jainen

>>the $5 “incident” portion of the per diem as defined by the IRS.<< No such thing. The IRS publishes a rate for M&IE and an incidental-expenses-only rate. There is no meals-only rate. If the driver pays for meals, he is eligible for M&IE rate (80% deductible).

>>carpet is a specifically noted 5 year rental property class<< Carpet may be a capital improvement if it adds to the life of the building or makes the building useful for another purpose. In other words, if you upgrade from the old sawdust floor system to a nice Persian weave, depreciate over five years. If you're just fixing where the cat peed, expense it.

>>quickfinders has a worksheet<< This is the key. You have to work out the numbers with a pencil. Once everything (including Form 8842, Schedules B and C and D and whatever else is involved) is completed by hand, with a pencil and a hand-held calculator, only then (after an appropriate rest period) can you work on getting it into the computer.

>>NO ONE else can claim the exemption if parents qualify for it<< No, sometimes a sibling or grandparent could. If the parents don't claim the child but the child is also a qualifying child to some other family member with higher AGI than both parents, that person could take the exemption and everything.

>>Client took loss on sale in year of sale (Sch D). Interest received has been reported each year. Balance of loan was $7900 when last payment received. Balance was $8020 @ foreclosure after adding 3 months interest not paid.<< I think you are confusing the question by including irrelevant details. If there had been a gain reported on the installment method, you would have to recalculate the gain. But the loss is history,. Same with interest wihich has already been reported. As for the balance of the loan, cash basis taxpayers don't get to deduct bad debts. If he received property in exchange for the note, his gain or loss is determined by the current FMV of the property received compared to his basis in the note, presumably FMV of property when sold minus payments on principal.

>>what part of Cir 230 this violates<< Section 10.51(a)(12), "Contemptuous conduct in connection with practice before the Internal Revenue Service."

>>Somebody slap me!!!<< OMG I didn't realize anybody else on this Forum was into that stuff too! But I have to wait until April when I have more time for fun! BTW, where exactly does this paper requirement come from? It isn't in the instructions to Form 1040V on the IRS website, and my software doesn't mention it.

>>new 27.5 year depreciation<< When you remodel, the addition to basis is depreciable over 27.5. But this cost of financing is an intangible with no determinable life. It gets capitalized with no write-offs until gain/loss is determined on disposition.

>>Spreading it over the life of the loan makes sense.<< How does that make sense? I challenge anyone to find some actual authority for it, or even in a standard tax guide. To the extent the refinance is acquisition debt, related costs are treated exactly like the same costs for acquisition debt. Of course to the extent it is not acquisition debt, nothing at all is deductible. Oh, I suppose there is the possibility of cash out for operating expenses, but people don't often use a mortgage to pay utilities.

>>If 7th year vehicle is not fully depreciated continue with the 10% SL<< I don't understand this. First of all, 2017 is not the 7th year; it's the 16th year. When you switch to SL, you divide the adjusted basis by the number of years remaining in the useful life. Except as limited by business usage and 280F, that straight line does not change. I don't see why you drop from 20% to 10% at some point. And I don't see where 17.50% fits in either.

>>Akin to a traffic ticket<< Tickets are for violations of law. Contracting is an inherently dangerous business, but we expect the contractor to fix anything he breaks. Paying for accidental damage from utility trucks and other equipment is an ordinary and necessary operational expense.

>>they owe money<< Prepare an MFS return with no dependents for your client. E-file the extension Form 4868 and give him a paper copy to send in with payment. Explain that he has until August 15 to bring his wife in and get the amount reduced to $xxx. [i find that date works pretty well for a deadline.]

>>I've done them grouped by casino for years<< Presumably those were PAST years? How about now? On the other hand, obviously this client likes to take a gamble so give it a spin.

>>as long as the total matches it should be ok<< The return is not eligible for e-filing. So don't do it. What's the big deal about that? You might be able to screw up the paperwork enough to get it through, but why in the world would you want to expose your clients (and yourself) to the increased scrutiny the IRS is able to do with their powerful computers these days? Unless there is a significant tax savings or other benefit, I think following the instructions is the best thing.

>>representing in audit for my clients for over 20 years<< This is not about what you did in the eighties--the relevant law is only six years old! As for "a situation as described above," all we know from the original post is that the student did NOT live "at home," and obviously that was NOT for the temporary purpose of education because she stayed away even when she wasn't in school. Maybe the job was temporary too (we don't know that either), but still there was no return to the household for at least another school year. Spreading "temporary" over three tax years is a stretch. Well, that isn't what Terry was asking anyway. I'm just upset because the temperature dropped down into the thirties last night.

>>I try not to get involved in client disputes with other preparers.<< It seems to me you are very much involved this time--in fact, you appear to be the driving force. Why don't you just show your new client how nicely YOU can fix the problem?

>>Time at school is counted as time in the home.<< This is only true if the school is a temporary absence, which it is not if the student only stops in occasionally to visit. I don't know what the case law on this is, and the regs are not exactly to the point. Section 152 doesn't define temporary under the qualifying child rules. It's in the old regs now called qualifying relative, where the question is whether a non-relative lives in the home all year. "The taxpayer and dependent will be considered as occupying the household for such entire taxable year notwithstanding temporary absences from the household due to special circumstances. A nonpermanent failure to occupy the common abode by reason of illness, education... under which the dependent is absent for less than six months in the taxable year of the taxpayer, shall be considered temporary absence due to special circumstances."

>>1040 Line 36<< Read the instructions to this line at http://www.irs.gov/p...s-pdf/i1040.pdf. But he probably has it wrong since 501( c)(18)(D) is a rare elective salary deferral through a labor union instead of the employer. He must have entered it with Code H in Box 12 of the W-2, misunderstanding the on-line software. Government workers typically have a 457 plan. There is no Box 12 code for 457 plans, but Box 1 taxable wages should be that much less compared to Box 3 SS wages. If this is the case, you can show him that he is already taking the deduction. (Note that without a code it can't automatically carry to the Retirement Savers Credit.)

>>(F/T student living away from home)<< No such thing in Section 152. To be a dependent, the student has to live with the taxpayer for at least six months, including TEMPORARY absence for school. This little bird has flown away. And no, rent is not deductible. Even if you say the student lived with parents, the "tax home" is where the principal job is, not the principal residence.

>>BTW, I would have him go back to his prior CPA to do amendment #2<< BTW, why?

>>I just read it in a 2011 book<< No you didn't. >>I only put the gain in colume g<< Who cares about column g? What did you put in columns e and f? And yes, if he would otherwise be in the 15% tax bracket his tax rate for long term capital gain is 0%.

>>the blank acknowledgement receipt is not proof to claim a deduction<< Do you charge extra for pre-auditing your client's return? Obviously the receipt was not totally blank, because you were able to identify it as exactly what the client said it was. Your job is to apply the 30% and 50% limitations and otherwise complete the return, not analyze the wording of a receipt. Depending on the value, the code calls for surprisingly little substantiation anyway. Pub 526 says you can even skip the receipt entirely sometimes when it is "impractical,"

>>there is no step up basis for installment contracts<< Normally this is true because it is income in respect of a decedent. However, if the "farm" was depreciable business property, installment treatment was not allowed on sale to a related party. Maybe "many years ago" the seller failed to report capital gain in full, but if the statute of limitations is past, it's past. The contract is revalued at date of death, with capital gain/loss calculated on sale accordingly.

>>all I want is to do a simple return<< Anagram for "simple return" Err--Smile--Punt

>>I put the amount of the gain thus far in column g<< According to the instructions, gain is determined by entries in columns e and f. Column g is only for adjustments, like if the 1099-S is wrong. >>if you sell land that is part of your homestead either 2 years before or 2 years after the sale of your main home; you can defer the gain<< That particular tax break was repealed 15 years ago. Your client may be able to exclude gain instead, but not if by "homestead" you mean 160 acres.