jainen

>>I wonder if anyone knows a court case that I might refer to?<< I love your understatement! There are dozens of rulings on different levels. General answer: none, it all depends on the specific circumstances. Some things are obvious--if you upgrade to steel, that's a capital expense. If you hang off a ladder with a bucket of mastic, that's a repair. In between can be pretty subjective, considering such things as the taxpayer's tolerance for audit risk. Don't forget how important non-tax issues can be. An original jainen theory holds that much of the drop in real estate values derived from over-expensing rentals. Nobody beats Realtors for understanding Time-Value-of-Money. That negative cash flow looks great on Schedule E as a tax shelter, but as a P&L sellers can't justify high market values.

>>Secondary mean High School<< The regs are referring to the education, not the student. There is no requirement that you have to be a high school graduate to claim the Lifetime Learning Credit. However, the education must be part of a college degree program or to improve job skills. Most high school students would not qualify on this point except for Advanced Placement classes.

>>Nope, just someone who hates to owe money and pays bills when received<< How can you say "nope" and then immediately give a perfectly good non-tax reason?

>>the client gets screwed by paying the tuition for 2011 early in December 2010.<< Presumably she had a particular non-tax reason for the advance payment, like maybe the school required it or she had to get it out of the account before the end of the year or something. That always trumps tax effects, in my opinion.

>>Compliance Fee 4.... costs incurred by H&R Block to comply with new U.S. tax preparation registration<< Yeah, that's fair. Registration was $69, so I recover that by charging $4 to each of my 17 clients.

>>Is there something I'm missing?<< Yes, you are indeed missing something. I don't mean this pejoratively, but ATX is not the gold standard for professional tax software. ATX is a fine program in its price range, but you can not expect it to do everything for you. It relies on you the preparer to research the tax code for the specific circumstances of your clients. You must determine the proper entry for each line, even when ATX does not provide all the details for less common calculations. I have had similar problems with ProSeries, which competes with ATX. This year I moved all my tax work to an accounting firm using Lacerte. But that has its own limitations and quirks (e.g., Schedule C auto expense is entered on Form 2106). And of course the tax code itself is full of conflicts and gaps.

>>why does it say, "do not include CRP payments?"<< That's not all it says--the whole restriction is "do not include CRP payments exempt from self-employment tax." The definition of net profit for this deduction is based on the elements of SE tax. There are several possible ways of calculating this and various special rules. For the last four years retired and disabled farmers have not had to pay SE tax on CRP payments, so anything using the same definitions must also exclude them.

>>taxpayers don't have ss#, they do have ITIN#<< Why exactly are you using an ITIN? Your client can not file with an ITIN if he is eligible to get a Social Security number, right?. So using an ITIN must mean he is a non-resident alien. And like the IRS has told you correctly, non-resident aliens are NOT allowed to deduct real estate tax on Schedule A. Check it out in Pub 519.

>>In CA the taxes on cigs are over $2/pack<< Not the kind I smoke. >>all their savings went up in smoke<< Yeah, the whole thing's a drag.

>>hit him with a 1099-C.... Hit them with a 1099-misc<< I certainly can't complain about somebody else being sarcastic on this forum, but as Randall points out this idea is dangerous. Let's be meek milquetoast bookkeeper types and turn the other cheek. Or cheeks. Block has to serve anybody who walks in the door, and can't even add a nuisance fee. But we independents get to choose who we give an engagement letter. Occasionally we have a problem, but that's an expected part of our practice and easily resolved with very little effort or expense. If you really feel abused (which happens), try this. Invest ONE 45 cent stamp for a simple invoice, copy attached to the front of the file and stuck back on the shelf. Then forget about it and move on. Sometimes you'll get a check. Sometimes you'll get a call from the new preparer asking for a copy of the prior year with depreciation or basis records or something. Reply that you are happy to give him all records but you can't send anything to a third party without a written release so the client will have to come in personally. When he does, there's that invoice.

>>"selling price" as remaining basis<< Unless she got some kind of credit or trade-in value, she realized zero from the disposition. That would probably mean a loss on the business percentage of basis. The basis would be reduced by straightline depreciation, and the Section 179 would still be recaptured accordingly.

>>Nothing on the new form indicates a form 1099-s<< Well, the instructions do. Almost identical to the previous year's instructions for Schedule D.

>>to work for nothing<< Don't think of it that way. You have a professional practice, not a bunch of separate jobs. You can't expect to have total efficiency. But if you have 200 clients, this guy is only one half of 1%. Giving him more effort than that would be your own choice.

>>if recapture rules apply the same for special allowance as for Section 179<< Not exactly the same. Section 179 recapture is triggered when usage falls to 50% or less, whether sold or not. Special depreciation is like MACRS in that depreciation is only recaptured on disposition. (For this purpose, conversion to personal use is not treated as a disposition, so recapture is delayed.) In the original post, MAS was asking about a car. Listed property triggers recapture of ANY excess depreciation when usage falls to 50% or less.

>>I'm out quite a bit of time<< Right. So why are you still throwing away even more time? Didn't you ever learn the mantra of all great sales seminars? "Some will, some won't, so what?"

>>If the CA AGI is above the filing requirement, then you have to file.<< Not just AGI. According to the Franchise Tax Board, "If your gross income or adjusted gross income is more than the amount shown in the chart below [at bottom of page at "]https://www.ftb.ca.g...ions.shtml#ifr] for your filing status, age, and number of dependents, then you have a filing requirement." That means, for example, disregarding IRA contributions and other adjustments. So generally if you have ANY amount of California source income and are required to file a return in any other state, you have to file California too.

>>those dirty dogs still got a chunk<< The same chunk your own state would exact from an out-of-state taxpayer, Tom.

>>Can we still use the 8453 with the 8949 with the information<< Maybe i"ll change my name to Cassandra.

>>Any futher news on this question?<< You mean the question of whether we are supposed to follow the IRS instructions I quoted? How about the actual Form 8453 we are discussing? It has a check box for attaching "Form 8949, Sales and Other Dispositions of Capital Assets, (or a statement with the same information)."

>>"FOR EXTRA VOLUME AND BODY."<< Are you sure that's what it means? I've been using that stuff ever since my army days when we used to shout all those bawdy lyrics as loud as possible. Hinky dinky parlez-vous.

>>putting in the expenses might may or may not make that big a difference<< What expenses? This situation is basically the same as the original post. We don't audit our clients one way or t'other. And we sure don't base our tax work on non-tax issues like what is best for underwriting a mortgage. Alimony is supposed to mean a specific thing, but it is used so generically and it's so uncommon anyway that I usually have to convince a client that support is NOT deductible. If they've already figured that out I don't try to embarass them by prying. As for business expenses, real estate transactions take months to play out. If she got a good start with lots of training and publicity last year why should you doubt that she spent her time this year reaping the harvest? That's the way it is supposed to work anyway, isn't it?

>>preparers who are currently unregistered were not under Circular 230<< Circular 230 is an ethical standard, not a law. In its own words it applies to "Any individual who for compensation prepares or assists with the preparation of all or substantially all of a tax return or claim for refund." That includes you, in case you were thinking of ignoring ethical standards.

>>the best that I can do for you<< Okay, in spite of my previous position I must now speak up in support of my friend Bulldog Tom, who long ago purchased my everlasting loyalty with two bottles of Mondavi. I know what the Wisconsin instructions SAY, but in my copious free time i have actually been unable to find any combination of numbers under $100,000 by which a non-resident with supposedly non-taxable Social Security would not pay at least a few dollars more tax than a non-resident without such income. Rounded to the nearest fifty or a hundred, it's about the same--but that is a few bottles of Mondavi, you know what I mean?

>>what are the "reasonable inquiries" I should make?<< For starters, no inquiry at all unless "the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete." Apparently you are worried that this client is TOO consistent and complete, but do you have any important fact. or factual assumption to support your doubts? Did she tell you that the GPS was a big help mountaineering in Tibet last summer? Did she bring in the log book and it's really just a household inventory with serial numbers? Did she pay $4500 for the so-called business computer the day before her son's 18th birthday? Whatever information you have that doesn't match up, that's what you need to ask about.

>>it is not (or at least should not) be our job to audit our clients<< According to Circular 230 at http://www.irs.gov/pub/irs-utl/pcir230.pdf, a preparer "generally may rely in good faith without verification upon information furnished by the client. The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete." This newly-updated treatise on professional ethics has great deal of interesting ideas, like what to do when you know that the client has lied in the past.