jainen

>>If the IRS WANTED TO address this,,,<< Why would they want that? They need to keep us all twisted up about bureaucratic inefficiency so we can't follow what's really going on. They used to keep us hating single moms with EIC, but we're starting to see our own friends and family there. So now it's zombie-apocalypse soul-snatching identity thieves.

>>which may be why<< They could get around that problem by first matching return address to PTIN or preparer address. Beyond that, the database does already exist. It's big but they could cut through it pretty quick with zip codes. Then what--let the first one go through, or the first five? There are plenty of legitimate multiples, like nursing homes and shelters and communes and general delivery.

>>look for duplications of an address<< We all want the IRS to process our refund immediately, and check the return later. But we want the IRS to check everybody else's returns before issuing refunds. Imagine if you were the IRS Commisioner--do you think making taxpayers wait six to twelve weeks would increase or decrease compliance?

>>he should try to help his client, don't you think?<< Of course he should help his client. He should explore the genuine issues, which for all I know are indeed medical. And he should help with the collection process if it comes to that. In my opinion, Jack's assertion that "IRS Phobia is a recognized psychological condition" is false and will not help his client. However, I will keep an open mind if Jack will cite his source, as I did mine.

>>MSNBC interveiw today in the moring talks about 21 billion<< According to the article, this is not news. It is just blatant non-factual speculation about the next five years. Even if true it would still be a big drop from the 2011 number which itself only counts for 1/5 of 1% of the budget anyway.

>>consider seeing a psychologist and getting a professional evaluation... that is an accepted basis for forgiveness of penalties<< Like so many, this old tax dodge has already been tried. In TC Memo 1993-394 [compare to the 1990 date in your link], "Court wasn't convinced taxpayer had phobia of tax documents that prevented him from filing tax returns. Psychiatric finding was rejected: it was arrived at after only one visit, and no treatment was prescribed. Further, taxpayer performed other normal business activities, and even hired tax attorney to prepare his returns. Negligence penalties were also upheld." This lame excuse is an affront to patients with genuine mental health problems.

>>Maybe lying counts as activity<< No, only running. The 35 year Copenhagen City Heart Study. Politicians are always running--running for office, and running away from every thing else. Many of them do seem to live an exceedingly long time.

>>Hollister, CA<< What happened to Lodi? Oh I remember now--KPIG had to shut down the Paradise simulcast. Of course you couldn't stay. I feel it, but I kind of lost track when Travus T. Hipp died. Chin up--Cousin Al lives right there in Hollister!

>>IF it does not qualify as Investment interest then it should be capitalized, just as the repairs are<< Interest and repairs can not increase the basis of a house any more than of a car. Oh, I suppose you might call them section 195 Start-up costs, but when "renovating and repairing" goes on for years I would ask for a genuine business plan, The Section 266 election to capitalize specified carrying costs (not including repairs) only applies to unimproved land.

>>Should she turn her in to the IRS for income tax evasion and get a fee for doing so?<< No. Too much trouble for the unlikely benefit. >>Should she turn her in to Wage and Hour to see if they can get her pay<< Yes. Hardly any trouble at all and a good chance of (eventual) success. >>risk more stalking by the employer<< That's a criminal matter. Let her brother advise, not you.

>>is that all you can say?<< Actually, it's MORE than I would have said if I had known about the marriage. But now that I'm committed to the thread, I'll suggest that you do these forms by hand. After you get numbers that make sense from all directions, re-enter or override the computer data.

Bar-b-que!

>>What do you do with the mortgage interest?<< In court they would say that question lacks foundation. It assumes that there is something to be done with the interest.

>>I was hoping to get jainen in on this too.<< Yikes!!

>>The church must pay for all expenses and not make payments to the workers going on the trip.<< I agree with your suggestion, subject to the donors' wishes of course. There is no such thing as payments to a volunteer. Regardless of the source of funds, if the church gives money to the workers it also has to give them a W-2.

>>how will you deal with it if a client of yours wants to take the credit<< No credit because the sales contract was rescinded. If he whines I'll suggest a non-deductible capital loss for the license and fees that were not refunded. If he still whines, I'll suggest a taxable gain for the excess refunded over the FMV of a used vehicle. I can be just as silly as any of my clients!

>>there won't be any documentation to support that they were trying to rent it during that time<< Think creative. Maybe the Realtor listing or one of the work orders identifies it as rental property. Maybe a business license or landlord insurance still covered the period. Maybe he wrote about it in his blog. One CAN'T have a tenant during major repairs; that doesn't mean he changed its usage. Same with allowing a Realtor to ask around about it. Six months is not a long vacancy--it's just a couple of months to schedule the work, a couple of months to complete the project, and a couple of months to find new tenants. Perfectly reasonable. Just remember to cooperate fully with the IRS so you can remind them that if you have to go to Tax Court the burden of proof will shift on to THEM. (Of course, don't try that line until everything else has failed!)

>>they presented the info as a businsess<< Why are you pushing these IRS red flags on a family that already has so many problems? They're juggling hundreds of thousands, and you're bugging them about hundreds of ones.

>>not run like a business -- just helping out neighbors<< That's not an easy position to take. They depend on her income for more than a third of their earnings, and it obviously represents an ongoing activity to generate a profit. If you are trying to dodge SE tax (several times any potential EIC), you should document the not-for-profit factors. There's a good chance you'll get to use those records.

>>Are shareholders require to manually calculate and report income on their VA individual tax return.<< I can't answer about VA forms, but I would guess the corporation has to make the calculation, not the shareholders, Isn't that what Schedule VK-1 is?

>>Do your cleints with rental properties generate income for tax purposes? What am I missing?<< You are missing the last factor in the hobby loss determination, as stated on page 5 of Pub 535. "whether... You can expect to make a future profit from the appreciation of the assets used in the activity." Unless one is a slum lord, we generally expect residential rentals to generate taxable capital gain in spite of annual operating losses. The reason I said the sales effort was "unrealistic" is that six months is not long enough to list property in a buyer's market except at a quick-sale price. Especially when the house is all torn up. Meanwhile, there is a business purpose in testing market value, and it makes sense to do that when the property is otherwise vacant anyway. On the other hand, a long period of repairs begins to look like a capital improvement. If Julie's client decides to fight, she must address multiple issues.

>>income that SHOULD have been received in 2010<< Talk tax reform all you want but you'll never untie the Gordian Knot. It would be so fine to only pay taxes on what might have been under other circumstances, instead of what actually is. [per Wikipedia, Gordian Knot is "a metaphor for an intractable problem solved easily by cheating."]

>>this has been property.... Is there any basis for the IRS to limit the deductions<< Of course there is--that's part of the definintion of investment property. Although a professional might have saved something in the audit, the FIRST mistake was not getting tax advice about taking it out of rental service way back when. Depending on actual records instead of definitions, you may succeed in Appeals. It's a lot of work even to evaluate where the auditor was weak or if the taxpayer has a case at all. Get a substantial retainer up front, with a separate engagement letter requiring full cooperation from the client with no guarantee of specific results. In my opinion, capitalizing repairs is not a good argument. The strong position would be to document that the property remained a rental during temporary repairs, and the unrealistic sales effort was simply a back-up plan. On the other hand, a percentage of 7K is not that big a tax bill, even with the automatic state audit to follow. Maybe the taxpayer can just shrug it off as one of life's unfair things.

>>claim the credit in the year the classes were taken not when paid<< I disagree. According to Section 25A(g)(4), "If qualified tuition and related expenses are paid by the taxpayer during a taxable year for an academic period which begins during the first 3 months following such taxable year, such academic period shall be treated for purposes of this section as beginning during such taxable year." In other words, when PAID, not when used. The 1098-T was correct.

>>a letter from me explaining that client either owns that location or doesn't<< Odd question from a lender--they are going to run their own title search anyway, so it makes no sense for you to speculate on the matter. Tell your client you can only provide a generic statement (delivered to the client, not the lender) that you prepared the tax return solely from information provided by the client without independent verification, and that your work is only intended to comply with the tax laws and may not be suitable for any other purpose.