jainen

>>Probably because they didn't happen in the same year.<< It is also possible that there is NO cancellation of debt. Maybe the lender isn't going to let the borrower get out that easy. Or maybe it was a non-recourse loan (Form 1099-A Box 5) that is completely covered by the property itself. In either case, report this foreclosure as a sale at FMV since that is less than the balance due.

>>they did appear before Judge Jeffrey Welbaum and it was assigned a case number<< I know this guy, been thinking of getting married. Got a license, picked a date, even signed a prenup. But in the end they just decided to shack up for a while to see what it's like.

>>standard would be higher<< That says it all. He is NOT paying an extra grand--he deducts even MORE than his actual expenses! Still, there is room for improvement. Talk to the property owner about a new, joint rental agreement; he will probably be interested in the guaranteed county money.

>>his only option to claim the income on line 21 and take no deductions for it?<< Don't be like that. He can put ALL his expenses, including a share of utilities and maintenance (generally prorated by square footage) on Schedule A. Enough to write off the entire 1099 plus the rent paid directly by his tenant (subject to 2% AGI limitation, just like any other not-for-profit activity or investment). What other option would you prefer?

>>a check box for "is u is, o' is ain't fo' profit"<< Even if it is for profit, a loss can't be deducted for renting a room within your own home. That's because Section 280A, business use of home, applies to rentals too.

>>the OP said it was a divorce decree<< Yes, I believe the original post (in the "Divorce Final" thread) did say "the decree plain as day." But these days recently haven't been all that plain. And anyway, I don't believe other preparers almost as much as I don't believe clients. Not that I believe lawyers, but I just can't believe ANY lawyer is going to tell his client to consummate a divorce by signing the ex's tax return. But don't hang your head so, Bulldog Tom. You know that if it were a real decree and it did say what it didn't, I would still have found something to disbelieve too.

>>it look like the 1099-R is correct?<< Yep, looks like. And the lawyer of whom was proclaimed, "ought to fix the defect in HIS work for free," he was right too. And I humbly submit that I was right as well, alone in the forum. Anybody that's been in this business through more than one April 15th ought to have a healthy skepticism when clients tell us their family secrets.

>>the fact that MFJ is wrong<< Is this the same divorced couple that claims they went over the cliff in April and the decree says to file MFJ anyway? Obviously someone is wrong, but I wouldn't be too quick to assume it's the trained professional managing the legal papers. If you ask the average divorcee whether the split-up is final, her response will likely range from mild obscenity to apoplexy, with the occasional death threat. Not the best environment for nurturing truth. Little things like the pig judge's sig or some stupid law about waiting period are irrelevant to sweetums and her new sugar daddy. And since you are representing both parties, you get a double whammy.

>>it is understood that you gift them the money and you can only deduct $25. << I think that's nonsense. It might work as an interview technique to emphasize the point, but it would be irresponsible to seriously consider it for the tax return. Subcontractor expenses are properly deductible if the company has reasonable records of the payment. The IRS might do whatever the IRS might do, but it is not OUR job to audit the client's books and determine that some slip of paper is not in the right folder. My source for that opinion is the Circular 230 standards of practice.

>>this is also the divorce decree where it is stated that they must file MFJ<< I really don't understand what y'all fussin' about. If they file MFJ the way they agreed, it doesn't matter whether it's one half or two halfs because it all goes together anyway!

>>No point in starting a fight that you know in advance you can not win<< I take exception to that attitude on general principles, kc, but in this particular case Momma WOULD win the tiebreaker rules because the longest-time test comes before the highest-AGI test.

>>husband's and wife's can be co-mingled<< An Individual Retirement Account is, well, individual. But I'm sure they can find an accommodating broker who can set up matching his & hers accounts with parallel investments.

>>extension of time to pay based upon your circumstances for 30-120<< Call the the phone number in the notice (800-829-1040). Expect to be on hold a while 'cause it's the main IRS number for entire country. It should be easy to qualify if you can show or at least state an ability to pay in full within a few months. They offer this because it takes them that long to start serious collection efforts anyway. You can achieve the same result by simply responding to one of the automatic bills they will send out. Note that the IRS can't waive interest and won't waive penalties. You save a little in those categories compared to an installment agreement because that is usually for a longer period and has a setup fee. You also have a little more flexibility in how and when you pay if you avoid a formal agreement.

>>subsequent new registrations, accounts, etc.<< You are setting up a new entity, so you will at least need a new EIN. I don't know if you can transfer the state or federal payroll accounts, but it's a bad idea. You want to establish a clear separation between the corporation assets and the owner, so the owner's liability can truly be limited.

>>they were trying in 2007 to be active<< It doesn't matter whether the business was active in 2007, as long as the expenses (and income) relate to the active conduct of a trade or business. Only if they gave up before actually starting in the prior year would these be treated as investment expenses. Otherwise, a 2007 Schedule C loss is appropriate.

>>have the kid come to your office and file for him. If his income permits, she will qualify for HH<< No can do. Even if you could get the miscreant into your office, you could not use information from his confidential interview in another taxpayer's return. The mother has to provide the information, which she has already done.

>>.....she told me too much<< I guess you need to brush up on your interview technique. You should have seen it coming and taken control. Well, too late now. You know what you know. Now that she knows the answer, she might take her papers to someone else. Try to keep her long enough to collect your fee, by explaining how complicated life could be for her if she files a false return and one of his jobs has issued a 1099 or his man gets busted or something. It really is best to not get tangled up in his web any more than necessary. Let him take care of his own taxes, period.

>>a merit badge in tax preparation<< Badges? We ain't got no badges. We don't need no badges! I don't have to show you any stinkin' badges!

>>is there something I can do here?<< You can return his receipts, thanking him for keeping such good records, and explain how the lifetime learning credit works.

>>If not for the business activity of the sole proprietor there would be no SEP fees<< The same could be said of a traditional IRA, in that it must be based on earnings. But that doesn't make it a business asset, and it doesn't make the maintenance fees a business expense. The rules are different for the owner and the employees. When the owner pays for the underlings, it goes on Schedule C like other compensation costs. When he pays for himself, it goes on Schedule A like other investment costs.

>>New client, says she is a currency trader<< Before you accept this engagement, you want to be real sure you understand why she isn't going back to her previous accountant. Currency trades are up there in the stratosphere if not totally outer space. Currency contracts are section 1256, which will take more time for you to research than you have in the next two weeks. Offer to prepare an extension based on the P&L "as if" it were Schedule C, priced accordingly, with the understanding that the actual return won't be completed before June and will have an additional fee. If she declines, you won't be able to help her at this late date.

>>God bless all who contribute time, talent, and $. Especially those who no longer have sons involved<< All three of my boys reached Eagle Scout and are still active. One is an officer on a Sea Scout ship, the other two are camp counselors. I remain the charter org rep and do adult training. Next weekend is the outdoor skills campout, at which I lead the nature hike, campfire program, and Scouts Own (and probably do some last minute 1040A's).

>>what the heck is a 4< It's a typo. Local troops rarely apply for and maintain 501c(3) status. You might consider them as a part of their charter organization, since legally all assets (and presumably new donations) belong to the sponsor. Many (but far from all) of those are qualified charities, but I've never heard of one logging a receipt for a donation to the Scouts.

>>he stole her car, stole her credit cards<< Always champion of the underdog, I'll take the KID'S side in this. Unless the tax preparer completed a dependency support worksheet, the mother had no right to claim her son because he was not a qualifying child. Stolen money is taxable income to the thief, and it looks to me like the exemption properly goes to the young man who provided more than half of his own support.

>>He covered park fees, gas, food and some treats << Technically his donation was not on behalf of Boy Scouts of America, which is a 501c(3) organization, but for the local troop which is not. Nevertheless, the IRS itself points to BSA adult leaders as an example of out-of-pocket charity expenses. For now we can continue to take such deductions if reasonable and adequately documented.