jainen

Final regs concerning a non-custodial parent claiming a dependent were issued last week. They specifically state that a divorce decree can NEVER be used as a substitute for Form 8332, EVEN IF both parents agree unconditionally and the order contains all the elements of Form 8332. A release of claim not on Form 8332 must be on a document executed for the sole purpose of releasing the claim.

>>Could he make a case for a large portion of the acreage as part of his residence?<< Twenty acres would certainly be acceptable under Section 121 if that is the local standard. Court cases have been won with two or three times that much. However, Section 121 is referring ONLY to land that has been used as the principal residence. Clearly your client used his adjacent land as business property.

>>filed the California 540 NR<< This form will identify what the tax preparer determined to be California-source income. Generally portfolio income should be sourced to the state of residence.

>>have the refund deposited into two different accounts<< Assuming, of course, that the bank will accept a joint check deposited into a separate account. Which is a mighty big assumption.

>>the place we sole proprietors vent<< You guys are a tough audience--won't anyone give Chief a break? Maybe HE was venting. But no, I think he was rather drolly supporting the joke by playing straight man. Cleverly, too. His 15th message is a word anagram for, The business posting on this Board has no humor, which in this I see "to fail."

>>The 3 sons are listed in the will as joint executors. This just should not be as difficult as ML is making it<< Sounds pretty hard to me. Did you say a WILL, with only part of the millions in trust? Multiple executors? "Household" members whose PARENTS weren't even born when the trustor named his beneficiaries? Expect to wait a year or two for probate court to sign off. Meanwhile, send the broker a thank you note for being so thorough in protecting the estate.

>>they did receive a $300 payment<< Apparently they filed a 2007 tax return reporting at least $3000 of qualifying income. I wouldn't call that an error on the part of the IRS.

>>a definite answer next year<< Fair enough, but I probably won't be around next year. Here in California efile is mandatory and all paid preparers must be registered, so I doubt our industry can survive much longer.

>>200 returns last year and had 2 or 3 issues.... That's professional enough for me, and apparently it is for my clients.<< Do you mean ALL of your clients, or just 197 of them?

>>the IRS has no business trying to force anyone to use it<< Some people say that about the whole tax system. But you miss the point with, "clients have enough common sense to understand where the responsibility lies." It isn't a question of who to BLAME. It's a question of using a professional to avoid the problems in the first place.

>>my job is not to be a data input clerk for the IRS<< Don't be petty. It is not about making things easy for the IRS. Your job is indeed to get data to the IRS, and you should have a strong desire to control as much of that data flow as possible. Why should some temp hire have a chance to transpose your numbers? Why should some spacey mailroom drudge even be involved in which pages are attached? Why should something as basic as the filing date be at the discretion of government agents? Although I tend to take conservative tax positions, having a defensible return is truly only my backup strategy. My motto is, you can look but you better not touch.

>>I wouldn't exactly call it EARLY retirement<< I can identify with you on that point. The term is redundant--in my world, ANY retirement would be early.

>>Microsoft to Stop Selling Windows XP... << Dang! Office Max is all sold out of DOS.

>>drive off a few more clients - and maybe charge an extra $100 for anyone who wants to efile<< Good plan, if early retirement is your goal.

>>the huge amortization dollar amount to correct amortization<< I'm always cautious of questions about goodwill. A huge dollar amount is likely to attract IRS attention so you should research the matter thoroughly. Before anything, verify that the asset was correctly defined and eligible for amortization. You say goodwill "was recorded" in 1996--does that mean the corporation merged with another business at that time? Are you sure 30 years wasn't used to comply with anti-churning or other older rules? The corporation previously made unauthorized changes in the amortization schedule by switching it on and off, so doesn't Revenue Procedure 2006-12 require amended returns before they are eligible for the automatic consent procedure? This is more than just a math problem.

>>they cannot close the existing accounts without a final tax return<< The broker is stalling because he has violated federal banking regs that prohibit activity after he knew the account holder had died. He will of course need an official death certificate and proof of who the executor is, the same info needed for the tax return, but is not entitled to any particular information about the return itself. The sons will have to fight for it, but I expect eventually they will get the fees reversed and the money released (assuming, of course, that the ACTUAL executor agrees).

>>they want me to buy there books to show me what I have to do. I've managed to do some research, but haven't found much<< Why don't you just get the book?

>>he is paying capital gains tax on $400,000 gain<< Sure he is. That was his plan from the beginning. He himself chose to set it up that way. That money is gone, regardless of what happens to the property now. A prudent investor looks forward, instead of getting hung up on might-have-beens. He knew the risk of the promissory note secured by the property, and used that knowledge in negotiating an interest rate. He knew the market conditions, and used that knowledge in negotiating the price and terms of sale. He also knew the tax ramifications of it all, and used that knowledge in electing out of the protections offered by the tax code. Real estate transactions sometimes fall through. That risk is part of the reason Congress gives tax breaks for real estate investment. If he has a cash flow problem, he can use the traditional investment technique of cutting his price and taking a tax loss. He'll still make lots of money on the deal.

>>a new sale might be immediately available<< It seems to me the net result is about the same. He takes back the property with a basis adjustment for the gain already reported and any costs of repossession. If he sells it again, that's a separate transaction with additional gain or loss.

>>I've also been asked for consultation regarding their finances and how to structure the various chapterhouses, etc to benefit them.<< You should get one of those books about taxation of clergy. CCH probably has one, or Thomson, etc. There are a whole lot of special issues. I should get one of those myself. I'm always being surprised by new things. My office is near to a large church that has lots of ministers and for some reason they never seem to stay very long. Every year there are new people with new ideas about that "render unto Caesar" thing.

>>was it the result of quick research??<< Nah. I keep words like "heuristically" at the ready. Never know when it might be needed.

>> it was an acronym for something HAL 9000 << Heuristically programmed ALgorithmic Computer. There is no truth to the rumor that it was a one-letter shift of IBM.

>>seller will have to repossess the property<< Not that I want to shoot anyone down or anything, and I think your wording and phrasing are quite excellent and all, but why exactly does he want to switch to installment reporting if he knows he has to repossess the property anyway? Well, I suppose he has his good reasons. Pony up the $11,000 user fee for a private letter ruling.

>>this can be appealed<< The letter should explain how to file the appeal. $6340 is a significant sum, but your client will have to decide how much he wants it. Don't expect the IRS to give in without a fight, possibly including going to tax court, so watch all your time limits very carefully and don't take any procedural shortcuts. There are a number of court cases to research and the results have been mixed depending on facts and circumstances.

>>the letter to the advocate included a detailed financial position.<< Did you explain that you figured he would have to pay one way or the other, so you decided to bump your own fee and use that to justify the hardship claim?