jainen

>>What would be some acceptable wording for "reasonable cause" for filing the election late?<< I hate this question. You aren't supposed to just make up something that sounds good. What in fact was the real reason? I'll tell you one thing. Don't bother saying stuff like "his business finally got it's feet and started making decent profits.... Decided to make the S election November 2011." That's the WORST reason, where they want a retroactive election after seeing how the business did. The best reasons (only if true) involve some outside event the company could not control, like death of a key officer, destruction of records, or a court order. I don't consider michaelmars suggestion in that category, but might allow it if corporate minutes or other records show a timely decision was ACTUALLY made.

>>Mass state requirements are tighter than the Federal ones<< This is a very excellent fact for someone with very excellent records. The personal trainer in Margaret's original post could enjoy that paid vacation on Unemployment Insurance AND still write off all her mileage and other deductions as an independent contractor!

>>Dubose was seen by a patrolman loitering near the ATMs of three banks, wearing pantyhose over his face as well as beanies and a scarf.<< His big mistake was wearing more than one beanie. Even in California that's going to attract attention.

>>If they are getting any kind of discount on the premium<< Two things wrong with that argument. First of all, ALL group plans involve employer subsidy, even if dependents or other individual non-employees pay full price to participate. That's the only way an entire group can be covered since some members might not be otherwise eligible for health insurance. Second, even if it weren't subsidized, it's still the employer's plan--not established under the sole proprietorship.

>>has for years<< Oh yes, that has always been the rule. But who ever followed that rule? What's new is that next year California will require taxpayers to report three more things--the deductible amount, the non-deductible amount, and the parcel number to make sure. The tax bill I happen to have in my hand at this moment is for $1528. Of that, 47% ($723) is non-deductible because it is not based on property value. I'm already having trouble telling clients that half their mortgage is not deductible after their last refinance. And half their boomerang kids are not dependents because they had those temp jobs last summer. And half their charity contributions are not deductible because the community groups aren't incorporated. Who looks good for electing on a third-party ticket this year?

https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/index.shtml You'll love this! And don't think you can ignore it just because you live another state.

>>if son was not aware of the deed<< Legally speaking, a recorded deed is constructive knowledge. But if Mom retained possession, using it as her home with the duties and benefits of ownership, it is still included in her taxable estate. So even if the total estate was less than the exclusion amount, it gets a stepped up basis.

>>left me a half-empty box<< Half a box more than you had before! Better than a half a box of miscellaneous receipts, at least. And a costume pageant besides!

>> isnt the husband's employer anymore<< Show him the Instructions to Form 1040, Line 29. The law says "employer," not "current employer." Maybe he's on disability or COBRA or retirement. Doesn't matter. If his ID card shows that's a group policy, it isn't established under the wife's business. Oh, by the way, why didn't he go back to his previous tax preparer?

>>audit risk of XYZ LLC is fairly small (limited IRS resources)<< IRS doesn't care--it's the state labor people. The way it works is one of these trainers that come through for a while gets tired of working and files for Unemployment Insurance. Or even Workers Comp. And because he knows the game (having already played it a few times with other companies), he has all the paperwork showing it was always XYZ's clients, XYZ's schedule and facilities, XYZ's exercises. But XYZ isn't your client. So tell New to keep all her records, and she can get a paid vacation next spring.

>>In my program I get as instant message<< You have a better program. She went el-cheapo, and then didn't even do the data entry right.

>>sec. 1,750.05 states... <<< sec. 1,750.05 of what? >>Does this change the personal use greater than 14 days answer?<< It kind of sets that answer aside and takes the discussion in a different direction.

>>don't want NC to walk away from what could be a great deal<< Once again we must remember that if a deal isn't good without a tax advantage, it's not a good deal. My magic rune sticks say they're going to pay her on a 1099 no matter what she wants, but I hope they don't get audited.

>>group of folks will be trained by single member of business or another trainer<< Generally I think this is an employee relationship even though New Client has a different business arrangement for his own clients. New Client does not control who he trains for XYZ, the facilities or schedule, or even the specific training methods. However, one of the key factors may be that the work does not have to be performed personally by New Client. This sounds unlikely to me considering New Client's professional qualifications for the quasi-medical nature of the job. But if it is a GENUINE part of the deal I would weigh it in relation to the rest of the terms. Does New Client LLC in fact hire other trainers?

>>IRS instructions say that if a TP rents their property less than 14 days, the income does not need to be reported.<< Please give a citation for those instructions. Pub 527 says, "If you use the dwelling unit as a home and you rent it fewer than 15 days... "

>>my church paid some to my college toward my tuition<< That's a pretty good score, but not as sweet as the guy in the original post who got the GOVMINT to pay for his tax break!

>>total income up 4%; taxes up 11%. Income up 12%; taxes up 27%<< Remember that all of the new income is taxed in the top tax bracket, so the new tax will be proportionately higher. Some taxpayers get double-taxed when higher income catches more of their SS. You are comparing taxable income with total tax. Total tax is AFTER calculating capital gains rate, most credits and SE tax, so depending on the mix those elements can indeed raise tax even if total income goes down. Good time for planning engagements, if only we could figure out how to charge more.

>>the way I felt standing in line last week<< Hmmm--was that the line for the bulls or the cows?

>>balance due on the 1040X of $4 less than what we asked to be credited<< Probably the refund/credit is already in place, and the full amended balance due should be sent in now. Alternately, she can still make her first quarter estimate in the same amount. If she waits until after April 17, she might be more certain because the amended will not be treated as an original return (at the small cost of late payment penalty).

>>if he did not pay it, he cannot claim it<< According to the instructions to Form 8863, this question can be answered by referring to Pub 970. Chapters 2 and 3 (AOC and LLC) tell us "Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you." But when you get to Tuition and Fees Deduction in Chapter 6 it changes. "Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student’s qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. If the student is your dependent, no one can deduct the payments." Original post was about education credits, not the deduction, so I disagree with the other two answers.

>>the informed and experienced professional<< >>if you are not paid you should not sign<< I'm between the two Jacks on this. I don't know if I can sign a pro bono return, but I do know I should sign it. Although "tax preparer" is defined in the Code in terms of compensation, Circular 230 spins it around. It doesn't mean that you aren't a tax preparer if you don't get paid. You aren't allowed to get paid unless you are a "practitioner" with a PTIN. And only a lawyer, accountant, EA, or RTRP can get a PTIN. But we are all subject to the same standards of practice, even unlicensed persons who charge illegally. The definition of "practitioner" subject to Circular 230 does not depend on compensation. There's also a difference between a preparer and an ERO. It is still possible for you to e-file a return that was not signed by a paid professional. Only thing you can't do is drop the envelope in the mail for a client. You have to either e-file any tax return in your hands, or give it to the client.

>>I've read Pub 4681 and nothing there states it's to be reported<< Page 10 says, "The foreclosure or repossession is treated as a sale from which you may realize gain or loss." So you report it the same way you would have treated a regular sale. It might be a sale of business or rental property, perhaps releasing suspended losses. Or it could be a home or personal use property, with non-deductible loss or Section 121 exclusion of gain. Whatever.

>>in case she turns out to be one of those who wants to paw through my underwear drawer<< There aren't many that bad still in the business. But your son (apparently) has search terms. That means anytime, anywhere, any officer, any reason. Your entire home can and probably will be tossed if your son continues to associate with trouble. Some space might be protected if he clearly has no access, but that depends on things you can't really control. Try to work frankly with the probation officer. She doesn't care about you or your legitimate files, and this is one situation that a lawyer could totally mess up.

>>HE doesn't normally fix software<< Shucks, didn't you see my quotation marks? It was just an ironic allusion to Darth Vader's daughter.

>>You guys are my last hope<< "No, there is another."