Lee B

"The tax treatment of legal settlements can be confusing for individuals who receive them, especially when they involve employment-related claims. One such issue was the subject of the Tax Court case Montes v. Commissioner,[1] which examined whether payments from an employment suit could be excluded from income." https://www.currentfederaltaxdevelopments.com/blog/2023/6/30/firefighters-settlement-payment-related-to-harassment-claim-did-not-qualify-for-exclusion-from-income

I think Abby's suggestion is a good backup plan.

The IRS has created a one page poster to be passed on to clients: https://www.irs.gov/pub/irs-pdf/p5797.pdf

Other than Box 3 being called "Other Income", the instructions for filing a 1099 Misc don't really address this question? Situation Normal - Confused!

More hacking details: "This includes approximately 3.5 million Oregon driver license holders; roughly six million Louisiana residents; some 770,00 members of the California Public Employees’ Retirement System; between 2.5 and 2.7 million Genworth Finance clients; approximately 1.5 million customers of insurance provider Wilton Reassurance; more than 170,000 beneficiaries of the Tennessee Consolidated Retirement System; and more than half a million Talcott Resolution customers. Callow tells TechCrunch that the mass-hacks include U.S. educational non-profit National Student Clearinghouse, which could be a “potentially significant” breach in terms of numbers. The organization, which began notifying schools of the data breach, works with 3,600 colleges and universities and 22,000 high schools."

As a practical matter I agree. However I do wonder whether the taxes withheld by the fiduciary are valid based on the instructions of someone who passed away in the prior year?

I don't recall that being a determinative factor listed in the 1099 Misc Instructions?

How about determining stockholders basis?

This sounds like a malpractice lawsuit waiting to be filed

Well since they filed MFS in 2022, it does affect 2022.

My knee jerk response was to say no, but since you are engaged in a trade or business the standard reporting rules for 1099 Misc apply.

Amazon was selling this device up until about 2 months ago when they banned it from their website. I did some more reading about it. In the hands of someone more experienced, it can hack wireless security cameras, remotely hack wireless keyboards and wireless mouses. Even more scary, combined with a red laser light it can used to to hack traffic signals. I can just imagine several stoners cruising around hacking traffic signals just for fun.

At this point, I believe another experienced business attorney will be needed to determine the legal ownership issues. There is quite likely state and case law that will decide who the owners are? If this was my client, I don't know how I would move forward until the legal questions were answered.

I believe this company based in London England. It's not against current laws to make or sell this device. Until someone uses it to steal something no law has been broken.

So for $169 you can order online a device with which you can hack many wireless devices i.e. garage door openers, car key fobs, remote gate openers, electronic door locks, basically many wireless locking systems. We definitely live in a different world now! "You may have stumbled across the Flipper Zero hacking device that’s been doing the rounds. The company claims it is on track to sell $80 million worth of ’em this year after selling almost $5 million worth as Kickstarter preorders — and it claims it sold $25 million worth of the devices last year. So what are they selling? Flipper Zero is a “portable gamified multi-tool” aimed at everyone with an interest in cybersecurity, whether as a penetration tester, curious nerd or student — or with more nefarious purposes. The tool includes a bunch of ways to manipulate the world around you, including wireless devices (think garage openers), RFID card systems, remote keyless systems, key fobs, entry to barriers, etc. Basically, you can program it to emulate a bunch of different lock systems. The system really works, too — I’m not much of a hacker, but I’ve been able to open garages, activate elevators and open other locking systems that should be way beyond my hacking skill level. On the one hand, it’s an interesting toy to experiment with, which highlights how insecure much of the world around us actually is. On the other hand, I’m curious if it’s a great idea to have 300,000+ hacking devices out in the wild that make it easy to capture car key signals and gate openers and then use them to open said apertures (including Tesla charge ports, for some bizarre reason)."

Lion, it sounds like you are going to be very busy. I am so very thankful, I don't any clients like these. Live long and prosper

"Timothy J Lundquist of Minnesota pleaded guilty to willfully failing to account for and pay over employment taxes for his automobile transmission business. Lundquist was responsible for filing quarterly employment tax returns, as well as collecting and paying over to the IRS payroll taxes withheld from employees’ wages. For at least the last quarter of 2013 through 2018, Lundquist did not pay withholdings to the IRS or file required employment tax returns. In total, he caused a tax loss to the IRS of more than $1.2 million. IRS Criminal Investigation is investigating the case. Lundquist faces a statutory maximum of five years in prison. He also faces a period of supervised release, restitution and monetary penalties." I am astounded that he got away with this for 5 years!

Take this with a grain of salt since I don't deal with these kind of clients: When you have the returns prepared, pay the tax and interest ( not the penalty) via direct debit or Direct Pay. Then file the penalty abatement request. Remember the POA will take 5 to 7 weeks to be processed. Don't know if it would be possible with this client, but in the past I have dealt with the POA processing delay by making phone calls together with my client in my office.

First Republic has been taken over by JPMorganChase. Your client should have received communications about that along with contact information.

Any depreciation gets recaptured and taxed in year 1 so that could be a problem when the resulting tax is greater than the first year proceeds. Don't think it makes any difference whether the corporation is accrual or cash The corporation can terminate and distribute the installment sales contract to the stockholders. This is a test of my memory. Did I pass or fail

This website maintained by an ex IRS employee should answer your questions: https://www.irsmind.com/irs-penalties-and-penalty-relief/

Yeah, the worksheets take some getting used to. I have been with Drake since the 2017 Tax Year and 2 or 3 times a year I have to call support because I can't find something. Their diagnostic messages can be annoyingly detailed. However, I can honestly say I have never had an efile fail once I cleared all the diagnostic messages!

"The California Public Employees’ Retirement System reported Wednesday that hackers stole the names, social security numbers, birth dates and other confidential information of roughly 769,000 retirees and beneficiaries, taking advantage of a vulnerability in a contracted vendor’s cybersecurity system.' Apparently CalPERS was also hacked 3 weeks ago and just announced it today? Not good optics.

Read several in depth articles recently saying that this trend started over 20 years and that the professions leaders never took it seriously.