jainen

>>repay the amount you claimed as a credit on your return<< According to the original post, the CP2000 is apparently only asking for ordinary tax on $1100 income. That may be little more than $300, compared to at least $580 for the credit. If so (although I would not have recommended filing the return incorrectly) the all around easiest and cheapest thing to do at this point is just sign the letter and mail it back with a check. I would of course advise the taxpayer of the implications of a prior year error, i.e. interest at the federal rate, but I would certainly not say "you should amend." In my opinion, the taxpayer has no particular statutory obligation to correct an honest mistake.

>>The client would not be personally involved with the farm operation.<< By the way, why does the taxpayer want to do this? Has he heard about the fantastic profits being picked up by absentee-owner farms that can't use credit?

>>If it is mentioned in the instructions, I missed it<< The instructions are pretty specific as to line numbers, so in my opinion you should be safe following them exactly (i.e., taking the deduction). But that does seem strange because South Carolina specifically exempts sales taxes from the deduction allowed under I.R.C. Section 164. Why don't you ask TRX sales what authority they are using for the calculation? Beyond the specific deduction, their response will probably give you a lot of information to assist your decision about what software to buy.

>>I don't see a reason why the IRA cannot hold real estate whether or not debt is involved<< To roll it over, the taxpayer would have to find a custodian willing to hold and manage real estate. The high fees are generally considered unacceptable by most investors. I don't know what authorities you researched, but one of the most basic rules is that pledging IRA assets as security for a loan (like a mortgage) is a prohibited transaction that is treated as a complete distribution of the entire account. Similarly, the taxpayer can not personally guarantee the loan for the benefit of the IRA because that would be providing a service to the IRA. The same rule prohibits the taxpayer from involvement in any aspect of the management or operation of the farm land.

>>do we have to snail mail them in?<< My understanding is that IRS generally demands or at least prefers automatic withdrawal from a checking account. I recommend a new account specifically for that purpose alone, scheduled well into the month, with overdraft protection in case there are delays transferring money in.

>>have a 20 day window to do so. << What sort of a window did you acquire for so many clients? And how did that come about?

>>suggestions for study guides<< You can find previous posts on this topic by searching for keywords such as Gleim and classroom. Here is how I recently answered the same question on a different forum. The CONTENT of all EA courses is identical, and can be downloaded for free from the IRS web site. It is the actual test questions and answers from prior years. But learning STYLE varies greatly in adults. Be honest with yourself. You might do much better with a classroom setting like H&R Block (for specific topics), or at least a study buddy. If you like self-paced correspondence, are short lessons better than comprehensive topics? How much "commentary" do you need for analysis, or would you rather have plenty of cross references so you can do your own research? Cheap courses give you Pub 17, an easy to read IRS publication. Some of the test questions might be based on examples from that book, but they won't be exactly the same so that might either help you or confuse you. Expensive courses give you something like the Master Tax Guide. Such books basically quote or paraphrase the code and regs, so they are much harder to read but cover a lot more detail and alternatives. That can also be either helpful or confusing, depending on how your own mind works.

>>non-professionals asking questions about their individual returns<< Well ain't we ridin' the high horse! I daresay our clients would be shocked to learn that in the last week we have had such professional-level discussions as what forms can be e-filed, what are the exceptions to early withdrawal penalty, male genitals, sartorial splendor, and even what might be the due date for filing a return! Some of the professional answers in this thread are not consistent with the tax code, and the original post's issue of a client's access to accurate information from her own preparer and the professional community is right on.

>> I didn't know what "unreimbursed EBE" was so I Googled it and found it means Extraterrestrial Biological Entities. I can understand why some clergy (depending on their religion) might not want to pay those guys back, so I would include it in taxable income. According to Pub 1345, there are some returns "with rare or unusual processing conditions or that exceed the specifications." Apparently the IRS can't readily warn us about these because the conditions change from year to year. They rely on the software documentation and support program to let you know when you need to paper file. Documentation and support is one of the key factors in why some software costs more than others.

>>you probably already received it an it was handled on your Schedule M<< In my opinion, the question was appropriate for this forum and somewhat better than the answers. I would expect a retired teacher to be eligible for this credit, even if she has wages. I'm not sure what the implications of the taxpayer's husband getting $250 are, though that does suggest the tax preparer considered the issue. I would guess this can all be easily resolved after the preparer takes a few days vacation from the busy time. Anyway, the newly revised Form 1040X is not very difficult to complete.

>>I even did my own yesterday<< You beat me by about six months.

>>is there a way to change the entity with the IRS from 1065 to a 1120S<< Yes, a sole proprietorship, partnership, or any entity can use the "Check the Box" regs to elect to be taxed as a corporation. Assuming they are eligible for S-status, they can file directly with Form 2553, or use Form 8832 to become a C-corp and elect S-status from there.

>>prayers which had been answered<< I wonder what exactly that lady had prayed for.

>>if father is not the custodial parent he doesn't get the exemption and doesn't deduct the credit<< That is not true, at least, not necessarily true. The tiebreaker rules allow a parent to claim the exemption for a qualifying child even when he is not the custodial parent in terms of nights (other factors being favorable). In the case you describe, the father simply does not have a qualifying child. Even so, he could still take the exemption by agreement. That would presumably be through the divorce proceedings, and Congress apparently has decided it is most fair to let the family itself work that out rather than having the IRS interfere. Frankly, I'm not real sure that the tax code actually allows a non-custodial parent to claim education credits anyway. It certainly does not in the case of Married Filing Separate or with more than $50,000 income (unless remarried). But here is another possible view. Since the student has her own apartment, perhaps it could be argued that she does not actually reside with the mother, but only visits when convenient, less than half the time. In that case she would not be a qualifying child to anybody, so she would be a qualifying relative and dependent of the parent who provided more than 50% of her support.

>>father pays for daughter's education and apartment and medical and cell phone and clothing and everything, but daughter spends more nights at mother's house<< It looks to me like you are not interpreting the circumstances correctly. The personal exemption is based on rules for a qualifying child, under which support (except self-support) is NOT a factor. The number of nights is also not a factor for a qualifying child. That is only used to determine the custodial parent for purposes of Form 8332, the release of exemption. I would hope that the best interests for a child's home and support are not superseded by the best tax breaks.

>>commercial property that also includes a mobile home<< Commercial zoning usually allows residential use. In my opinion, the tax position should be based on how the property is actually used, not on what it could be used for under other circumstances. Owning through an LLC is a matter of state law, disregarded for federal tax purposes. (I would guess that even under state law the liability limits of an LLC would be disregarded for property used as a personal residence.) For a taxpayer who prefers an aggressive position, I think the distinctions between a mobile home, travel trailer, RV, and so on are sufficiently vague to construct an argument. For a tax practitioner, however, I think there needs to be better authority than "it doesn't say you can't."

>>No entry on Sch se due to vow of poverty<< Study Pub 517 at My link. Members of certain religious orders do indeed get automatic exemption. Wages still count for EIC, but not honorariums or gifts reported as self-employment.

>>their daughter who is one of my clients pushing them to do so<< Okay, I'll take the bait: Why was the DAUGHTER pushing them to change? When adult children take a keen interest in how marital assets are allocated, that does not constitute a self-evident answer. And when they feed you some line about filing MFS for medical reasons, well, that's hogwash. I agree with Bulldog Tom that they probably aren't telling you everything. If so, it's a fair guess that they didn't tell the other guy everything either. So when you have a bit of spare time, you might look closely at the daughter's file to see just why she recommends you. [For some reason this year I'm feeling even more suspicious than usual.]

>>tax return/situation of the year<< Oh yes! A reverse annulment--ain't love sweet! But, the Supreme Court, you say? What a paperwork nightmare. Speaking of which, don't file that amendment yet. Wait until the first one is fully processed. Well, you can hold off on the money if you need to. It will all get fixed in the end. Meanwhile, don't forget to put the decedent on extension. You don't think that will mess up his Judgment Day, do you? I mean, maybe he's been camping outside the Pearly Gates waiting to see whether he was living in sin last year. And I'm pretty sure non-filers aren't allowed into Paradise.

>>his out of the ordinary AGI<< Well, gee, I'm sorry about his love life but it sounds like he had a ton of money he could draw on from different places, so I guess he's doing okay. In terms of planning, we must note that he has no requirement to pay support. It was just a fair division of marital assets, and the tax code has various ways to transfer the tax burden to the recipient. Unfortunately, it doesn't work so well with retroactive planning. But do we have any reason to think the settlement did not already account for the tax cost? Isn't he kind of trying to double-dip now?

>>This is what we gotta watch...<< Why bother? I figure they'll let me know.

>>commuting is commuting<< What if they commute on the train?

>>ate me out of house and home<< Since you left, he apparently was not a member of your household for the entire year. In my opinion you cannot claim him as a dependent (unless of course you are related).

>>he took it last year<< It was not a Revenue Ruling, but a Chief Counsel's Advice. That's not very high authority, but it has stood the test of many years. In my opinion, it is obvious that Medicare is not "established under" your client's Schedule C business. Has anybody figured out a tactful way to tell clients that if they want shoddy tax work they should take their business back to the idiot who did it before?

>>"Frikkin" is the adjective that describes the word "Unreal"<< I don't get that. Unreal is itself an adjective, so its modifier must be an adverb. Yeah I remember ebonics (as an adult, thank you). I consider that more a matter of racist politics than linguistics. But "real" is a noun, actually the name of a Spanish coin. Some people got ebonics at Martin Luther King H.S., but I learned proper English at Sir Francis Drake H.S., and that pirate was very big on Spanish coins.