jainen

>>my three kids<< I said this on a school bus once, and everybody got mad. If there are five oranges and you take away two, how many do you have?

>>I'm looking for other ways to convince them.<< Hmmm, let's see. We're going to offset wages from two full-time jobs with a bunch of startup expenses, mostly for listed property, cars, and meals, for an activity that virtually everybody (including IRS auditors) does for personal pleasure. No, I can't think of any reason that wouldn't sail through unnoticed.

>>John Force<< Oh, does he file Schedule C? http://www.johnforceracing.com/

>>Race Car, Depreciation<< In my opinion, depreciation is not available for a race car. Since there can be no realistic expectation of profit, it is not property held for productive use in a trade or business.

>>a quit-claim in lieu of foreclosure would still be better<< Quit-claim to whom? No transfer can relieve the borrower unless the lender agrees. And although lenders are struggling to stabilize their assets, a mortgage on rental property is likely to be recourse. If the owner has other assets or income, the lender might well decide to wait it out. He can probably deduct normal maintenance expenses for as long as he had a realistic expectation of rent. I would inquire about particular events like the town factory closing or major property damage that wasn't worth repairing, but otherwise take his word for it. If it was unoccupied more than several months, I would caution the client to assemble whatever documentation is still available to support his expectations.

>>you may use §179 on as much of that total as you want to use, subject, of course, to the limitations on total §179.<< If new, a $25,000 truck is certain to be subject to the luxury auto limits in Section 280F as well as Section 179.

>>He had originally not included the sons, then they amended his return to include both of them. Now I have to amended again to remove the 2 sons.<< Would you mind sharing what this is all about? Was he trying to game the tax system but found that immigration doesn't play games, or is he just not sure if his wife has been messing around behind his back?

>>the write-up of their plan<< The actual plan document, not just a "write up," must be made available to the employees. Ask to see it, along with the IRS determination letter that approved it. I guess the plan can prohibit hardship distributions, but it would be a very odd provision to include in what is supposed to be a benefit package. Besides upsetting the employees, it would require a customized plan which would be more expensive to draft and have a much higher chance of failing to qualify.

>>I wouldn't even mind a couple of insults from Jainen just to get his valued opinion! << In my opinion, you wicked man, Californians prefer the five year rent with option rather than the 15 year redeemable lease. Who wants to spend a decade building their dream house with zero equity? Ground leases are more common with commercial property. By the way, California tax law does not conform to Section 1055 for corporations. And don't you think you've had enough of that Halloween candy already?

>>The minority shareholder has requested from me a copy of the corporate tax return<< The shareholder can probably demand an accounting from the corporation to support the buyout price, although it's a bit late even for that. He certainly has no right to the whole tax return which contains information about periods when he was not a shareholder. I agree with the ever-wise OldJack.

>>I also still sometimes have problems dealing with partnerships technicalities<< I think she was talking about professional issues--leave your love life out of this!

>>If said inventory was disposed of in a one complete block transaction and in liquidation of the corporation they would indeed be section 1231 assets<< That may be so. Liquidation would be another previously undisclosed fact, but that is one of the fun things about this scenario. On the other forum I complained that the facts were being revealed piecemeal. Ahern responded that even he didn't the whole story since he had not yet gotten around to discussing it with the company's accountant. With that kind of financial planning, it's a good guess that if the corporation is not in liquidation at this time it will be soon enough.

>>I'm not sure of all the facts of your situation.<< Your caution is appropriate. Ahearn posted this same question earlier on the 18th on a different forum. I guess he didn't like what I had to say over there about accounting methods and installment sales for inventory, because here in the ATX Community he has not mentioned that the cows were held for sale in the ordinary course of business.

>>does he have a bad debt on the amount owed<< Pub 537 explains that when an installment agreement becomes unenforceable it is treated as a disposition. You can not simply claim a loss for the unpaid balance. First multiply the balance due by the gross profit percentage, then subtract that figure from the balance due. The result is your basis in the installment agreement, and your loss is the difference between that basis and the FMV (presumably zero unless it was a related party). It's a capital loss if the rental property was treated as a capital asset. Be sure your client understands that losing the security does not necessarily make the note worthless, since he did not do the foreclosure. A lot of people these days are simply letting property be repossessed if the value has dropped to less than they owe, even though they still have substantial assets. Have a lawyer review the terms of the note, and consider pursuing collection on it.

Hoo, boy, you know how casual we are about those mileage claims? In U.S. v. KAMALU, a tax preparer was convicted of willful preparation of false income tax returns for deducting mileage on Form 2106. He protested, pointing out that the taxpayers hadn't even filed that form, and complaining that the IRS investigator had prejudiced the jury with testimony about the preparer's obligations that was "intentionally false" (in the words of the investigator's supervisor). The appeals court was not in the mood, and upheld the 27 month sentence. Not that it mattered--by then the government had dragged out the process so long that he had already served his time anyway.

>>no one is listing a score<< Umm, I got 14. Missed 11. But wait--two of them, acknowledgement and judgement, are PERFECTLY acceptable alternate spellings. And supercede and procede are the same mistake, so it's not fair to ding me twice.

>>who his two sidekicks were<< I remember Jingles, but I forget who he was with.

>>The wording suggests to me that the preparing firm/preparer had computed the form but did not include it<< Perhaps that was the first impression, but it was obviously wrong because submitting the form did not solve the problem. We don't know why the form did not solve the problem, and we don't even know who "they" at the firm were. We DO know the owner wanted his accountants to handle the response. I can't think of any reason why that response should include updating the employees with details about their boss's tax problems.

>>It says so in my engagement letter.<< Most likely this company did not use your engagement letter. I believe most professionals would hold that IRS representation is not part of the original tax preparation engagement. It isn't always easy to assign blame. For example, I think a corporate taxpayer has to elect annualization with the first estimate. If that's the case, it might not be so clear that the accountant made an error. I could certainly see how they might have several billable hours researching and trying to argue with the IRS about it, since that is apparently (according to the original post) what the owner wanted them to do.

>>I haven't got any idea.<< You are not alone. According to the headlines today, that's one of the big problems with the economy--it is no longer true that, "Every five seconds of every working day, somebody buys a new Chevrolet!"

>>theres where the problem is<< It seems the consensus in this thread is that there is no problem.

>>Most of the rest I hadn't even heard of. (I'll be 29 next month) << Then I suppose you don't remember what somebody buys every five seconds of every working day.

>>not helping at all would have been a better answer<< Now, THERE'S an ethical problem. Your employer is trying to sell the system and you know of a likely buyer, yet you decide not to provide the information the buyer needs because... why is that exactly?

>>All estimated taxes were paid on time. << It sounds simple enough. But the owner wants his CPA to handle it, so let him sign the checks.

>>Form 5806 Underpayment of Estimated Tax<< One more question: When they said they left the form out, did they mean they should have annualized income to eliminate the penalty, or they just forgot to calculate the penalty that was due anyway but could at least have been paid when the return was filed so you wouldn't get the nasty letter?