Lee B

Actually, I'm surprised that this type of problem hasn't popped up more often. There was a lot of confusion about what to do around the time W -2 s were being prepared. His employer needs to talk to their accountant and decide what they are going to do.

Do you think the father is competent enough to execute the gift ?

I had almost the exact same scenario a number of years ago except there were 3 brothers involved. The CPA who prepared the returns before me just divided everything in thirds on each 1040's Schedule E So after I had prepared the returns the same way for 2 or 3 years the IRS sent the three brothers the same letter and insisted that a partnership return had to be filed going forward.

Mar 22, 7:51 AM (ET) By HOPE YEN WASHINGTON (AP) — Cash-strapped Americans anxious for tax refunds are increasingly turning to payment advances, prepaid cards or other costly services when getting tax preparation help, according to new federal data raising concerns among regulators about whether consumers are fully informed about the fees. Regulators are looking to increase oversight of preparers amid the rise in "refund anticipation checks," a type of cash advance especially popular among low-income families who receive the Earned Income Tax Credit, the government's $65 billion cash benefit program. The advances are being marketed as a way to get fast refunds or defer payment of tax preparation costs. The Consumer Financial Protection Bureau says some consumers have complaints about refund anticipation checks centered on advertising, quality of service or fees. The bureau is finalizing the first rules on prepaid debit cards, including those for tax refunds, that would require "easy to understand" disclosures upfront about costs and risks. Refund anticipation checks rose to roughly 21.6 million in 2014, up 17 percent from 2011, according to IRS data provided to The Associated Press. About half the purchasers are EITC recipients; roughly 84 percent are low-income, according to the data. Industry analysts project the payment advances and their fees will become more widespread as tax preparers seek to boost revenue. Currently, refund anticipation checks and prepaid cards make up 10 percent of industry giant H&R Block's revenue and more than 20 percent of Liberty Tax Service's, according to earnings reports. Both companies said they are committed to providing consumers with the information they need to make tax-filing decisions, including use of refund anticipation checks. They said the payment advances offer added value, such as convenience. The Internal Revenue Service has been pushing Congress for new authority to regulate the $10.1 billion tax preparation industry after an appeals court last year barred it from requiring tax preparers to undergo background checks and testing. "It's the wild, wild West," said Nina Olson, the IRS' national taxpayer advocate, describing the current state of the industry. She called the level of risk for abuse in pricing and quality of service unprecedented. The National Association of Tax Professionals supports certification of providers to ensure a minimum level of competency. But the Institute for Justice, which filed the lawsuit against IRS, says new licensing requirements and other oversight aren't the answer. "We should do more to increase competition, not drive independent tax preparers out of the market," said Dan Alban, an attorney for the group. The average tax-preparation fee for 2014 returns is $273, up 11 percent from two years ago, according to a survey by the National Society of Accountants. But there's wide variation, with fees of $400 or more, according to the National Consumer Law Center. Netran Washington, 40, a materials handler in Cleveland, says he's been going to a neighborhood tax preparer for four years, eager for a fast refund. Washington readily agreed when asked if he preferred to pay for the tax preparation later. Washington says he was later surprised by a $500 fee that included the cost of a cash advance. Still, he kept going each year until a friend suggested the Volunteer Income Tax Assistance program, an IRS program providing free tax preparation services to low-income families. The IRS-certified tax preparer found a filing error that had cost Washington $1,000 in unused tax credits and helped him file an amended return. "It was very upsetting," Washington said. Four states — California, Maryland, New York and Oregon — require preparers to undergo training. The California attorney general's office recently requested information from H&R Block about its refund anticipation checks, which range in cost from $34.95 to $59.95; at issue may be whether the fees may be subject to strict truth-in-lending laws, the company said in financial filings. H&R Block emphasized that it was a request for information, not a lawsuit. Consumer groups in Colorado and Ohio are pushing proposals to require greater disclosure. In Ohio, a federal court two years ago barred the owner of Dayton-based Instant Tax Service from doing business after finding various abuses, including defrauding mostly low-income customers. "Taxpayers should have the ability to research and compare prices," says David Rothstein of Neighborhood Housing Services of Greater Cleveland. In his budget proposal, President Barack Obama asked Congress to give IRS and the Treasury Department explicit regulatory authority and to increase penalties for certain tax filing errors due to willful or reckless conduct. Legislation has been introduced in the Senate, but prospects remain uncertain in a GOP-controlled Congress unhappy with the agency's investigations of the tea party and also its role in implementing Obama's health care law

Sounds about right

Most of my clients are blue collar people who are somewhat distrustful of attorneys. Then when I do convince them to see an attorney, they have a tendency to disregard what in their minds is legal mumbo jumbo and do what they wanted to in the first place. They seem to think that, "O K, I went to the attorney and paid him a lot of money, that takes care of whatever ! "Now I can go back to doing things my way"

Sounds exactly like a call left on my answering machine at home about 10 days ago. I thought about reporting it, but I am just too busy right now.

Issue Number: 2015-3 1. New on IRS.gov 2015 Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans 2015 Pub. 5196, Understanding Employer Reporting Requirements of the Health Care Law (brochure) 2015 Pub. 1167, General Rules and Specifications for Substitute Tax Forms and Schedules 2015 Pub. 505, Tax Withholding and Estimated Tax 2015 Inst. 941-SS, Instructions for Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands 2015 Form 945-A, Annual Record of Federal Tax Liability 2015 Form 943-A, Agricultural Employer's Record of Federal Tax Liability 2015 Inst. 941, Instructions for Form 941, Employer's Quarterly Federal Tax Return 2015 Form 941, Employer's Quarterly Federal Tax Return 2014 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage 2014 Form 1095-B, Health Coverage 2014 Inst. 1094-C and 1095-C, Instructions for Forms 1094-C and 1095-C 2014 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns 2014 Inst. 1094-B and 1095-B, Instructions for Forms 1094-B and 1095-B 2014 Form 1094-B, Transmittal of Health Coverage Information Returns 2014 Form 8922, Third-Party Sick Pay Recap 2015 Pub. 5200, Affordable Care Act: What employers need to know (flier)

From The Tax Book: Dividends paid on Insurance " Dividends paid on insurance policies are a partial return of the premiums paid. Do not report them as dividends. Include them in income only if they exceed the total of all net premiums paid for the contract."

You don't say what the disposal costs are related to? It's a facts and circumstances decision. For example, under the new regs : 1. Disposal of contaminated soil or remediation of other contaminants usually are required to be capitalized. 2. Disposal of construction debris from tear outs in preparation of leasehold improvements usually is capitalized

Under the Return Manager check the box for your client: 1. In the Tool Bar click the support button 2. About 2/3 of the way down the drop down list select "Customer Service Utilities" 3. Click on the last choice in the next drop down list, "Re-download Forms on Marked Returns" Let us know if this helped.

Look at the exceptions to Time Lived with the Taxpayer, specifically "Temporary Absences" which includes, school, vacation, business, medical care, military services, or detention in a juvenile facility, count as time lived with the taxpayer.

There was a thread about this last month. Support was able to find the assets, but it was a convoluted process and support said it was a known problem which would be fixed at some future date but probably not soon.

Real Estate Property Foreclosure and Cancellation of Debt ATG Publication Date - February 2015 NOTE: This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date. Table of Contents Chapter 1: Overview Purpose Brief History Exceptions Definitions Key Tax Issues Chapter 2: Type of Debt Nonrecourse and Recourse Debt Gain and Loss Computation and Cancellation of Debt Income Chapter 3: Income from Discharge of Indebtedness Bankruptcy Insolvency Qualified Farm Indebtedness Qualified Real Property Business Indebtedness Qualified Principal Residence Indebtedness Audit Techniques Chapter 4: Tax Attribute Reduction Reduction of Tax Attributes Depreciation Recapture Reductions Summary of Tax Attribute Reduction Rules Bankruptcy, Insolvency, and Farm – Attributes Reduction Qualified Real Property Business Indebtedness–Attributes Reduction Qualified Principal Residence Indebtedness - Attribute Reduction Chapter 5: Rental Real Estate Property Introduction Qualifying Dispositions under IRC §469(g) Non-qualifying Dispositions under IRC §469(g) Depreciation Recapture Character of Property at Disposition Lease with Option to Buy Property Rental Audit Strategies Chapter 6: Tax Consequences of Abandonments Chapter 7: Form 1099-A and Form 1099-C Background Examination Considerations Inaccurate or Questionable Forms 1099-A and 1099-C Chapter 8: Community and Common Law Property Community and Common Law Property Systems Community Property Chapter 9: Audit Strategies Summary of Real Estate Property Audit Strategies Case File Documentation Standard Paragraphs and Explanation of Adjustments Job Aids Resources for Real Estate Foreclosures and Cancellation of Debt Income Chapter 10: Rehabilitation Credit and IRC §469 Background Audit Hints Chapter 11: Low Income Housing Credit Low-Income Housing Credit $25,000 Offset Disposition of Passive Activity

I believe I remember a thread about this problem back in January ?

No I don't really see a change here. Although the article doesn't talk about the difficulty of coming up with the basis of components when the original component basis wasn't segregated in the original depreciation schedule. Actually after reading the article, it basically ignores some of the more difficult issues in dealing with partial asset disposition. It's more like the article is pointing out an area of opportunity.

Copied from the CPA Practice Advisor: Recent changes to tax regulations have made it easier for businesses to capture deductions associated with disposed assets such as HVAC units, roofing, lighting systems and other assets, according to the Capital Review Group, which specializes in asset taxation issues. Complying with the final tangible property regulations has just become easier for small businesses filing 2014 tax returns. The recently-issued Revenue Procedure 2015-20 will allow small business taxpayers to change methods of accounting under the tangible property regulations for 2014 without having to file a Form 3115. Small businesses are defined as those with either $10 million or less in assets or $10 million or less in annual revenue. Per this definition, some larger businesses may also qualify for the simplified procedure, such as those that have revenue greater than $10 million but less than $10 million in assets. Previously, taxpayers were required to file a Form 3115 for each automatic change request, which made compliance with the tangible property regulations cumbersome for small businesses and their tax preparers. The new procedure is available on a prospective basis for the 2014 tax year. The tangible property regulations detailed in §263(a) grant business taxpayers with tangible property, such as buildings or equipment, the opportunity to expense items capitalized as improvements in prior years. This enables businesses to claim deductions and capture losses for disposed assets that were not claimed previously. By claiming these additional deductions and losses as permitted by the latest tangible property regulations, taxpayers may significantly bolster their bottom lines through hundreds of thousands of dollars in tax savings. For example, consider this $2,000,000 manufacturing facility: the building entered service in July 2001 and the owners replaced ten 40-ton roof top units at an approximate original cost of $250,000. The units had an annual depreciation of $6410, and as 39 year assets, have 25 years of remaining depreciation as of 2015. At a rate of $6410 per the building owner may be able to claim a total of approximately $160,250 in depreciation balance in 2015. As another example, the owners of an office building will realize similar savings based on their replacement of metal casement windows. The $1,500,000 building entered service in January 2005. The total cost of the new windows was $21,000 in 2005 (100 windows at $210 each), and as 39 year assets, they had an annual depreciation of $538. In 2015, with 29 years of depreciation remaining, the building owners may be able to take approximately $15,602 in depreciation balance (29 years x $538 per year). Businesses may achieve significant tax savings even for replacing one asset. For instance, a $1,750,000 medical office building that entered service in April 2007 replaced a single elevator for $31,000. The elevator was also a 39 year asset with annual depreciation of $1069. In 2015, with 31 years of depreciation remaining, the building owners may be able to claim approximately $33,138 in depreciation balance (31 years x $1069 per year). In light of Rev. Proc. 2015-20, now is the time for taxpayers, particularly small businesses, to seize the substantial savings that are possible by complying with the tangible property regulations. The regulations are complex, and assistance from a qualified tax firm will help taxpayers navigate them and optimize financial gain

Any chance there is a contingent POA named ?

The real question here, is this a non business bad debt on which can be shown an attempt to collect the debt or is this debt forgiveness to a friend which is a gift?

I disagree, I would capitalize the new unit and do a partial disposition on the old unit.

Move to Puerto Rico

3. Tangible Property Final Regulations FAQs now Available The Tangible Property Frequently Asked Questions provide a brief summation and direction on some key elements of the Tangible Property Regulations and include information on simplified procedures for small business taxpayers

Reminds me of those wonderful business opportunities with Amway and Mary Kay

Also, the LLC is a hollow shell until it's funded by the contribution of assets or cash. So hold off on the bank account, operating agreement, SS -4 , etc until such time as your client is ready to use the LLC

Usually the two reasons for obtaining an EIN are payroll or the bank won't open a business checking account without an EIN. Here in Oregon the last several years I have had clients who set up an LLC, who went to the the bank with an EIN and the bank would not open a business account without a copy of the LLC Operating Agreement. If that happens, they may have to go an attorney or at least Rocket Lawyer or Legal Zoom to have an Operating Agreement created.