jainen

>>to fly skydivers, which is much better than crop dusting<< I believe crop dusters will all be out of work within five years anyway. The drones are coming!

>>put a note on the 1040 or 1041 to show why it's reported with a different EIN<< That's what the instructions for Schedule A say about claiming interest from someone else's 1098. But remember it is investment interest expense on the 1041, so it is only deductible to the extent of investment income. That probably makes a big difference with a reverse mortgage sold for the step-up FMV.

>>Here is the answer.<< Thanks for the great research, Jack! This is an example of how a transaction can be completely proper under its own regulations, but still inconsistent with tax regs. Sometimes it's really hard to explain that to the client.

>>fees paid to township, architect and engineers<< Development costs are capitalized, so he apparently has a non-deductible capital loss on personal-use property.

>>Can the revese mortgage interest also be moved to the 1041?<< Yes, in fact it must be. On the final 1040 report only amounts paid prior to death; you don't need to explain why it is less than the 1098 amounts..Note that in both these situations the estate treats it as investment interest expense, not qualified home mortgage interest.

>>forgiven in 2011 due to disability<< Do you mean it was forgiven out of sympathy? Disability does not necessarily mean he is insolvent.

>>how did you fix it?<< Ummm--read the instructions? http://helpx.adobe.c...t-open-pdf.html

>>how am I supposed to find the money for this?<< The idea is that a professional practice should be able to support the resources it needs to keep up to date. Otherwise, like, check out the hobby loss rules.

>>closer to 11 million<< That's 11 million FAMILIES. Most uninsured Americans are children. http://money.cnn.com/2011/09/13/news/economy/census_bureau_health_insurance/index.htm Europeans are bewildered at our lack of coverage. They see health care as a human right. And our system is already hugely dependent on taxpayer funding, starting with research. (Even St. Jude relies on about as much from government grants as from private insurance http://www.stjude.org/stjude/v/index.jsp?vgnextoid=a516e9e5e9a0e210VgnVCM1000001e0215acRCRD&cpsextcurrchannel=1.) We just don't have much taxpayer oversight. Among the most effective segments of health care in the U.S. are MediCare and VA. In comparison, children are relatively inexpensive but they are locked out by the great fear that they might have safe sex.

>>the IRA contributions are not deductable because I did not pay myself any wages<< Worse than non deductible. The excess contribution is subject to a 6% excise tax every year until withdrawn. Any earnings have to be withdrawn too, and they are subject to a 10% excise tax in addition to your highest tax bracket. If you were audited the IRS might recharacterize your S-corp earnings as wages, so why not do that yourself first? Like MAS says, contact a tax professional in your area.

>>what we'll be dealing with if the Supreme Court does not do their Constitutional duty<< Yep. Much better to have 40 million Americans keep on using emergency rooms for everything. Public health takes a hit, but hey--tax dollars cover it all with hardly any paper trail.

>>Paul puts nothing out his pocket<< Use the gift basis rules for 1/2 the purchase price. Also note that the new loan had a "large amount" of cash out that is not acquistion debt for purposes of tracing or deducting interest..

>>If the parent who lived with the children only 7 months wants to claim them, that parent needs to secure form 8332 from the custodial parent.<< No, that is not how it works. In your previous post you said 5 months. If it was 7 months instead, then they ARE qualifying children for the father so he can claim without Form 8332. However, if the mother also claims them the tiebreaker rules would cut the father out. Grandparents can't win the tiebreaker against either parent with more than six months.

>>the father will win the tie breaker<< Since the children lived with the father less than six months in 2011, they are not qualifying children for him. He can only claim them with Form 8332. They are qualifying children for the mother and grandparents, so there's nothing you can do about who claims them.

>>e-file then amend option is the best<< In my opinion you should not intentionally file a false return. This is another example of how practitioners might be more concerned with convenient office procedures than with the accuracy of their work product. If a return is not eligible for e-file, just mail it. What's the big deal? Then amend the child's return and mail that too.

>>take me to the part that speaks about the medical deduction<< The point is that it does NOT speak to the medical deduction in particular--nothing does. California has adopted the ENTIRE federal tax code unless there is a separate law, court decision, or FTB ruling. Which there aren't any about deducting marijuana, so none of the opinions you found are based on anything except phantasy. For TAX purposes it does not matter whether medical marijuana is legal to use. Many legal things are non-deductible. California conforms to the federal law for medical deductions, which means that because marijuana is not deductible under federal law it is not deductible under California law either. In fact, it's the same law. SB401, "Conformity Act of 2010," updates California Revenue and Taxation Code to the "specified date" of January 1, 2009. See the top of page 7 at http://www.novoco.co..._sb_401_enr.pdf.

>>nothing in the tax codes for California<< There is a recent California law, name of SB401. This conformed the California law to the Internal Revenue Code as it read on January 1, 2009. In other words, there is no separate California deduction for medical expenses. As you say, there are lots of different opinions about how it should be--just no different laws or rulings about how it actually is. We are required to use the federal amount, period.

>>He does have a prescription<< No he doesn't, at least not in the usual sense of the term. It doesn't even prescribe a dosage, for example. And it is not anything that can be filled at a drugstore, at least not in the usual sense of the term. Ginseng tea is another powerful herbal remedy often "prescribed," but it is not deductible either.

>>Be AFRAID!! Be VERY AFRAID!!!<< Yes, I am afraid. I am afraid of the cavalier attitude that has discredited professional tax and accounting work. I am afraid of low standards of quality that has caused the IRS to rewrite its ethics guide. I am afraid that some of my colleagues care more about their workflow procedures than about the accuracy of their data.

>>tried going into business for himself in 2011 without any luck<< Expenses of an unsuccessful attempt to go into business are not the same as expenses of actually operating a business. According to Section 67(b ) they are subject to the 2% of AGI limit on Schedule A.

>>No "financial problems"<< Perhaps I misunderstood, but you did say she had to use SEP funds when she missed a "hefty" payment to IRS. Cash flow problems can really tear up your mind. I know the Social Security clerk was more kindly than me, but she was wrong. Doc did not qualify for permanent disability under the same definition the IRS uses.

>>We know it is not on the federal level<< Like federal, California only allows a deduction for PRESCRIPTION medicine. You can deduct Marinol, but not marijuana. Besides, no deduction is allowed for an expense that the taxpayer would have paid anyway even in the absence of the medical condition.

>>Your quote from the Pub made me all warm and fuzzy<< That's even more interesting! But before I take advantage of your emotional swings, I will confess that I understood the quote to argue against your position. It seems to me that she took time off from a very stressful job because she had financial problems as well as health concerns. Even you had "little faith" in the original diagnosis, and everyone agreed she needed better medical testing. Which called for no treatment at all, and shortly proved to be negative.

>>1941... 1964<< Ya skipped the 1961 Bay of Pigs invasion.

>>I've not heard of accepting an electronic signature from a client.<< Also known as efile. YOU aren't accepting the electronic signature, the IRS is. However, according to the Instructions to Form 1040, "A PIN is any combination of five digits you choose except five zeros." And since he is using a tax practitioner he still has to sign Form 8879.