Lee B

by S. Miguel Reyna, CPA On Sept. 13, 2013, the IRS released final regulations providing guidance on the deduction and capitalization of expenditures in acquiring, producing, and maintaining or repairing tangible property (T.D. 9636). The new rules, commonly called the repair regulations, replace previously issued temporary regulations and attempt to clarify Sec. 263(a), which requires the capitalization of the amount paid to acquire, produce, or improve tangible property; and Sec. 162(a), which allows deduction of ordinary and business expenses. The final regulations are generally effective for tax years beginning on or after Jan. 1, 2014. Taxpayers may generally apply the provisions to tax years beginning on or after Jan. 1, 2012, although some of the provisions can only be applied to expenses paid or incurred in tax years beginning on or after Jan. 1, 2014. Following are a few highlights of the repair regulations. General capitalization As a general rule, all costs that facilitate the acquisition or production of real or personal property must be capitalized except for employee compensation and overhead costs. Under final regulations, a taxpayer must capitalize amounts paid to acquire or produce a unit of property (UOP) unless the expense qualifies as a material or supply or the de minimis safe harbor election applies. This includes leasehold improvements, land and land improvements, buildings, machinery and equipment, and furniture and fixtures. The amounts paid to acquire or produce a unit of real or personal property include the invoice price and transaction costs. Repairs and maintenance In general, under the safe-harbor election for routine maintenance, a taxpayer may deduct amounts paid for repairs and maintenance to property other than a building or the structural components of a building if the activities occur more than once during the useful life of the unit of property and the amounts paid are not otherwise required to be capitalized, such as betterments, restorations, and adaptations to a new or different use. The final regulations extend the concept of the routine maintenance safe harbor introduced by the 2011 temporary regulations to buildings. This includes the recurring activities that a taxpayer expects to perform as a result of its use of the building to keep the building structure or system in its ordinarily efficient operating condition. The taxpayer must reasonably expect to perform the activities more than once during a 10-year period beginning at the time the building structure or building system is placed in service. Materials and supplies The final regulations expand the definition of materials and supplies to include property that has an acquisition or production cost of $200 or less, clarify application of the optional method of accounting for rotable and temporary spare parts, and simplify the application of the de minimis safe harbor of Regs. Sec. 1.263(a)-1(f) to include materials and supplies. De minimis safe harbor An alternative to the general capitalization rule is the de minimis safe-harbor election, which allows businesses to elect to expense qualifying expenses such as amounts paid to acquire or produce any eligible unit of property or any eligible materials and supplies. A taxpayer is eligible for the de minimis safe-harbor election if the taxpayer meets all three of the following: At the beginning of the year the taxpayer has written accounting procedures opting to expense for nontax purposes, such as book financials, amounts paid for property costing less than a specified dollar amount or acquisitions with an economic useful life of 12 months or less. The taxpayer treats the amount paid for the property as an expense on its applicable financial statements (AFSs) if it has AFSs or on its books and records if it does not. The taxpayer has an AFS and the amount paid for the property does not exceed $5,000 per invoice. If the taxpayer does not have an AFS, the amount cannot exceed $500. It should be noted that the $5,000/$500 limit is a safe harbor rather than an absolute limit. It is not intended that IRS examining agents must revise the taxpayers’ materiality thresholds in accordance with the de minimis safe-harbor limitations. Therefore, if examining agents and a taxpayer agree that certain amounts in excess of the de minimis safe-harbor limitations are not material or otherwise should not be subject to review, that agreement should be respected despite the requirements of the de minimis safe harbor. However, a taxpayer that tries to deduct amounts in excess of the amount allowed by the safe harbor has the burden of showing that such treatment clearly reflects income. Property ineligible for de minimis safe harbor election includes: Property that is or is intended to be included in inventory; Land; Rotable, temporary, and standby emergency spare parts that the taxpayer elects to capitalize and depreciate; and Rotable and temporary spare parts that the taxpayer accounts for under the optional method of accounting for rotable parts. The de minimis safe-harbor election is made by attaching a statement to the taxpayer’s timely filed federal tax return including extensions. The statement must be titled “Section 1.263(a)–1(f) de minimis safe harbor election” and include the taxpayer’s name, address, taxpayer identification number (TIN), and a statement that the taxpayer is making the de minimis safe-harbor election. Editor’s note: This column provides a snapshot look at some aspects of the repair regulations. Topics not covered include: Disposals of MACRS property; Costs to investigate and pursue the purchase of real property; Expenditures for property on which a casualty loss has been deducted; Costs subject to capitalization under Sec. 263A; Regulatory accounting methods; and Costs paid to facilitate the sale of property

Perhaps this post which I copied from the ATX Board will help someone. Re: Can't connect to server error - An attempt was made to start the server process...... Reply Quote Favorites I had the same problem. spent lot of time with customer support. they uninstalled & reinstalled ATX 2013. Took long time to complete Program update on reinstall. couldn't complete Forms update, taking for ever. Escalated to Tech Support. i was told that they can't help bcoz my processor speed was below the minimum system requirement and that there is NO option but for me to get a new computer which has atleast the recommended system requirements. Then I did 2 things. 1. Followed Server Start/Restart process per Answer ID 14613 for Stand-alone setup. 2. (a) Right click on ATX2013 icon. go to property. go to Target. copy the path. (b ) Went to my Anti-Virus program's anti-virus settings. select 'Exclusions' (from scanning). Added the 'Target' path by pasting it. saved the change. (c ) closed the ATX2013 program restarted it. I did this just 2 days ago. so far it seems to be working. If I get the 'Server" message, I again follow the server 'Start/Restart' process and the program will open. Hope, this helps you all out there wondering what to do

I agree Pub 4681, has a number of good examples which I find are fairly well written.

What if he acknowleged the debt post bankruptcy by making a payment.

Tom, Are you using the backup/ restore function to backup ? Did you change the auto backup location to do so ? Curious, because a lot of posters on the official board are having major problems with the backup/restore function ?

Joe, In order to find the files you have unhide the files because Carbonite won't backup hidden files. However running ATX with unhidden files may be problematic. You may have to change to a different backup. Hopefully some else that knows more about this than I do will post. Also, there are several different threads about this problem on the ATX Board.

It really depends on what you're going to use it for. A tablet can't really replace a laptop for production purposes. If you're just going to browse the web, email, lookup stuff, maintain your calendar, maybe even some tax research then one of the better tablets may work.

The rent was never deductible in the S Corp in the first place because of related party rules. Assuming the LLC is cash basis, more than likely, there is no debt to forgive, unless the unpaid rent was converted to a legal note with stated interest and regular payments. If the S Corp has been taking a deduction for the unpaid rent and letting that flow to his 1040 you have a big problem, both the 1120 S returns and the 1040 returns will need to be amended. Potentially, accuracy penalties will apply, if not worse!

It flows from the Info Sheet, so make sure the Info Sheet is completed. Also make sure the 8979 has the relevant boxes checked and the dates entered.

Last year it was optional. You could turn it on or off.

I do payroll processing. Personally the only way I would touch this would be by grossing up the wages for the FICA that should have been withheld. and then run the calculated grossed up wages thru the 943 and their W 2 s and pay both sides of the FICA. Otherwise walk away!

I've always left on my return. Didn't really think about too much.

I have reviewed their documentation several times recently, but haven't decided whether to use it. 1. Will laser print on plain paper W-2, W-3 and 94x series. 2. Will print 1099s on preprinted forms only 3. After downloading a free module, it will create the required W-2/W-3 files to submit to the SSA via Accuwage . 4. Does not efile 1099s or 94x series. For what it does, it's a great bargain.

I went to a Tax Update seminar last Monday and the New Capitalization and Repair Regs change this effective Jan 1, 2014. Also a partial disposition election can be made back as far as years beginning on or after Jan 1, 2012 via amendment or accounting method change (Prop Reg 1.168(i)-(d)(2)(ii) and (Prop Reg 1.168(i)-8(d)(2)(iv) See IRS Notice 2012-73 I not going try to spell out all the changes but this is going to affect everyone with depreciable tangible property. Any change to comply with new regulations will generally be a change in accounting method to be recognized prospectively.

I've used the program for years and I'm not aware of how you would do that. Perhaps you could output the 1099 s and save as pdf s and then modify the ssn.

I had a very similar situation arise recently. My client is the 100% owner of an S Corp. His wife is not an owner and isn't involved in the business. She has a separate job which provides health insurance for the two of them. Short Answer: No, the health insurance has to be in the shareholder's name.

I have had good success in the past submitting a question to the Firefox user community and have always received several good answers in less than 24 hours. I have also seen 4 or 5 posts in the last month about different tax & accounting programs not working well with IE 11.

Like Lion, I usually put the return to one side, then I review it the next day by double checking every number on the original documentation against the return. I use the Tax Organizer to make sure I didn't leave something out or the client forgot to give me something, even with those clients who won't fill out the organizer.

Also, I read several days ago that: 1. The IRS will start processing 1099s on February 3rd 2. The SSA will start processing W -2s thru Accuwage on February 11th. I didn't doublecheck the dates, so I'm relying on my questionable memory. LOL

I have attached the IRS FAQ on the ACA Mandate: Questions and Answers on the Individual Shared Responsibility Provision Basic Information 1. What is the individual shared responsibility provision? Under the Affordable Care Act, the federal government, state governments, insurers, employers and individuals are given shared responsibility to reform and improve the availability, quality and affordability of health insurance coverage in the United States. Starting in 2014, the individual shared responsibility provision calls for each individual to have minimum essential health coverage (known as minimum essential coverage) for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. 2. Who is subject to the individual shared responsibility provision? The provision applies to individuals of all ages, including children. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the payment if the dependent does not have coverage or an exemption. 3. When does the individual shared responsibility provision go into effect? The provision goes into effect on Jan. 1, 2014. It applies to each month in the calendar year. The amount of any payment owed takes into account the number of months in a given year an individual is without minimal essential coverage or an exemption. 4. Is transition relief available in certain circumstances? Yes. Notice 2013-42, published on June 26, 2013, provides transition relief from the shared responsibility payment for individuals who are eligible to enroll in eligible employer-sponsored health plans with a plan year other than a calendar year (non-calendar year plans) if the plan year begins in 2013 and ends in 2014 (2013-2014 plan year). The transition relief applies to an employee, or an individual having a relationship to the employee, who is eligible to enroll in a non-calendar year eligible employer-sponsored plan with a 2013-2014 plan year. The transition relief begins in January 2014 and continues through the month in which the 2013-2014 plan year ends 5. What counts as minimum essential coverage? Minimum essential coverage includes the following: Employer-sponsored coverage (including COBRA coverage and retiree coverage) Coverage purchased in the individual market, including a qualified health plan offered by the Health Insurance Marketplace (also known as an Affordable Insurance Exchange) Medicare Part A coverage and Medicare Advantage plans Most Medicaid coverage Children's Health Insurance Program (CHIP) coverage Certain types of veterans health coverage administered by the Veterans Administration TRICARE Coverage provided to Peace Corps volunteers Coverage under the Nonappropriated Fund Health Benefit Program Refugee Medical Assistance supported by the Administration for Children and Families Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these programs may apply to HHS to be recognized as minimum essential coverage) State high risk pools for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these program may apply to HHS to be recognized as minimum essential coverage) Minimum essential coverage does not include coverage providing only limited benefits, such as coverage only for vision care or dental care, and Medicaid covering only certain benefits such as family planning, workers' compensation, or disability policies. 6. What are the statutory exemptions from the requirement to obtain minimum essential coverage? Religious conscience. You are a member of a religious sect that is recognized as conscientiously opposed to accepting any insurance benefits. The Social Security Administration administers the process for recognizing these sects according to the criteria in the law. 1. Health care sharing ministry. You are a member of a recognized health 2. care sharing ministry. 3. Indian tribes. You are a member of a federally recognized Indian tribe. No filing requirement. Your income is below the minimum threshold for filing a tax return. The requirement to file a federal tax return depends on your filing status, age and types and amounts of income. To find out if you are required to file a federal tax return, use the IRS Interactive Tax Assistant (ITA). 4. Questions and Answers on the Individual Shared Responsibility Provision http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Share... 1 of 4 1/16/2014 5:07 PM Short coverage gap. You went without coverage for less than three consecutive months during the year. For more information, see question 22. 5. Hardship. The Health Insurance Marketplace, also known as the Affordable Insurance Exchange, has certified that you have suffered a hardship that makes you unable to obtain coverage. 6. Unaffordable coverage options. You can’t afford coverage because the minimum amount you must pay for the premiums is more than eight percent of your household income. 7. Incarceration. You are in a jail, prison, or similar penal institution or correctional facility after the disposition of charges against you. 8. Not lawfully present. You are not a U.S. citizen, a U.S. national or an alien lawfully present in the U.S. 7. What do I need to do if I want to be sure I have minimum essential coverage or an exemption for 2014? Most individuals in the United States have health coverage today that will count as minimum essential coverage and will not need to do anything more than continue the coverage that they have. For those who do not have coverage, who anticipate discontinuing the coverage they have currently, or who want to explore whether more affordable options are available, the Health Insurance Marketplace will open for every state and the District of Columbia in October of 2013. The Health Insurance Marketplace will help qualified individuals find minimum essential coverage that fits their budget and potentially financial assistance to help with the costs of coverage beginning in 2014. The Health Insurance Marketplace will also be able to assess whether applicants are eligible for Medicaid or the Children’s Health Insurance Program (CHIP). For those who will become eligible for Medicare during 2013, enrolling for Medicare will also ensure that you have minimum essential coverage for 2014. For those seeking an exemption, the Health Insurance Marketplace will be able to provide certificates of exemption for many of the exemption categories. HHS has issued final regulations on how the Health Insurance Marketplace will go about granting these exemptions. Individuals will also be able to claim certain exemptions for 2014 when they file their federal income tax returns in 2015. Individuals who are not required to file a federal income tax return are automatically exempt and do not need to take any further action to secure an exemption. See question 21 for further information on exemptions. For more information about the Health Insurance Marketplace, including how to sign up for email updates and tips on how to prepare for open enrollment in October 2013, visit the Health Insurance Marketplace website . 8. Is more detailed information available about the individual shared responsibility provision? Yes. The Treasury Department and the IRS have issued final regulations on the new individual shared responsibility provision. Who is Affected? 9. Are children subject to the individual shared responsibility provision? Yes. Each child must have minimum essential coverage or qualify for an exemption for each month in the calendar year. Otherwise, the adult or married couple who can claim the child as a dependent for federal income tax purposes will owe a payment. 10. Are senior citizens subject to the individual shared responsibility provision? Yes. Senior citizens must have minimum essential coverage or qualify for an exemption for each month in a calendar year. Senior citizens will have minimum essential coverage for every month they are enrolled in Medicare. 11. Are all individuals living in the United States subject to the individual shared responsibility provision? All U.S. citizens are subject to the individual shared responsibility provision as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes. Foreign nationals who live in the United States for a short enough period that they do not become resident aliens for federal income tax purposes are not subject to the individual shared responsibility payment even though they may have to file a U.S. income tax return. The IRS has more information available on when a foreign national becomes a resident alien for federal income tax purposes. 12. Are US citizens living abroad subject to the individual shared responsibility provision? Yes. However, U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are treated as having minimum essential coverage for the year (or period). These are individuals who qualify for an exclusion from income under section 911 of the Code. See Publication 54 for further information on the section 911 exclusion. They need take no further action to comply with the individual shared responsibility provision. 13. Are residents of the territories subject to the individual shared responsibility provision? All bona fide residents of the United States territories are treated by law as having minimum essential coverage. They are not required to take any action to comply with the individual shared Questions and Answers on the Individual Shared Responsibility Provision http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Share... 2 of 4 1/16/2014 5:07 PM responsibility provision. Minimum Essential Coverage 14. If I receive my coverage from my spouse’s employer, will I have minimum essential coverage? Yes. Employer-sponsored coverage is generally minimum essential coverage. (See question 5 for information on specialized types of coverage that are not minimum essential coverage.) If an employee enrolls in employer-sponsored coverage for himself and his family, the employee and all of the covered family members have minimum essential coverage. 15. Do my spouse and dependent children have to be covered under the same policy or plan that covers me? No. You, your spouse and your dependent children do not have to be covered under the same policy or plan. However, you, your spouse and each dependent child for whom you may claim a personal exemption on your federal income tax return must have minimum essential coverage or qualify for an exemption, or you will owe a payment when you file. 16. My employer tells me that our company’s health plan is “grandfathered.” Does my employer’s plan provide minimum essential coverage? Yes. Grandfathered group health plans provide minimum essential coverage. 17. I am a retiree, and I am too young to be eligible for Medicare. I receive my health coverage through a retiree plan made available by my former employer. Is the retiree plan minimum essential coverage? Yes. Retiree health plans are generally minimum essential coverage. 18. I work for a local government that provides me with health coverage. Is my coverage minimum essential coverage? Yes. Employer-sponsored coverage is minimum essential coverage regardless of whether the employer is a governmental, nonprofit or for-profit entity. 19. Do I have to be covered for an entire calendar month in order to get credit for having minimum essential coverage for that month? No. You will be treated as having minimum essential coverage for a month as long as you have coverage for at least one day during that month. 20. If I change health coverage during the year and end up with a gap when I am not covered, will I owe a payment? Individuals are treated as having minimum essential coverage for a calendar month if they have coverage for at least one day during that month. Additionally, as long as the gap in coverage is less than three months, you may qualify for an exemption and not owe a payment. See question 22 for more information on the exemption for short coverage gaps. Exemptions 21. If I think I qualify for an exemption, how do I claim it? It depends upon which exemption it is. The religious conscience exemption and most hardship exemptions are available only by going to the Health Insurance Marketplace and applying for an exemption certificate. Information on final rules for obtaining these exemptions is available. The exemptions for members of federally recognized Indian tribes, members of health care sharing ministries and individuals who are incarcerated are available either by going to a Marketplace or Exchange and applying for an exemption certificate or by claiming the exemption as part of filing a federal income tax return. The exemptions for unaffordable coverage, short coverage gaps, certain hardships and individuals who are not lawfully present in the United States can be claimed only as part of filing a federal income tax return. The exemption for those under the federal income tax return filing threshold is available automatically. No special action is needed. 22. What qualifies as a short coverage gap? In general, a gap in coverage that lasts less than three months qualifies as a short coverage gap. If an individual has more than one short coverage gaps during a year, the short coverage gap exemption only applies to the first gap. 23. If my income is so low that I am not required to file a federal income tax return, do I need to do anything special to claim an exemption from the individual shared responsibility provision? No. Individuals who are not required to file a tax return for a year are automatically exempt from owing a shared responsibility payment for that year and do not need to take any further action to secure an exemption. Individuals who are not required to file a tax return for a year, but file anyway, will be able to claim the exemption on their tax return. Questions and Answers on the Individual Shared Responsibility Provision http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Share... 3 of 4 1/16/2014 5:07 PM Page Last Reviewed or Updated: 24-Sep-2013 Reporting Coverage or Exemptions or Making Payments 24. Will I have to do something on my federal income tax return to show that I had coverage or an exemption? The individual shared responsibility provision goes into effect in 2014. You will not have to account for coverage or exemptions or to make any payments until you file your 2014 federal income tax return in 2015. Information will be made available later about how the income tax return will take account of coverage and exemptions. Insurers will be required to provide everyone that they cover each year with information that will help them demonstrate they had coverage beginning with the 2015 tax year. 25. What happens if I do not have minimum essential coverage or an exemption, and I cannot afford to make the payment with my tax return? The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The law prohibits the IRS from using liens or levies to collect any payment you owe related to the individual responsibility provision, if you, your spouse or a dependent included on your tax return does not have minimum essential coverage. However, if you owe a shared responsibility payment, the IRS may offset that liability against any tax refund you may be due.

Since I do payroll processing, I track this for my clients. To my surprise the IRS has been sending out letters notifying my clients if their depository status changes.

I'm on the fence about using ATX for taxes for 2013. I'm waiting to see what other users experience. I have a backup plan for both payroll compliance and tax prep.

I have been using Accountants World for Client Writeup and Financial Statements for 2 years. I know it has the trial balance features you're looking for, but I don't use them very much. I'm fairly happy with what I use it for. Their support is average at best. FYI: They hired Jeff Gramlich as President after he left ATX ???

I have used ATX for Forms W - 2, 940 , 941 & 1099 for years. I have seen some posts on the ATX Board with respect to users having problems with Installation, opening the program etc. I would like some feedback, before I decide to use ATX again or switch. Thanks, Lee Barckert

I don't have any farming clients, but I grew up on a farm, so be aware that there are a number of special depreciation rules and unique lives for farm assets.