jainen

>>OldJack needs a refresher tax course<< In professional discourse, we do not expect everything to be "correct" by any reasonable standard. There is a great deal of ambiguity in the tax code, and it is very worthwhile to explore offbeat positions as the legal climate changes. Remember, even the IRS only calls for a one-out-three chance that it will be upheld. And that's when actually filing a return. We can be far more aggressive on this forum. Where would we be today if T.J. Starker hadn't insisted, seemingly in direct violation of statute, that he could complete a 1031 exchange months later, with a party that didn't even own the replacement property? A lot of "established tax law" starts out as "a little too independent." So if OldJack can make a good argument that "considered unmarried" need not be restricted to Head of Household, I want to hear it. It may seem to violate statute, but it obviously reflects the understanding of a great many taxpayers and probably many judges too. In case you haven't noticed, the definition of marriage is changing in taxation as well as the rest of society. For something with such enormous potential impact, it is entirely appropriate for him to demand we support our own positions. If you have any useful information to contribute, Bees Knees, we welcome it. If you just want to post personal slurs, another Internet site would serve you better.

>>code sec. 7703 2( c ) that you refer to<< You misread my citation. I did not refer to Section "7703 2(c )." Please look up Sections 2b and 2c, as I said .

>>the income amounts provide additional basis<< I think I agree with the other member, gfizer. The income did increase your basis. But perhaps we are talking about two different things. Additional basis in WHAT?

>>pay 3-8x more to have *comprehensive,* tax-preparation software<< I generally use Firefox with Windows 7. Tonight I was researching Checkpoint (not cheap software) for my reply to OldJack. I had to switch to IE to access the code history text. Microsoft is the standard because it works in all sorts of settings. Others may be better at this or that, but then not work so well with these or those. If I were a programmer, I would write for IE too, because everyone has it. I wouldn't try to stay on the leading edge with Chrome or Firefox or anybody else. Why should I? My interest would just be whatever my own content is, not the fanciest features that most of my customers don't even bother about.

>>nothing in the statute that says this person, considered unmarried, must file head of household<< Sorry, OldJack. I tried to give you an easy out, but you are being obstinate. Now I'm going to have to embarass you by citing the actual statute you have declared does not exist. But first, I want to point out a couple of OTHER times when a married individual must be treated as unmarried for tax purposes. We know there is no federal marriage as such; it is just a law in the various states. Here in California some same-sex couples are legally married, but still must file as Single. And I think the spouse of a non-resident alien would normally file as Single. Now for your statute. Note that your quote doesn't cover the entire tax code, only those parts that specifically refer to Section 7703. That would include Sections 2b and 2c, which run through the usual requirements for HoH to give the definition of an individual who "shall be considered a head of household." Not may be or could be or ought to be, but SHALL be. In other words, if you happen to be one of those "certain married individuals living apart," you are head of household, period.

>> certain married taxpayers living apart << OldJack is teasing us, and quite properly so. He challenges us to get off our assumptions and defend our position with something specific. The answer is already in this thread. I absolutely agree--some married taxpayers can use the Single filing status. Of course, not everybody, only "certain" ones. So which ones? Obviously it's the taxpayers who aren't eligible for HoH but are indeed still married--though "separated under a decree of divorce or separate maintenance." Q.E.D., OldJack.

>>cannot force her husband to divorce her<< "Legal separation" is very rare these days, because all states have no-fault divorce laws. Generally the only time a judge would agree to issue an order of legal separation is where the spouses are strongly opposed to divorce for religious reasons. There is no such thing as "implied legal separation." She MUST get a court ruling or she is still married, at least for purposes of income tax. She doesn't have to force anybody or prove anything. She doesn't need any reason at all. But she does need something signed by a judge.

>> more clients leaving dirty socks<< Don't sweat the small stuff. When that happens, I always just fax 'em back to the client. Saves on postage.

>>parents both have altzheimers<< Yes, at least according to the IRS. A Power of Attorney does not grant the right to sign a tax return unless it specifically says so. And in any case a Power of Attorney ENDS when the maker becomes incompetent. The son should obtain legal counsel if he wants to handle his parents' affairs.

>> Bees Knees << "The lady doth protest too much, methinks."

>>Amy McAnarney, Executive Director and VP of The Tax Institute at H&R Block. "TheTaxBook contains superior content, is easy to navigate, and is published by a company with experience we can trust." What more needs to be said? << As BeeKnees quotes, The Tax Book can apparently serve the limited needs of the inexperienced workers in national franchise offices, a very different group than the independent practitioners here in the ATX Community. Block employees have far less control over deciding tax positions or even standards of client service. My own evaluation found Quickfinder to be faster to use on topics I know well, with more comprehensive citations for topics I need to research.

>>she exercised the option but did not sell the stock<< This would seem to be the case, as there is no 1099B. An amended return is not needed unless the AMT adjustment changes her overall tax.

>>he really didn't try to generate revenue << In my opinion he was not actively conducting a trade or business during the time he could not legally practice. Therefore his expenses are not deductible, or at least must be capitalized. Nevertheless, his SE insurance deduction is supported by the old collections, which are clearly self-employment income.

>>Does the excess of 13,500.00 have to be reported on Form 709<< The ENTIRE $19,305 must be reported on Form 709. It is not a difficult form. Most of it probably won't even apply, so read the instructions carefully at Form 709 Instructions.

>>how do you apply the taxes paid in 2009 to the 2010 disbursement?<< Presumably when the conversion income is subtracted, Form 1040X will show a refund for 2009. Use Line 22 to apply it to 2010. I suggest you put 2010 on extension for two or three months until the amendment has been processed.

>>it is always deductible<< Corrected response: Payment of estimated taxes may not be deductible in some situations. Payment of actual tax due (excluding penalty and interest) is generally deductible except as limited by AMT. The deduction may also be limited by expected or actual refunds, change in filing status, or another less common circumstance.

>>does HOH over ride that necessity for MFS?<< That depends on which spouse is your client. In your case, the HoH can take standard deduction even though her husband itemizes. But if SHE itemizes on the HoH, he does not have the same choice.

>>it is always deductible<< I can think of at least two circumstances when state taxes are not deductible. If payments greatly exceed the reasonable amount needed to cover taxes due the following year, they are generally not deductible. Estimated payments made in January would likewise not be deductible to the extent they are offset by a refund in April.

>>how he could be a resident of Virginia if he is not a resident of the US<< Virginia residency is defined under a different law than the federal. In the same way, a taxpayer could be a resident of two states at the same time.

>>there must be a "profit motive"<< If it has been years since they showed a profit and they keep doing the same thing anyway, it's kind of circular argument that they must have some other motive. It might not be a tax motive. Maybe they have some commitment to the family name or something. The IRS wants to see that the business is making a bona fide effort--getting training or professional help, upgrading equipment, seeking new markets for new products.

>>both CA and WA are community property states<< Idaho, too. >>what do I do without a SS number<< The instructions to Form 1040 have dropped the use of "NRA" (non-resident alien), though it's still available for the 1040NR. See page 8 of Instructions 1040NR. Apparently all of the choices which would allow her to file on Form 1040 require an SSN or TIN. There's still time to get a TIN without an extension, because if she files a joint return the due date is June 15.

>> the IRS "calendar year" usage << The vacation home rules are in Section 280A, and generally apply to use "during the taxable year." However, there is an exception when the usage changes as it did in this case, assuming it was rented for at least 12 months immediately before they moved in. Meanwhile, this isn't your queston but don't let them think they can exclude gain on sale after living there two to three years. They will have to deal with "unqualified use" rules in Section 121 for that.

>>her income is about 55,000 << She is MARRIED, period. Filing as single would be blatant tax fraud, so I am apparently misreading some comments in this thread. Her only choices are Joint, Seperate, or (in other circumstances) HoH. I shouldn't say her only choices, because she still may have options to exclude his income or claim an exemption for him on her separate return. Any tax guide, including even the instructions to Form 1040, will be an easy review on that point. I don't know where in Oregon you are, but if your client lives over the line in any direction she can (in fact, she must) allocate 1/2 of her community income to her spouse.

>>Do you split everything 50-50 << Yes, YOU probably do because you are in a community property state, According to the instructions to Form 2210, "If you filed a joint return for 2009 but you are not filing a joint return for 2010, see Pub. 505, chapter 4, General Rule." Basically, you figure the tax each would have owed had they filed MFS in 2009, then apply the same ratio to the actual payments.

>using the computer for tax work and Quickbooks<< There are two differences. Pro offers heavy duty network capability and Pro offers a "virtual" XP mode for older software. Obviously you upgrade your tax program every year, and you might as well get the newest Quickbooks for your new computer too. Cost matters more for big corporations that don't want to buy lots of new licenses, but you just need the one. Home will be fine for you. It has the same graphics capabilities so you can watch all your movies. Well, maybe a machine with Pro will also have a better graphics card and more RAM and so on, but that's comparing more than just the operating system.