jainen

>>I cannot find a reference<< See Pub 541. "If a partnership is terminated before the end of what would otherwise be its tax year, Form 1065 must be filed for the short period, which is the period from the beginning of the tax year through the date of termination. The return is due the 15th day of the fourth month following the date of termination."

>>the stock is listed as Jt ten with the son. so I think from the very start they both were on it.<< But it was from an employer stock benefit, right? So at some point it must have belonged solely to the employee. I would guess the adult child was added to the account for the common purpose of estate planning, but did not represent an actual change in ownership (until now). I would further guess that claiming payments now (instead of prior year tax returns) is simply an effort to jack up the basis on old employee stock.

>>son paid father who worked at walmart for the stock each yr.<< Right--and that is documented because the father reported that sale of stock on Schedule D each year? Oh, but he forgot to tell the account manager that title had changed? Sorry, I'm not in the mood for tax evasion nonsense. Dad sold employee stock and let his kid keep the money as a gift.

>>phone, utilities, internet<< What--no business development activity over all these years without a client? It rather seems like she is mischaracterizing personal expenses as business deductions. How separate are her corporate books from her personal finances? Does the corporation pay her a reasonable salary as required? Other than a corporate structure, in what way is this an actual business?

>>He has consented to her using all of them<< Very generous of him! Kind of irrelevant, though, don't you think? Form 8332 only covers exemptions, not deductions. According to the good old Instructions for Schedule A, right up top there, "If you and your spouse paid expenses jointly and are filing separate returns for 2012, see Pub 504 to figure the portion of joint expenses that you can claim as itemized deductions." Pub 504 has a whole table on page 5. Check it out!

>>Is there any way around having to pay the tax on this forgiven debt?<< No way around IRS assessing the tax. Quite a few ways around having to pay the tax. Something may come to mind if you consider this as a collections engagement rather than tax preparation.

>>a real budget that cut spending appropriately. Since that obviously is not going to happen... << Hey, it happened here in California, the 5th largest economy in the world,. Of course, the cuts were painful--we had to cut out an entire political party!

>>I see a word called Rehang Ack<< It is an anagram for Ankh Grace, Either that or a keg ranch,

>>rolling over with the letters<< Someday the lawyers are going to make us put disclaimers so we don't get sued when our client says the IRA distribution was a rollover (but he never actually put the money back), so we calculated his ES estimates with gross incompetence.

>>Form 2441 will not be transmitted<< i don't understand your objection. The form is not eligible for e-file with that data. You filled out the form, so if there is still some particular reason you need to file it you have to use paper. Don't blame ATX for telling you so--it seems like a good thing to know.

>>Client withdrew money from her 401k twice during 2012<< You know, we haven't talked about HOW she managed to get her money out of the 401(k). Other than some form of terminating employment, about the only way is for hardship, defined as various circumstances of immediate and heavy financial need. It's only for real hardship, because it is expensive, subject to penalty as well as tax. And you can't change your mind either--Pub 575 page 27 says, "An eligible rollover distribution is any distribution... except... Hardship distributions."

>>she has until 03/02<< "Within 60 days," NOT "by the 60th day." The 60th day after 12/31 is March 1, so she had best put the money back tomorrow--assuming the 401(k) plan will even accept a rollover, which is not particularly common.

>>Company info also says nada about federal credits<< The energy credits are nothing but lobbyist dreams come true. We are so happy to get a 30% credit that we gladly pay 50% more! Of course, some lobbyists are better at their job than others, so only certain products qualify. Which products? That's up to the manufacturers! Notice 2009-41 says, "a taxpayer claiming a credit for residential energy efficient property should retain the certification statement as part of the taxpayer's records." So ask your client to show you the manufacturer's certification.

>>the seeds are planted in the river<< More and more companies are moving their assets offshore. If it's just a shell company, you need an oyster in compromise.

>>obviously more questions to ask<< Generally, but especially when the entire compensation is designated as housing allowance, I would clarify that it does not exceed actual costs. I don't think that applies here anyway, because in SFA's post it doesn't sound like the minister is ordained. If that is correct, the housing allowance can not be excluded from income and needs to go on Schedule C.

>>how much investigation do I need to do regarding his credentials?<< A little less than you already did.

>>users with smooth ATX 2012 experiences are far and few between<< Ah, but they DO exist! To me that says there is nothing inherently wrong with the program. The problem is getting it to work in all the different hardware, software, and office environments of users. Tech support and customer service are always very expensive, so that's where ATX looked to save money. Lacerte has had almost daily updates since January, and is even still updating 2011 too. But they answer their phones. They can afford to.

>>Then when they withdraw extra IRA money, and their taxes go thru the roof, guess who gets the grief..........<< But... but.. doesn't that banker also explain to them how they can use income averaging?

According to my Lasser's Everyone's 1978 Income Tax Guide, "The IRS has instituted a new procedure to ensure a more efficient method of receiving and processing tax returns. If your return is not complete with all of the necessary documents the entire file received by IRS will be returned... "

>>It just doesn't seem right to me that an unmarried single person with an income of basically $24,000 is eligible for EIC<< I have no problem with low income taxpayers excluding Social Security benefits from AGI in accordance with the tax code. Every SS recipient gets at least a partial break, with whatever consequences may be for an individual's deductions and credits. Basic tax planning principles apply. Actually, tax code treats Social Security payments less generously than many other public benefits like welfare, Veterans Administration pensions, state disability or worker's compensation.

>>you are supposed to be a professional preparer working for the IRS.<< Are you sure this is what you meant to say?

>>if I could help him write off his losses<< The problem is, he doesn't HAVE any losses from a pass-through entity. Even though he got out, he can't establish a basis without adjustments for income, distributions, and so on. It's probably time to ask a lawyer to send a friendly reminder.

>>trying to complete them by the March 1 deadline<< Relax! According to Notice 2013-5, "IRS has issued guidance to relieve estimated tax underpayment penalty otherwise imposed on farmers and fishermen, due to delayed start of 2012 filing season. Affected taxpayers who have chosen not to make quarterly estimated payments in 2012 will have until 4/15/2013, rather than 3/1/2013, to file and pay full amount of tax due, without incurring penalty. Those requesting this waiver must attach Form 2210-F (completed as specified in this guidance) to their tax return, which can be submitted electronically or on paper." The guidance goes on to say just put in name and number, check the Part I Box A for the waiver, and leave the rest blank. So relax. Be happy. It's easier this year, not harder!

>>i before e<< According to the Urban Dictionary at http://www.urbandictionary.com/define.php?term=wierd. "Not a spelling mistake but the hybridisation of the two words weird and wired. Used when someone is behaving like a crazu, due to the influence of restricted substances."

>>if she has a bona fide tip log<< Another weird thing is how his scenario triggers such a suspicious response. As I read the original post, she DOES have sufficient records to file a return and meet a professional's requirement for due diligence. Asking for the EIN would be reasonable for Form 8919 (employer's share of FICA), but not if the purpose is harassment. Or any part of the purpose. In my opinion the notarized letter should be ignored as irrelevant to tax preparation. What a lawyer would call prejudicial. All eligible returns are subject to mandatory e-file. When I recall how this forum railed against e-file a few years ago, I smile at a suggestion to threaten clients with paper-filing! So the response is starting to look weirder than the scenario.