wrote, there is no tax effect on either. Fil has relatively low income and medical bills wipe out taxable amount as he is in high level assisted living with huge pharmacy expense. Dil has 4 kids, disabled contractor husband, wages of $33,000 and no taxable income even with listing the $1160 received for paying fil bills, etc. I was just looking for principles and references as I could find nothing on point either. Just a little mental exercise after the worst of a challenging season. Thanks again!

Anyone?

Client has guardianship of father-in-law's assets. She pays nursing home bills and manages assets. She had to engage an attorney to get court processing completed and fil into home, etc. She also received a modest amount ($1160) in 2011 for these tasks. Are the attorney fees and bond paid for guardian deductible? Guardian fees? I know estate planning by attorneys is a 2% itemized expense but not sure of others. In this case it literally doesn't matter as there is no taxable income but I would like to be sure of the principle. I also assume that her fees are taxable but not for SE. Comments, guidance, answers welcomed!

Ooops! I mistook the 9 for a 0. Must have been distracted -

So sorry to hear about your experience, Catherine. I have ordered these for many years and always received both the first cd and the final. Obviously your mileage has varied! I have also kept the first one from 2996 as the content goes back further than the recent ones - sentimental, I guess ...

Found it! I just opened my renewal packet (received sometime in March because it urges me to renew by March 31 to win $3000) and it mentions a first ever User Conference in Atlanta in October. So someone else must have opened theirs earlier and mentioned it. "..more about this exciting conference in the weeks to come." I hope to attend then scoot on down to FL to dive.