jainen

>>what an undergraduate program is<< An undergraduate program is a formal course of study leading to either an Associate or a Bachelor's degree. For purposes of the education credits, certificate programs are generally considered equivalent if they involve the same level of study. Coursework as an intern or apprentice might qualify if it is part of an undergraduate program at an accredited school. A masters or doctoral program is always considered to be post-graduate work. A second bachelor's degree does not qualify.

>>the new partner will show a much larger gain when the new property is sold<< What's that got to do with the original individual? His basis is whatever it is. But if he "sold" the old property and "bought" new property with a "partner," Section 1031 is irrelevant anyway. Generally I do like to keep discussing 1031, but I do get tired of putting those three words in quotes.

>>the first-year "loss leader" approach is certainly used in many industries<< So are Loyalty Awards. Well, anyway it makes ATX look desperate, so I'm not about to invest in a switch even though my software (ProSeries) gave me nothing again this year.

>>the remainder divided by two charities<< Apparently about a third of the estate consisted of assets other than taxable income. Since the will did not require that the charitable contributions be made from taxable income, they would not be deductible on Form 1041.

>>they continue to keep the Corp active, but haven't filed corp tax returns in the past 10 years<< There are two separate things. He is operating his business as a sole proprietor. He also has a corporation that is not conducting any business. Since the corporation was never actually dissolved, it continues to have a filing requirement. The IRS doesn't much care, but the state might. Here in California, the corporation would owe a minimum franchise tax of $800 per year.

>>if the spouse has no assets... is a guardianship necessary?<< A guardianship can be over assets or person, or both. Still, a judge might not want to grant a guardianship where there are no separate assets to protect and a husband and other family members seem to be taking good care of the patient under a stable living situation. But that would be in consideration of all the facts, something you are not able to do. While this is a common setup for family financial planning, it's just as common for elder abuse. You don't know whether the mother is really mentally incompetent, or simply needs physical support. You don't know what assets might be involved. All you know is that the husband and daughter don't have authority to sign for her. As I said, some practitioners would ignore that little detail. In my opinion, it's far better to get the individual's signature if at all possible, perhaps with some physical assistance in holding the pen.

>>the guardian for a legally incompetent spouse may sign the consent<< True, but a durable Power of Attorney does NOT create a guardianship. Third parties are not required to accept a P.O.A., and the IRS has made it clear that it does not recognize as valid a signature made under a P.O.A that does not specifically authorize tax returns. Many tax professionals ignore that fact, however, and rely on a P.O.A improperly. According to what you say, the "gift" was illegal under state law. In my opinion, it would be unprofessional for you to ignore federal and state rules in such circumstances of giving away the poor woman's assets without her consent. It would be particularly unethical if it turns out the daughter herself used the P.O.A. to take the money. And there is no way of knowing if everyone in the family really supports this plan, so in my opinion the risk of it backfiring on YOU is too high. Do you happen to know why the family has not presented the medical evidence in court to get a proper ruling of guardianship?

>>Increase your accumulated depreciation.... reduce the basis for the following year<< Maribeth and Bulldog Tom, you offer markedly different solutions. Would either of you care to cite a reference in support of your procedure?

>>an immigration case that will go in front of a judge in August<< Remember that it normally takes four months or more to process an amended return. This taxpayer needs some extra service. I would call tax practitioner hotline for advice on how to get the amended returns at least acknowledged before the hearing. Immigration can be unpredictable. They might just shrug it off, or they might get really upset about years of obviously false tax returns. Work with the client's attorney on the presentation. In my opinion, this is high-stakes professional work that deserves a reasonable fee.

>>assets in the trust are to be distributed to two charities<< Apparently the will did not require that the charitable contributions be made from taxable income, so they would not be deductible on Form 1041.

>>the fruitless and pointless<< Well, if it is required by the IRS, even wrongfully, that would be a point. You may have noticed that the entire accounting field has been changing in big and little ways. Part of that is the public revulsion to the Enron and similar accounting scandals, which are generally viewed to have been nothing unusual except in size. The government is not the only one clamoring for better documentation. Their constituents hit them at every town meeting. That's our clients. Ordinary people want to be able to file nice clean tax returns that don't call down a lot of scrutiny. What are you saying? Can you imagine bankers whining, "We have to track the interest we pay on every single little account!" Well, the reason it started with banks and brokers and pensions is that they got computers first. Now, digital power is available to everyone, and it is perfectly reasonable for the IRS to expect anyone with a true business motive to be taking competitive advantage of technology. Odd sort of operation that has no business purpose in tracking who the major vendors are. I would guess she DOES think about which restaurants she prefers for price and quality, so a bit more formal analysis is not even a new function. I repeat, this is data that has ALREADY been collected. It just isn't that big a deal to code information you are entering anyway. Oh, and category was Lion's word, not mine.

>>set up and use all 119 subcategories<< She does not need separate categories. She can name or code the restaurants when she enters them in the single category. I'm not saying she won't have some new steps, but these are just new ways of arranging the data she already has. That is, you know, the great advantage of data management software. Otherwise why not just stay with the Dome ledgers and a cheap calculator? She may not have used this data before, but she does already collect it and retain the source documents. Another very common way of handling this kind of expense is to always use a single credit card, the business class kind that offers printouts and other data management.

>>has no business purpose and provides her with no useful information<< The new rules do not require a 1099 for expenses that have no business purpose. In my opinion, most businesses consider travel costs to be very important, and pay close attention to where the money is being spent and why. I would expect that information to be even more useful since travel is a significant part of her business. In any case, your client already is required under Section 274 to keep ITEMIZED records of her business meals, and that is so clear and important that it's a standard provision in tax engagement letters. In my opinion, you should not sign her tax return knowing what you know. I really don't see how your example supports the objection. Apparently this client is one who needs to upgrade her record-keeping just to comply with current law.

>>my clients don't keep computerized records<< It sounds to me like you already have a nightmare. You can't expect a lot of sympathy for maintaining hundreds of clients on long-outdated business models. Are you really saying your businesses can't figure out who their best customers are, or how much they pay their suppliers? They still stay up all night casting out nines? As I said in my first post, this requirement (which no doubt will be eased in over time) will move inefficient businesses to get more professional with their books. Not just internally--they may find customers and suppliers using the 1099's to analyze who is most worth doing business with, and who is just too much trouble.

>>reading it makes me want to hit someone<< Get a grip, friends! This will cause very little inconvenience. The IRS is only asking for reports on information the business already controls and has readily available. The software already exists and will undoubtedly be upgraded and enhanced. Companies with reasonable records will have no trouble complying, and companies that don't have it together will be that much more likely to seek professional help from us. Of course, it also means a lot of our clients will RECEIVE 1099s. Since this is the real purpose of the new rule, perhaps it's the real objection too.

>>80 percent of American households using a tax preparer or tax software<< It seems to me that far less than one out of five still do their tax returns by hand.

>>I can't even seem to use my cell phone for anything but talking<< I use mine to tell time as well for talking!

>>how my observation is wrong<< If you believe someone is "not able to handle the technical world," how could that person handle such a question? The problem is not the technical elements as such. We can all work our way through the software and hardware challenges, if we want. But the effective application of technology has stymied experts at every level. It's nothing new--the Luddite movement dates back two hundred years. But of course Ned Ludd failed, just as Guy Fawke's attack on secular government failed before that. In my opinion, anyone who talks about "eflinging" has an attitude that prevents the basic understanding of how important and valuable is the control the IRS has given our industry.

>>But I digress.<< It's not a digression. You are exactly on point, though you contradict yourself. Electronic filing does not make us an extension of the IRS any more than ordering books on line makes us an extension of Barnes & Noble. This very incident is a perfect example of how e-file can wrest control of the filing process away from the government bureaucracy. Now we send the IRS nothing at all, except a phone call (that is, the data equivalent of a phone call). No forms, no W-2's, no attachments, nothing--the tax preparer controls it all, along with the signatures and dates and whatever facts the taxpayer is claiming. How can you defend the need to spend an hour just to get to the point where you can decide what to do next? An hour is more time than I spent filing ALL of my clients.

>>can you able to give me the phone number please<< Use the phone number on the notice. I recommend you have the taxpayer himself call, as it usually takes a half hour or more and this is most likely a very simple matter that doesn't need professional help and expense. However, you should advise the client that his return receipt is NOT proof that the return was filed on time, and neither is his canceled check. The IRS might be correct for any of several reasons such as misdirected or damaged mail, an SSN mismatch, an incomplete return or missed signature, etc. In any case, it is my opinion that the tax preparer is partly at fault. Those used to be common problems, but electronic filing has totally eliminated them all. In the 21st century, I don't think we should be exposing any of our clients to letters like that.

>>he needs to depreciate the room<< The fact that he owns the house certainly does not mean he never needs help covering expenses! In fact, a mortgage often creates a cash flow problem that aggravates expenses. At the same time, a homeowner most likely will not have a profit motive in the sense of seeking the highest rent available in the market, but will be very choosy about the roommate's personality and lifestyle, perhaps even with restrictions that are illegal for a business.

>>No non-compete agreement<< Lack of a non-compete contract just means he is free to practice in the same area. It does not mean he can steal corporate assets such as client lists and backup files. However, because of the personal nature of the service and the clients' right to choose whomever they want, it is difficult to win a legal fight. Often a friendly compromise can be negotiated with the corporation giving up the most.

>>taxpayers simply "forget" to mention it<< Of course I encourage clients to fully explain their financial circumstances to me, but room rent very often is indeed nothing more than cost sharing, albeit undocumented. In that case clients don't consider it to be income, and neither does the tax code.

>>isn't worth the hassle<< It is my general understanding that this is far and away the most common opinion of people who rent out rooms. Expenses are sometimes but rarely taken on Schedule A or Line 36, or perhaps informally netted on Line 21 if not simply ignored.

>>This is a reasonable reporting of income and expenses as allocated to the one room<< It may seem reasonable to you but in my opinion the tax code has more authority than reason. I don't think expenses should be deducted unless the law allows it.