Lee B

My client, a U S citizen wants to form an LLC with a foreign national, who is a citizen of Taiwan and is a nonresident alien. The LLC will buy a piece of commercial property ( building & land ) which will be leased to a U S subsidiary of a Taiwan company, which is owned by the Taiwan national. Question : Can my client form an LLC with a non resident alien ? If he can, what do you use for an EIN when filing Form 1065 ?

COPIED FROM THE ATX BOARD: Yes, it is the CCH 1040 Explanations in IntelliConnect. Access your tax research in IntelliConnect through the Tax Research menu, toolbar and right-click menu when working on a form. If you don't know your login, request your IntelliConnect registration email. Then add your login to Preferences so you will be logged in automatically from ATX. Karen DeGasperis Product Manager, Research and Learning Wolters Kluwer, CCH Small Firm Service

COPIED FROM THE ATX BOARD: From the System requirements in help: Windows® 10 is fully supported for ATX 2015. Before upgrading computers that currently have an earlier Windows version installed, please refer to Knowledge Library Answer ID 15351 for important information. The new Edge browser included with Windows® 10 currently has limitations with respect to required functionality. Microsoft offers the option to use Internet Explorer 11 rather than the Edge browser and the ATX team recommends that customers choose that option until Edge is more fully developed. For Online Check Printing, Internet Explorer is required. Marilyn Burtt Sr Business Analyst Wolters Kluwer, CCH Small Firm Service

COPIED FROM THE OSEA NEWSLETTER: e-Services phishing scam It has come to our attention that an email is being issued to tax preparers asking them to update their e-services information. This email WAS NOT generated by e-Services. The links provided in the email to access e-Services appear to be a phishing scam to capture e-Services usernames and passwords. If you receive an email like this, do not click on the links or take any other action. There is no need to call us. Just disregard the email YOU CAN ALSO FORWARD THE EMAIL TO : [email protected]

COPIED FROM FORBES: The easy answer may be to dig out your passport to avoid any doubt. Yet the IRS may have something to say about whether your passport is any good. H.R.22 has passed both the House and the Senate. It is expected to pass and be signed into law, adding new section 7345 to the tax code. The title of the section is “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” The idea goes back to 2012, when the Government Accountability Office reported on the potential for using the issuance of passports to collect taxes. Sen. Harry Reid (D-Nev.) got on board, and then Sen. Orrin Hatch wrote a Memo to Reporters and Editors. The idea has grown in popularity since then. The State Department could revoke, deny or limit passports for anyone the IRS certifies as having a seriously delinquent tax debt in an amount in excess of $50,000. Assuming that it passes, in January of 2016, the State Department will start blocking Americans with ‘seriously delinquent’ tax debts. Administrative details about how all this will work are scant. But in all likelihood, it will mean no new passport and no renewal. It could even mean the State Department will rescind existing passports of people who fall into that catego The list of affected taxpayers will be compiled by the IRS. The IRS will use a threshold of $50,000 of unpaid federal taxes. But this $50,000 figure includes penalties and interest. And as everyone knows, interest and penalties can add up fast. Notably, if you are contesting a proposed tax bill administratively with the IRS or in court, that should not count. That is not yet a tax debt. There is also an administrative exception, allowing the State Department to issue a passport in an emergency or for humanitarian reasons. But how that will work isn’t clear, nor is the amount of time it will take to get special dispensation. You would still be able to travel if your tax debt is being paid in a timely manner, as under a signed installment agreement. Yet the dynamics are still significant and could drastically alter how people interact with the IRS. Moreover, these harsh rules are not limited to criminal tax cases. They aren’t even limited to situations where the government thinks that you are fleeing a tax debt. In fact, you could have your passport revoked merely because you owe more than $50,000 and the IRS has filed a notice of lien. A $50,000 tax debt is easy to amass today, especially considering interest and penalties. Moreover, the IRS files tax liens routinely. It’s the IRS way of putting creditors on notice so the IRS eventually gets paid. In that sense, the you-can’t-travel idea seems extreme. IRS tax liens cover all your property, even acquired after the lien is filed. The courts use liens to establish priority in bankruptcy proceedings and real estate sales. The IRS can file a Notice of Federal Tax Lien after: IRS assesses the liability; IRS sends a Notice and Demand for Payment saying how much you owe; and You fail to fully pay within 10 days. A tax lien can also be filed by mistake. In most cases, there’s no mistake and the IRS lien is valid. But occasionally, the person might not actually owe the taxes and may just need to straighten out a pile of paperwork. With all this in mind, if this becomes law, is it subject to challenge? Is it constitutional? The right to travel is established, both between states and internationally. And although some restrictions have been upheld, it is not clear that this measure would pass the constitutional test. Consider especially the roughly eight million Americans living overseas, many of whom are already reeling from FATCA compliance problems. Moreover, although we think of passports as useful only when traveling internationally, even stateside flights may soon make passports even more fundamental

I would think that it would be reported on Form 4952 as Investment Interest and deductible on Schedule A subject to the normal Investment Interest limitations.

I have mixed feelings about this. 1. It creates a wider gap between Book and Tax Depreciation for larger clients. 2. if your state has personal property taxes like mine, then you are in a situation of having to report assets for personal property tax reports which are not on a depreciation schedule.

There are some posts on the ATX Board with error messages about having the wrong version of .Net Framework which is halting the installation. The strange thing is that according to the posters they have a newer version of .Net Framework than the error messages are specifying.

This is not the complete list. These are "New" in addition to last year.

Copied from the ATX Blog: New Electronic Filing packages planned for TY 2016: l CO – 1041 l CT – 1041 l GA – 1041 l IN – 1120S, 1065 l LA – 1120 l ME – 1120, 1120S, 1065 l MI Detroit – 1040 l NC – 1120 , 1120S, 1065 l OH – 1041 l OR – 1065 l UT – 1041 l VT – 1120, 1120S, 1065, 1041

COPIED FROM IRS.GOV Where to File Your Taxes" (for Form 2553) If the corporation's principal business, office, or agency is located in Use the following IRS Center address or fax number Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin Department of the Treasury Internal Revenue Service Cincinnati, OH 45999 fax # 855-270-4081 (NEW) Alabama, Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming Department of the Treasury Internal Revenue Service Ogden, UT 84201 fax # 801-620-7116 Page Last Reviewed or Updated: 10-Nov-2015

. New on IRS.gov Pub. 1693, SSA/IRS Reporter Newsletter 2015 Inst. 8952, Instructions for Form 8952, Application for Voluntary Classification Settlement Program (VCSP) 2016 Form W-3SS, Transmittal of Wage and Tax Statements (Info Copy Only) 2015 Form W-3SS, Transmittal of Wage and Tax Statements (Info Copy Only) 2015 Form W-3C, Transmittal of Corrected Wage and Tax Statements (Info Copy Only) 2016 Form W-3, Transmittal of Wage and Tax Statements (Info Copy Only) 2015 Form W-3, Transmittal of Wage and Tax Statements (Info Copy Only) 2015 Form 8508, Request for Waiver from Filing Information Returns Electronically (Forms W-2, W-2G, 1042-S, 1097-BTC, 1098 Series, 1099 Series, 3921, 3922, 5498 Series, and 8027) 2015 Form 8922, Third-Party Sick Pay Recap 2015 Pub. 1239, Specifications for Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Electronically 2015 Form 944, Employer's Annual Federal Tax Return 2015 Inst. 943, Instructions for Form 943, Employer's Annual Federal Tax Return for Agricultural Employees 2015 Form 943, Employer's Annual Federal Tax Return for Agricultural Employees 2015 Pub. 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G 2015 Inst. 945, Instructions for Form 945, Annual Return of Withheld Federal Income Tax 2015 Form 945, Annual Return of Withheld Federal Income Tax"##

COPIED FROM ACCOUNTING TODAY: Changes Coming to W-2, 1099 and 1095 Forms The Internal Revenue Service is making yearly adjustments to W-2 and 1099 forms, while adding brand new 1095 forms related to the Affordable Care Act to the list of required forms for filers this year. Greatland Corporation, a provider of W-2 and 1099 products for businesses, has compiled a list of what businesses need to be aware of when filing this year. 2015 Affordable Care Act Forms Required for 2015 Reporting Under the ACA, or Obamacare, all providers of health care, including employers that provide self-insured coverage, must file returns with the IRS that include information about the coverage and each covered individual. Employers should report this information on Forms 1095-B or 1095-C, depending on the size of the employer. Providing 1095 forms became mandatory starting in the 2015 tax year and filers must send the forms not only to their eligible recipients but also to the IRS in order to remain in compliance with ACA reporting requirements. Filers with 250 or more forms must file them electronically. Incorrect filings will not be penalized for calendar year 2015 filing (reported in 2016) if employers/insurers file on time and make a good faith effort to comply. Below is a summary of each new form related to the Affordable Care Act: • Form 1095-B—Health Coverage Insurers and self-insured employers that provide health plans are required to report data on all covered individuals. • Form 1094-B—Transmittal of Health Coverage Information Returns Form 1094-B is the transmittal for Form 1095-B. • Form 1095-C—Employer-Provided Health Insurance Offer and Coverage Employers with 50 or more full-time employees (including full-time equivalent employees) are required to report (whether or not they offered coverage to their employees) by providing each full-time employee with Form 1095-C. This form requires information such as whether the employee was offered coverage, for which months, and the employee's share of the lowest-cost monthly premium for self-only minimum value coverage. A large employer with a self-insured plan will only be required to submit Form 1095-C, as the information on Form 1095-B can be included on Form 1095-C. • Form 1094-C—Transmittal of Employer-Provided Health Insurance offer and Coverage Information Returns 2015 W-2 Form Changes Medicaid Waiver Payments Certain Medicaid waiver payments are excludable from income for federal income tax purposes. See Notice 2014-7 for additional information. Third-party Sick Pay Recap Reporting For wages paid in 2015, Form 8922, Third-Party Sick Pay Recap, will be used to report total third-party sick pay wages paid to employees when liability for the employer and the employee portions of Federal Insurance Contributions Act (FICA) taxes on the wages is split between the employer for whom services are normally rendered and the third-party payer. Form 8922 replaces the Third-Party Sick Pay Recap Form W-2 and W-3. Form 8922 is filed with the IRS rather than the SSA. Virtual Currency The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, FICA tax and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2. 1099 and Related Form Changes 1096 - Compilation sheet that shows the totals of the information returns that you are physically mailing to the IRS. The check box for Form 1099-H was removed from line 6, while a check box for Form 1098-Q was added to line 6. The spacing for all check boxes on line 6 was expanded. The amounts reported in Box 13 of Form 1099-INT should now be included in box 5 of Form 1096 when filing Form 1099-INT to the IRS. 1098-C – This form is for contributions of motor vehicles, boats, and airplanes. A donee organization must file a separate Form 1098-C with the IRS for each contribution of a qualified vehicle that has a claimed value of more than $500. All filers of this form may truncate a donor’s identification number (social security number, individual taxpayer identification number, adoption taxpayer identification number, or employer identification number), on written acknowledgements. Truncation is not allowed, however, on any documents the filer files with the IRS. 1099-B – This form is issued by a broker or barter exchange that summarizes the proceeds of transactions. For a sale of debt instrument that is a wash sale and has accrued market discount, enter code “W” in box 1f and the amount of the wash sale loss disallowed in box 1g. 1099-DIV – This form is issued to those who have received dividends from stocks. A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement. 1099-INT – This form is used to report interest income from banks and other financial institutions. Box 13 was added to report bond premium on tax-exempt bonds. All later boxes were renumbered. A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement. 1099-K – This form is given to those merchants accepting payment card transactions. Completion of box 1b (Card Not Present transactions) is now mandatory for 2015. 1099-MISC – This form reports the total paid during the year to a single person or entity for services provided. Certain Medicaid waiver payments may be excludable from the income as difficulty of care payments. A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement. Important Dates to Remember • Feb. 1, 2016 – due date to mail recipient copies for W-2, 1099, & 1095 • Feb. 29, 2016 – due date to send paper format of 1099 & 1095 Federal (IRS) filing • Feb. 29, 2016 – due date to send paper format of W-2 Federal (SSA) filing or • March 31, 2016 – due date to send e-file format of W-2, 1099 and 1095 Federal (SSA/IRS) filing • Form 1095 does not need to be filed at the state level

Last spring there was a thread about this software questioning whether it was real or a scam or ? Saw this on Accounting WEB this morning and copied : MyTAXPrepOffice, a new SaaS-based tool for U.S.-based tax preparers, is now out of beta and rolling out to the market The Wyoming-based company claims the tool has already successfully processed more than 600,000 state and federal tax returns, with the ability to run on multiple platforms, including iPad, Android tablets, Mac and Windows computers, as well as the ability to automate practice management in multiple offices. Tax forms released by the IRS are also updated regularly within MyTAXPrepOffice. In addition, a hybrid storage mode is under development, which will store all needed software and returns -- besides the online storage -- securely on the computer or tablet. This way, all the benefits of the online solution are maintained and the tax preparer can continue to work offline. MyTAXPrepOffice will offer this tax season a tailored website per tax preparer, where the clients of the tax preparer can see the status and documents online and can interact with the tax preparer to reduce the effort and cost of the tax preparer. Users also have the ability to offer bank products due to several banking partnerships. In addition to improvements in the core workflows, a tax preparer may need access to additional software or services. These may include secure document storage, a tax library, electronic signature service, time accounting software, or an accounting package. For pricing and additional information, feel free to connect with them at www.mytaxprepoffice.com

Microsoft wants Windows 10 on as many PCs as possible, so it's no longer waiting for people to request a free upgrade. In the coming months, some older machines will start the upgrade process automatically. That's a change from the way Microsoft delivered Windows 10 after its release this summer. Initially, owners of PCs running Windows 7 or 8 had to make a request, then wait to be notified when it was available for downloading. Now the company says it's offering Windows 10 to all eligible users through the Windows Update service, which notifies PC owners when various software upgrades are available. By early next year, Microsoft will re-categorize the upgrade from "optional" to "recommended." That means the process will start automatically if users have Windows Update set to download all recommended updates. Many PC owners use that setting to make sure they don't miss vital security fixes or essential upgrades. Some might question whether Windows 10 is essential, though Microsoft says it contains important security features and other improvements. The company also wants to increase demand for Windows 10-related apps and services. PC owners can decline the upgrade, even if it's downloaded automatically. In a blog post, Microsoft executive Terry Myerson said users will get a prompt asking if they want to complete the change. He also said the program will save a copy of each user's old operating system and settings for 31 days, so people can switch back. — Brandon Bailey, AP Technology Writer

It does not include W -3s & W -2 s. It does include the 94x series and 109x series.

In recent years, it has been the last Friday before Thanksgiving for personal returns. For business returns it has been the week before Christmas

In the September issue of Accounting Today, John Sapp, Drake's Vice President of Strategic Development is quoted" "We have a full version of desktop that runs through a web browser. It feels just as though it was running on your server even though it's running on our server. It's almost like outsourcing your IT department. We keep the software and the operating system up to date. . . . . We have have it all here in Franklin North Carolina in redundant date centers." Have any Drake users tried this or heard anything more about this ?

Copied from P C World:How to turn off Windows 10's keylogger (yes, it still has one)Lincoln Spector J Confusion worries that, despite assumptions that it would be removed, the final version of Windows 10 still has a keylogger. Last fall, I discussed the keylogger that Microsoft openly put into the Windows 10 Technical Preview. The company admitted that “we may collect voice information” and “typed characters.” At the time I defended Microsoft, pointing out that the Preview was “intended for testing, not day-to-day use,” and that Microsoft recommended against installing the Preview on a computer with sensitive files. I said that “I seriously doubt that the worst spyware features will remain in the finished product.” I was wrong. [Have a tech question? Ask PCWorld Contributing Editor Lincoln Spector. Send your query to [email protected].] Microsoft pretty much admits it has a keylogger in its Windows 10 speech, inking, typing, and privacy FAQ: “When you interact with your Windows device by speaking, writing (handwriting), or typing, Microsoft collects speech, inking, and typing information—including information about your Calendar and People (also known as contacts)…” If that makes you feel creepy, welcome to the human race. Speaking of online Microsoft documents, you may want to browse the company’s overall Privacy Statement. To Microsoft’s credit, it’s in plain English rather than legalese. On the other hand, it’s about 17,000 words (as someone who’s paid by the word, I’m frankly jealous), so it will take time to find out if there’s anything else that’s truly awful inside. The good news is that you can turn off the keylogging. Click Settings (it’s on the Start menu’s left pane) to open the Settings program. You’ll find Privacy...ummm....hold on a sec...OH! There it is!—on the very last row. Once in Privacy, go to the General section and Turn off Send Microsoft info about how I write to help us improve typing and writing in the future. While you’re there, examine the other options and consider if there’s anything else here that you may want to change. Now go to the Speech, inking and typing section and click Stop getting to know me. (I really wanted to end that sentence with an exclamation point.) You may also want to explore other options in Privacy. For instance, you can control which apps get access to your camera, microphone, contacts, and calendar. I wish I had that capability in Android. Actually this seems to more invasive than what Google does !

If it's not business or investment property, how would you take a loss ?

Copied from the same article: The Senate Appropriations Committee has also asked for similar questions to be added to forms to verify eligibility for other refundable tax credits, such as the Child tax Credit, the American Opportunity Tax Credit for tuition and the Premium Tax Credit for health care coverage, according to the Center on Budget and Policy Priorities and Vox.

Mystic Pizza Owner Gets Prison Sentence for Tax Evasion The owner of Mystic Pizza, the Connecticut pizzeria made famous by the 1988 Julia Roberts movie of the same name, has been sentenced to over a year in prison on charges of tax evasion and structuring cash transactions. John Zelepos, 49, of North Stonington, Conn., was sentenced Monday by U.S. District Judge Victor A. Bolden in Bridgeport to 12 months and one day of imprisonment, followed by three years of supervised release, for tax evasion and structuring cash transactions. Zelepos also was ordered to pay a $25,000 fine, forfeit more than $500,000, and pay back taxes with interest and penalties. Zelepos is the sole owner of Mystic Pizza, LLC, a Schedule C retail restaurant business in Mystic, Conn. From 2006 to 2010, he allegedly diverted approximately $567,435 in cash from Mystic Pizza’s gross receipts, approximately $330,005 of which was deposited into his personal bank account, his and his wife’s personal checking account, his wife’s personal checking account and passbook savings accounts in the name of each of his three minor children, according to prosecutors. During the same time period, Zelepos caused Mystic Pizza to pay a total of $162,168 to two “no-show” employees who performed no work for the restaurant. He then deducted the wages as expenses on his tax return’s Schedule C for Mystic Pizza. Prosecutors claimed Zelepos failed to disclose to his tax return preparer receipt of the diverted cash and the two no-show employees. Based on this conduct, the federal tax loss for 2006 to 2010 was $234,407. Zelepos has paid restitution in that amount, but still is required to pay interest and substantial penalties. Zelepos also intentionally structured financial transactions to avoid having the bank file Currency Transaction Reports, according to prosecutors. Federal law requires all financial institutions to file a CTR for currency transactions that exceed $10,000. To evade the filing of a CTR, individuals will often structure their currency transactions so that no single transaction exceeds $10,000. Structuring involves the repeated depositing of amounts of cash less than the $10,000 limit, or the splitting of a cash transaction that exceeds $10,000 into smaller cash transactions in an effort to avoid the reporting requirements. Even if the deposited funds are derived from a legitimate means, financial transactions conducted in this manner are still in violation of federal criminal law. Structured funds are subject to forfeiture to the United States. Between January 2010 and January 2011, Zelepos engaged in 61 currency transactions in amounts less than $10,000, depositing a total of $522,658 into the business account, his personal account, his and wife’s personal bank account, and his three children’s bank accounts in amounts ranging from $3,000 to $9,998. The cash deposits were made on sequential days, or multiple cash deposits were made on the same day. Prosecutors said Zelepos knew the bank was required to issue a report for a currency transaction in excess of $10,000 and by conducting his financial transactions in amounts less than $10,000 he intended to evade the transaction reporting requirements. Zelepos was ordered to forfeit $522,658 as a result of his illegal structuring. On January 2012, pursuant to a court-authorized federal seizure warrant, the IRS seized $63,084.49 from a payroll account Mystic Pizza held at Chelsea Groton Bank. Those funds are being applied to the forfeiture, reducing the remaining forfeiture amount to $459,573.51. On March 31 of this year, Zelepos waived his right to indictment and pleaded guilty to one count of tax evasion and one count of structuring financial transactions. He was ordered to report to prison.

After reviewing my reference materials: 1. Standalone HRAs for two or more employees are not in compliance with the Market Reforms 2. HRAs are prohibited unless integrated with an ACA compliant group health plan. 3. HRAs for ancillary benefits, i.e. dental and vision are allowed. You don't say whether there are any other employees at your pastor client's church. If your client is the only employee then the HRA does not fall under the ACA market reforms. If I were you, I would advise the first client to request a substantive detailed cite from the HRA administrator for their position.

A narrowly written individual exemption was passed for recognized medical sharing arrangements. Medishare was one of three recognized medical sharing arrangements that qualified for the individual exemption. An individual exemption from the requirement to have ACA Compliant coverage clearly does not make medical sharing arrangements ACA compliant, because clearly they are not.

There was lengthy discusion on the ATX Board about medical sharing programs several months ago so I did quite a bit reading about the subject. Medi-share is most definitely not ACA compliant !