jainen

>>The ony time to go this route<< I wouldn't say "only." First of all, not all married couples are even eligible to file joint returns (non-resident aliens). And as you point out there may be various non-tax reasons for MFS. >>from a Federal tax standpoint is there such a thing as a legal same-sex marriage? << Well, technically there are no marriages at all under federal law. It looks to the individual states, so for example some common-law couples can file MFJ and some can't. That is why I expect the Supreme Court will eventually accept same sex marriages as a matter of states rights. Meanwhile, we can at least say that the relationship does not violate local law, which is an element in claiming a dependent.

>>claiming their spouse as a dependent<< This idea always hangs around, fueled by stupid stuff like this ehow.com. But you know, there is some fact in it. According to page 10 of Pub 501 at Pub 501 it IS sometimes possible to claim an exemption for a spouse when filing MFS. And welcome to the 21st century! In a legal same-sex marriage, a spouse might well qualify as a dependent on the federal return.

>>they need to re-hang the returns, whatever that means<< I don't know what that means, but it sounds good. Maybe it's, like, stick back up on the rack. Or maybe hang the clients. Hang this whole job. Anyway, sounds good.

>>SPECIAL PIN FOR VICTIMS OF IDENTITY THEFT << I prefer the arm band because it won't rust in the wash. Actually, the best thing would be a tattoo.

>>Can a return signed by daughter having power of attorney be filed?<< According to the instructions to Form 1040, "you must have a power of attorney that specifically authorizes the representative to sign your return." Most general Power of Attorney forms do not SPECIFICALLY authorize tax signatures. The IRS doesn't seem to challenge many, but that is the rule that you are supposed to be following. By the way, why can't the taxpayer sign her own return? If she is no longer competent, a general power of attorney ceases to be valid for ANY purpose anyway. In other words, better paper file this one, 'cause as a professional you probably can't accept the daughter's signature.

>>the IRS puts so much responsibility on US << Surely tax preparation is the LEAST regulated financial service. Compare the IRS to the SEC and bank regulators. Of course, THOSE guys need and deserve regulations. Our own ethical standards are self-imposed through the long-standing good works of our industry associations like AICPA and NAEA. But too many of our colleagues got greedy. Since the Big 5 scandals, the country (that is, our own clients) have demanded stronger protection. Still, it's taken this long and we only have the flimsiest registration system. Read this forum, this thread. The concensus is that we just won't play along with these cheats, even if we lose business. That's honest self-regulation.

We've had some threads about the most outrageous things our clients say. How about the most outrageous thing--that was just almost believable so you got talked into accepting? I have a client that got married last June, but doesn't live with her husband yet. She only visits him on the weekends, 25 miles away, then returns to her own place. Of course, they both have their own kids so its HoH all around.

>> America will never be destroyed from the outside. If we falter, and lose our freedoms, it will be because we destroyed ourselves << That's a bit strong, Marilyn--I mean, it's only a cell phone! But I'm reassured to learn it doesn't matter if I can't figure out how to turn the dang thing on, because nobody else can figure out how to hear me on the other end anyway.

>>I will follow KC's suggestion << Personally I never feel comfortable doing that. Apparently it works okay, but it means signing a return I know is not factually correct.

>>the IRS itself does not ever question such filings<< Well, they do sometimes. Look at TC Summary Opinion 2002-37. First they just said the guy didn't provide half his kid's support. When he argued with them, IRS called him a cuckold.

>> I am still a he << Forgive me--I'm from California where nobody can ever figure that out anyway, even about themselves. I edited my post, and I'll refund my fee directly to Daddy's Girl.

>>What do you think?<< I think the company has some inexperienced bookkeepers, but after you complained somebody who knows what they are doing fixed it all. I assume you tell all your clients to immediately bring you any IRS letter. If IRS should ask about this 1099 snafu, you'll be able to explain it with a single phone call.

>>should it be converted with SOS as LLP?<< Choice of entity is very complicated, and it is important to be very careful with it. You will need local advice as the requirements and benefits of an LLP or LLC vary from state to state. Variables include the type of business it is, who the active partners are, profit level expected at this stage of growth, overall business plan, nature and amount of assets to protect, type of potential liabilities. Many other things. If you are not experienced in this analysis, I strongly recommend you refer the question to someone qualified. Otherwise it could go horribly wrong for your client--and for you too.

>>Just a little humor<< Like many on this forum, MAS is a bit wary about my posts. The last time I answered him (Inconsiderate Son), it was not funny at all. So I figured I owed him some light-heartedness with good numbers.

>> hands-free speaker function << Anyone know how that works?

>>the IRS will be looking for a Sch C<< Get a power of attorney on file with IRS, and tell the client to send you the IRS letter as soon as it comes this summer. You'll have more success phoning the IRS than calling the company.

>>FMV $170K<< It looks to me like C.O.D. income is $165K (335-170). You will need to determine if he is eligible to exclude that due to bankruptcy, insolvency, or qualifed real property business. In any case, he also reports the sale on Form 4797 with gain/loss calculated as $170K (lower of balance due or FMV) minus his adjusted basis. Make sure you agree about the correct FMV. It's not likely, but if use of the property changed he might have to amend 2006 to remove the 1031 exchange and recalculate basis. Somewhat more likely is that I got something wrong in this post, but I'll refund my entire fee if needed.

>> she will help me << Sounds like a cry for help, and to my ears that means a good tax planning engagement. Most clients don't ask for consultation that clearly. The successful professional, of course, would start by reversing the subject and predicate.

>>deducting a crazy amount of items << A new ruling, TC Memo 2011-42, shifts the focus from specific deductions to how the activity was operated. It involved an Amway dealer where both spouses had other employment. This summary is from RIA Checkpoint. "Lack of profit objective was shown by facts that taxpayers commingled expenses, had no idea if they were making profit for any given year until they filed that year's return, didn't keep complete records, and otherwise didn't conduct activity in businesslike manner. It was also telling that taxpayers didn't have experience in this type of activity, didn't seek out independent advice, used activity losses to offset their real estate and construction business income, and stated that they would continue with activity regardless of whether it ever turned profit. Countervailing facts that they spent significant time on activity and increased gross receipts during years at issue weren't dispositive considering overall record."

>>I had not mention all of this before because the issue was with the son<< I'm talking about the son. Apparently you wanted us to respond without knowing key facts, but I did say I was only guessing about the missing info. Why did you harangue him about paying rent when that had nothing to do with the return? In my opinion, the tax preparer should deal in eligibility factors, not family dynamics and certainly not a young man's posture. So this kid is staying in school full time and holding down a job too. Most families should be so lucky! He counts on his family for basic support; like most students he does not pay rent to his own parents. Still, he doesn't feel obligated to bail out the older generation's poor investment decisions. Well, I do agree with one thing. "You think you heard them all."

>>it's better for your parents to claim you because it looks like they are going to owe<< Of what possible relevance is that? Either the son had more than $3650 gross income or he didn't. From your numbers, I'm guessing the son was right to insist his tax professional prepare an accurate return.

>> Where does it say "her standard deduction is zero" << IRC § 63 (c )(6) "In the case of (A) a married individual filing a separate return where either spouse itemizes deductions... the standard deduction shall be zero." Elsewhere the regs word it a bit differently, and indeed even the heading of this paragraph is "not eligible," but the text of the actual law is as I quoted.

>>provable - you have the fraudulant return<< That may be an element in a potential investigation, but it certainly doesn't prove anything by itself. And in any case you don't have a requirement, or even the ability, to evaluate such evidence--both civil and criminal fraud have rather complicated legal issues. I admit I'm jaded, but when another professional makes an error I suspect it is most likely for the same reasons I make errors myself--the client intentionally or otherwise provides incorrect information. In my experience, when a client is changing preparers he often is changing his story at the same time.

>> extend the accelerated depreciation of qualified restaurant buildings to 15 years<< Under Section 168(e)(7) qualified restaurant property now includes buildings as well as improvements, without a three year requirement. But also consider that qualified restaurant property is now eligible for 100% Section 179 expensing.

>> he pays you in wheat and a cow<< The value of the barter or in kine payments should be reported on a W-2. If you don't have that, file a substitute W-2 with Form 8919. Otherwise treat him as an independent contractor and report the value as earnings on Schedule F. The wheat and cow are capital assets in your client's hands, so also report their immediate or later sale on Schedule D.