jainen

>>invest in snow skis<< That's not really my style. How about if I just whip up a blueberry cobbler and spend the afternoon in the park listening to Patty Griffin and reading Stephen King?

>>darn global warmings<< I like warm globes, thanks for asking.

Looks like it was a big one.

>>When i checked my thermometer this morning, it said -42<< What a coincidence! We had the same temperature--42. The only difference seems to be that we have an extra dash in front of the number. Weekend forecast for zip code 95060 is "Sunny. Highs in the 60s to mid 70s. Northeast winds 5 to 10 mph."

One WHAT?

>>I'd have had to charge him more than that just to justify the paper used in doing it<< Obviously this was a low-income client, and you had already done the work. Isn't it easier and cheaper just to include it without extra charge, rather than explain to your client how high your fees are?

>>was your client's foot in the shoe at the time?<< I think it's a great idea. I always try to help my clients relax before I explain how little I can do about whatever they didn't call me ahead of time about. Perhaps if I ask them to take their clothes off first, we'll all be more comfortable.

>>Other programs make you complete two schedule C's<< The election to file as a qualified joint venture always requires two Schedule C's, which can show other than a 50/50 split. However, the IRS instructions to Schedule C include an additional exception for community income, by which income and deductions are simply "allocated to the spouses." http://www.irs.gov/pub/irs-pdf/i1040sc.pdf. Professional software typically has some way to track it on a single Schedule C.

>>Jainen on a surfboard << Not me. I sit up on the cliff playing french harp and watching the waves pummel those guys. Yeah, the weather's been nice, but rosarians like me need a little dormancy in January, and it's not happening. Ignore the TV news about jets or tax returns. That's not what's happening either. Tim Geithner is proof that our economic policy of corporate globalization has continued intact for decades, Dem or Republican, with no change in sight.

>>drinking the Democratic Kool Aid<< Have you read this guy's resume? Ronald Reagan first brought him to Treasury as a supply-sider. George Bush put him in his current job as one of the most powerful members of the private Bank that brought down our economy. Self-employment tax is the least of my worries about Tim Geithner. (Okay, it's a bit more important than his maid's paperwork.) The whole purpose of this scandal is not to cast doubt, but to deflect it. Still, as a Santa Cruz cold-water fan, I gotta go with the surfer dude.

>>failed to pay his SE tax in 2001 -2004<< It wasn't exactly an obvious thing. He was paid on a W-2 from an international organization that is exempt from the Social Security System. Sure, he got notices and was supposed to understand, but it's not like he was hiding income. At least he paid up. If that's the worst thing you can say about Tim Geithner you haven't looked very close.

>>8. Dogs like to go hunting & fishing.<< Frankly, this does not describe MY dog. And I was just wondering if anyone has ever done a study as to the percentage of dog owners who have been stuck with some hand-me-down rather than getting a free choice.

>>Time to change banks<< Also time to change preparers, as that is one of the more serious ethical breaches in this business. The fact that it's a family member makes it somewhat worse in my mind because it goes both ways. You are asking your relative to violate a very clear legal standard and risk disbarment for your "laziness thing." Tell me again how your company can help tax professionals?

>>Should I tell her to go back three years and amend them?<< Do you have an engagement letter from this company to handle their bookkeeping or tax matters? If so, follow Circular 230 instructions (including instructions concerning written advice, if applicable) to advise her of the need to correct all past errors and the potential penalties involved. If not, a generic comment about tax rules, with a disclaimer that you are not offering specific advice, should be enough.

>>and whatever Medicaid paid<< Medicaid paid more than half the support while they were in a nursing home. The repayment did not come from your client, but from a lien against the property. Your client can't claim the couple as dependents or deduct their medical bills. Since there is no final return or estate return, there is nothing further to be done in terms of tax benefits. Your client's parents were fortunate to get help.

>>they have to file a regular 1040<< For bona fide residents, the U.S. Virgin Islands has its own separate tax system. See Pub 570 at http://www.irs.gov/pub/irs-pdf/p570.pdf.

>>Was "Somebody" his barber or mechanic? << It can be helpful to know the context of the advice you are responding to. The original post didn't say when the loss occurred, but the taxpayer probably had at least two years to sell the land and reinvest it under the rules for involuntary conversion. If that wasn't enough time, he could even have requested more. Most likely the advisor was referring to a Section 1031 exchange, as JRS says, with the exchange proceeds being used for the down payment. That's a very reasonable plan, but it still doesn't answer the question about cost basis. If he doesn't have records of his original acquisition, he must either pay for a retroactive appraisal or declare zero basis.

>> Her attorney sees no reason why they shouldn't just file MFJ<< Neither do I, unless the spouse is so stubborn even his own attorney can't convince him that it's in his best interest to do so. **************** >>I believe there was withholding on the 401K; but have no way of knowing the exact circumstances>> On January 28 the retiree will get a 1099 in the mail, but since the envelope will be upside down your client will accidentally open it before she realizes it was addressed to him. At that point she will be confused and since it's obviously a tax form she will just give it to her tax preparer. **************** >>was secretive about them, as he was about other very serious things<< Apparently he was not secretive enough.

>>he will not cooperate<< I know that Wisconsin community property laws have some particular differences from my state of California, but I don't know what they are. In California, the community ends when the spouses separate permanently. In that sense, she must claim 1/2 his earnings up to April, and allocate 1/2 of hers to him for the same period. Afterwards, it's all her own wages. However, your client is still taking money from the 401(k), and I'm sure she will claim a community property interest for that in her divorce. So I think I would consider the community to continue, at least in financial terms. I suggest she file HoH and pay tax on half his 401(k), half his W-2, and half her own W-2. Send a copy of the worksheet along with the 1099 and W-2s c/o his public defender. Via her own attorney, of course.

>>write a letter to the mortgage company on my letterhead explaining that<< That is terribly risky, even foolish. If the bank grants credit based on your independent assertion that the client had signed his tax return in error, they can hold YOU responsible for the balance should he default. If you must write a letter, address and send it to the client. Even that won't satisfy your E&O carrier, and if you don't have insurance--well, shoot, why are we even thinking about this? And really, what good is a letter anyway? The bank has specific requirements for loan docs that are set by FNMA and other secondary market players. If he uses alternative docs, he will get bumped into a whole different category of mortgage. In case you haven't been reading the news this year, lenders are on the ropes for handing out money without proper documentation. Only work with standard records to back up the loan app if at all possible. "Fixing" something is often a bigger red flag than the original mistake. So far, lucho, you haven't mentioned a single document that supports his position. And what's up with the co-owner? Ask the loan officer for help; he gets nothing unless he can close the deal.

>>You do not claim the dependency exemption.<< It depends on WHY you don't claim the exemption. If it's so the child can take an education credit or so an absent parent can claim the exemption, you can still file Head of Household. However, if the dependent is also a qualifying child for another family member who DOES claim the exemption, you can not use Head of Household with the same qualifying child. (Well, at least if you do the tie breaker rules will decide which one of you gets the benefit.)

>>The fax included his small bank statement that she funds.<< You mean the best thing she can come up with to prove someone lives in her own household is a bank account that he doesn't even control? I'd be rather cool towards that too.

>>I'd probably cut the wage in half if the company was not giving me any profits.<< While I have no personal argument with this line of thinking, I can't help observing that industry in general does not share it. I wouldn't exactly call it a red flag, but judging from the daily news don't you think it sounds odd for a corporate executive's compensation to go down if his company doesn't do well?

>>there is another person in the title<< The mortgage company knows all about the title. They are asking about who is USING the house and for what purpose, i.e., is it actually your client's primary residence. To rewrite the mortgage will no doubt require a credit application from the co-owner. >>My concern now would be how to fix my own mistake.<< Frankly, I don't see it that way. From the point of view of the client, the mortgage company, or the co-owner, some one-time clerical error would not be the main concern. By the way, how did your client manage to get his stimulus check last year?

>>that will be considered a red flag<< It does seem kind of red. The first thing is to ask him straight up if it is true. If he is not actually living there, he needs to abandon this scheme and come up with a new plan because the mortgage company WILL send a real live investigator to knock on the door and see who answers. He must have plenty of ID with his correct address. Bills, bank statements, love letters, UPS packing slips, drivers license, memberships and registrations of any kind. Give it all to them.