jainen

>>the years that have not expired<< I suppose you need two years in particular by Thursday, 06 for the 1040 and 05 for MI (extensions for 09 of course). I would do the Fed for both years, but hold off on the state 06 until you can try some other things for the W/H. For MI 05 you might just try a guess, I mean estimate, and assume the state will correct it for you. For the other years, when you have more time you can probably find some W/H tables that give you a better estimate. Also, I hope you are asking at least a thousand bucks in prep fees, with maybe half paid up front. I mean, is he your friend, or are you his friend? 'Cause you sort of added that description as an afterthought.

>>Un-Frikkin<< Doesn't un-frikkin mean the same thing as frikkin? Like, flammable and inflammable? Here it is April 14th and I can't even tell the difference between taxable and nontaxable any more.

>>Our government... allows anyone born here to be an automatic citizen<< I don't see that the government has any choice in that matter. It's been a fundamental part of the spirit and letter of the Constitution since the very beginning.

>>the only thing we need to do is send a letter to the IRS.... Does this advice sound right to you.<< Pretty much. You disagree with an IRS position so the sensible thing to do is disagree with it. The letter you received from the IRS probably has instructions for several ways you can respond. I would guess, however, that the issue will quickly go beyond your understanding, and with that much money in question it may be worthwhile for you to engage a tax professional to resolve the matter with the IRS. I would further guess that you are going to lose anyway--as you already know, it's hard to fight a bank.

>>Should we start with the 1099R issuer to get it corrected or respond to the state first?<< Neither. In my experience, it is far more likely that the tax return was filed incorrectly than that either the issuer or the state is wrong. In what way was the IRA "excluded from income on the original return"? I'm not familiar with Pennsylvania procedures, but at least according to the instructions to Schedule W-2S you are not allowed to exclude IRA distributions, but must report them even if they are exempt.

>>The transfers disqualify them from the credit.....right????<< In my opinion, the transfers disqualify them from my answer. I would not accept them as clients.

>>how do you have the time to be so helpfull?<< My link

>>Can the estate check "active participation"?<< According to Pub 925 at My link, "Only individuals can actively participate in rental real estate activities. However, a decedent's estate is treated as actively participating for its tax years ending less than 2 years after the decedent's death, if the decedent would have satisfied the active participation requirement for the activity for the tax year the decedent died."

>>they are out of luck<< I'm feeling kind of whiney today, so you can take me even less seriously than usual. But I don't think it helps our clients to express a pejorative position about the 2008 credit. It was an astoundingly fine, unprecedented tax break. Thousands of dollars payable immediately, in what is often (in my opinion inaccurately) characterized as a loan. Well, a loan without any interest cost, amortized far beyond the use of the money, and forgiven entirely if the investment should fail. Didn't the 2008 buyers get the property they wanted when they wanted it at the price they wanted? Why should anyone feel bad that somebody else got a different deal on a different property under different legal and economic conditions?

>>Just had to do a 2006 return so the client could receive his $39 refund<< And, what? He only nets $14 after paying your fee?

>>will be talkinh with the IRS before I proceed<< What do you need to talk to the IRS about? You say you know how to amend a return, and the instructions to Form 1040-X at My link are perfectly clear about how to change from a separate to a joint return when only one spouse has filed. See page 5. It's just the way you would expect it to be. First, though, you have to determine why the CPA agreed to separate the returns, and why both spouses agreed to file that way for so many years. Apparently your new clients admit to just dumping receipts late in the tax season, so I would guess the other guy finally got fed up with their marital chaos and told them to get lost. If they came to me, I would tell him to go ahead and file the way he worked it out with his preparer, then come back for a comprehensive review next month.

>> this one is another legend << No it isn't, silly. It's a joke! Read again the fifth paragraph, especially the last six words.

A few months ago we had an interesting discussion of a recent ruling about this, at My link. Without knowing more about the document, I would guess each casino or transaction entry would be evaluated separately. I would further guess that entries with a net gain would go to Line 21, losses (not exceeding gains) to Schedule A. In my opinion, using the bottom line annual net wins does not comply with the law.

>>it is going to go to that account anyway<< Oh, well, you didn't mention that before. Did the personal representative tell you that's what the will says? Are you sure all the potential heirs are in a mood to take shortcuts? Did you ask the bank if it will accept an IRS refund check not made out to the trust? Do you believe everyone's answers?

>>If the trust has a bank account, can I just send the refund electronically into the account?<< I think that would be very improper. In my opinion, the trust can NOT receive the refund. It must be received only by the personal representative and distributed according to the will or state law.

>>Make check to trust or to trustee?<< Neither one, unless the trustee also happens to be the executor or personal representative.

>>Wanting to take FMV per bushel<< In my opinion, that is an appropriate deduction (assuming he complies with the rules for substantiation). Well, technically the lower of FMV or basis, but I would guess the reason he's giving them away is that he can't sell them.

>>cannot find 2007 return<< Let's make a TV show about a forensic accountant who reconstructs depreciation schedules from obscure clues everyone else is missing. ALT will mean Add Laugh Track.

>>they had me convinced << If you have a problem explaining it, remind him that we don't get capital gains rates within an IRA either. But his argument is interesting. It doesn't sound to me like the sort of thing a taxpayer would think of on his own. Try to find out where he got the idea from, and whether he based his original investments on it or is just applying it now because it's time to withdraw.

>> look for US govt interest << Some people say treasuries and muni bonds are not a smart choice for an IRA, since you get the lower yield without any corresponding tax advantage. Distributions from an IRA are fully taxable as ordinary income, even if the IRA's growth was due to what would otherwise be tax advantaged investments.

>>my wife is to never and under no circumstances call me on this phone<< Ahh, a fine new twist on the old "Don't ever call me at work"! Does your wife fall for that line about taxes? My wife always says, "Honey, I have to visit my Dad so I'm taking the cell phone with me." I don't deduct any telephone costs on my own tax return. Cell phones are listed property so therefore require a usage log. I always ask my clients if they keep a record, then I put down whatever they say their cost is. When the IRS decides to publish some sensible rules about the matter, I'll change my procedures.

>>I am unable to find a clear IRS definition for "disabled"<< There is one to find, and it's the same as Social Security--Unable to perform any kind of competitive work for a period expected to last 12 months or end in death. There must a thorough medical diagnosis. In other words, it generally depends on what Social Security eventually rules. The standard is harder for young people who could presumably be retrained for another line of work. In my opinion, just getting the family doctor to write a note is probably not enough.

>>show only the CA income on her Caloifornia state return<< You must show ALL her income on her California return. Column A is for the total federal amounts. Columns B-C-D are for differences in law--for example, American Social Security would be subtracted because federal taxes it and California does not, but generally W-2 income is treated the same under federal and state law. Column E is for just the $13000 income earned while a California resident. California tax is calculated on her ENTIRE $21000 of income, but she only owes 62% of that because of the ratio of her California income.

One hour from now, President Obama will stand down all the nuclear threat in the entire world.

>>I would like to run this by again to see if anyone has a response.<< In my opinion, you will never find an answer to this. The K-1 is wrong.