jainen

>>the dates acquired are before the dates sold<< BINGO!

>>will this raise a red flag with the IRS since the 1099B indicates short sale?<< Although the full broker statement may provide details, the actual 1099B itself only shows sales proceeds. Furthermore, the "transaction type" is simply an internal software check, not a part of the final Schedule D. Any kind of work around that gives the desired result should be acceptable. But something is wrong, and short sales are so common that I'd guess it's more likely your data entry than a software bug. Particularly check the dates; they are always confusing when you sell before you buy.

>>one son filed for himself unexpectedly<< That does not affect their tax liability. If he is a dependent, he is a dependent regardless of how he files. >>20 years old<< Can we assume they did not consult a lawyer in filing the bankruptcy? They probably have no legal liability for the bills of another adult, regardless of tax status.

>>I called the IRS and actually got some good advice<< Well, I think it was LOUSY advice! Form 8919 would have your client double pay Social Security taxes that have already been withheld, and SS-8 gives the employer an invitation to prove that the 1099 was proper! File with a substitute W-2 ( Form 4852), period. You are probably going to get an IRS letter no matter what you do, but you might reduce that possibility by using Form 8275 to disclose your rejection of the 1099. Before any of that, try a non-tax approach. If the employer can't make payroll then the job is going to end anyway, so tell your client to pressure the boss into using the correct form. A worker has a very powerful position in anything concerning payroll taxes, because the Labor Board and state EDD are always crouching nearby, ready to pounce. But once the W-2 is in hand, you couldn't care less whether the company actually pays over those withheld taxes or not--the worker still gets credit.

>>whether we should invade Iraq or bail out California. << You mean I got it mixed up AGAIN? I thought it was whether we should invade California or bail out Iraq. Shucks, we'll probably just invade everybody and bail out everybody.

>>Can you say $Billion bailouts??? << Yes I can, and without winking or scratching my head. The companies receiving bailouts are considered to deserve them by reason of their essential role in the national economy. [ Wink, wink, scratch scratch]

>>would the marrid taxpayer qualify for the $500,000.00 gain exclusion for sale of principal residence<< Not for the entire property, only for the portion used as a primary residence. There have been some rulings about contiguous land, which have allowed twenty or thirty acres. This taxpayer's property exceeds that by two or three times, and it clearly was being used by someone else for a different purpose. Whether it was bought and sold in single transactions or even that it was all zoned as a single parcel does not change the basic fact that only a part of the property was used as his home. You may apply any reasonable method to allocate the basis and selling price to the two uses, including size or location if appropriate. A qualified appraisal would help support it, especially if you are trying to say the farmland itself had little value.

>>The liberal philosophy is based on the idea that everyone should live in comfort whether they produce or not<< Don't be ridiculous. Neither party wants undeserved handouts, and both parties endorse a strong social safety net. The most important liberal philosophy is right to WORK, which happens to be the biggest argument in Washington this morning.

>>It just didn't seem right her having to pay back 17,000 that she has paid taxes on.<< All things considered, her tax situation doesn't seem to me to offer much to complain about. She paid normal tax on income actually received, like anybody else. It was replaced by Social Security which is at worst only partially taxable and she gets to choose which way to calculate that tax. She also gets to choose which way to calculate her credit or deduction for taxes previously paid. Meanwhile, all her lost wages, medical bills, and a lot of intangibles can be covered by Workers Comp, insurance, and a legal settlement without any taxation at all. She got a tough hit, no dispute about that--but not because her taxes aren't fair.

>>We set them up as rental property.... he called to say that he's living in one<< Either he lied to you so you would help him take business deductions he is not eligible for, or he lied to you so you would help him take a credit he is not eligible for. Or both, like as not. Since you KNOW he lies to you, your professional services could never be based on anything more than dishonesty and mistrust. Send his papers back to him.

>>Back Pay from SSI<< [First of all, assuming you mean SSD (Social Security Disability) rather than SSI (nontaxable Supplemental Security Income), determine how much of the lump sum was paid for each year, and the same for the repayment.] Unfortunately, your sister may still have some double taxation even though there are a couple tricks to reduce it. Her Social Security can be treated as all received in 2009 or recalculated for each prior year. Either way, the tax is added to 2009. See the lump sum election in Pub 915 at http://www.irs.gov/pub/irs-pdf/p915.pdf. Attorney fees can only be deducted on Schedule A for the year paid, subject to 2% limit. The repayment can be netted against any long-term disability received for 2009. Amounts for prior years can be taken either as a credit or a deduction in 2009. See the section on repayments in Pub 525 at http://www.irs.gov/pub/irs-pdf/p525.pdf.

>>I've stopped thinking of myself as a Republican<< It's hard being a conservative these days. At least we liberals can fall back on our old standby, cynical negativity. But you guys have to try to find some kind of consistent way to look forward, and the field is pretty bare. Both major parties have joined all the smaller parties in pushing personality cults, with honest political theory reduced to empty slogans. It's not like it used to be, when [...fill in favorite name...] ran things.

>>they called stating that their review supports the fact that the remaining basis can be deducted<< Did they happen to state that the CODE and REGS support the fact? I mean, if "their review" covers the same non-authority references that you yourself are reviewing, they will find the same non-authority support that you are finding. You would be no closer to anything you can use, so did they happen to state anything else?

>>exactly the way an individual must manage his affairs<< No, that is not the way an individual does it--at least, not an individual who can print up his own money!

>>Each state was originally regarded as something like an independent county that was part of an alliance among equals. << That was true, but after a few years they unanimously agreed to dump the Articles of Confederation and replace them with a Constitution that began, "we the people of the United States, in order to form a more perfect union...."

>>On Schedule D, I note in the description, see attached.<< I agree with taxbilly, one should follow the instructions. I truly am mystified as to why a preparer would do it the way ed says, ignoring the specific line that IRS has put on Schedule D to summarize such attachments. I would guess not a single one of the returns ed does like that could be processed by the IRS computer. In my opinion, it is always a BIG problem whenever IRS examiners are taking a personal interest in any client's return. I just wonder if ed discloses to his client that he chooses to ignore plain instructions, guaranteeing that the client's return will be examined.

>>does this mean investment property can not be depreciated?<< As I said in the sentence immediately leading in to the one you quoted, only property for productive use in a trade or business or for the production of income is subject to depreciation. That can include "investment" property such as rentals in the sense of ordinary income rather than capital gains. Even in that case, depreciation is not an investment expense but an operational expense related to the production of income.

>>I agree with the program.<< Well, I don't, at least assuming (without any foundation whatsoever) that the data was entered correctly. I think the IRS is probably right this time. With two children and qualifying income exceeding $3000, they get $300 more for the Recovery Rebate Credit, plus the $509 withholding. I'm not sure where the extra thousand came from; perhaps a forgotten ES payment or the Child Tax Credit. The IRS will tell you, but you have to ask the right question. The fact that three IRS reps and some several software techs ALL gave answers that did not resolve the matter suggests to me that you are not formulating your question correctly. In my first post in this thread I also felt that you were not formulating your question correctly.

>>One IRS employee informed me that many of the tax prep software programs do not compute this correctly<< I see. But apparently two other IRS employees told you differently. What did tech support say?

>>first year working. Filled 08 tax return AGI 193k << You mean dentists pull 200K the first year out of school? Golly.

>>looking for an attorney specializing in trusts, preferably in Chicago<< Personally, I would not trust any lawyer from Chicago.

>>Anyone else have this problem with the software? << To what software problem are your referring?

>>The fairest way of all would be to determine what percentage is needed and charge a flat rate<< In my opinion, that is the LEAST fair method imaginable. Not only does it mean people on Easy Street get subsidized by real hardship cases, but it does not reflect the greater access to government and economic benefits that some taxpayers enjoy. The biggest problem with a flat tax is in the way you define "income." You say no deductions, no exemptions, no nothin. Do you mean a traveling salesman can't deduct the costs of travel or the cost of goods sold? Would you not deduct basis on a capital asset, or what should be excluded from basis? Would you tax accrued income whether or not it was received, or would you exclude bad debts (which would also need to be defined)? If you tax only money received, what about voluntary (whatever that means) exclusions like a 401(k) or direct payments for charitable contributions? And how do you define taxpayer anyway? Would a corporation pay the flat tax on its income, and shareholders pay again on dividends? Would the same double taxation hit partnerships? Why shouldn't a sole proprietorship likewise be taxed exactly the same as a corporation? Or do you propose that only individuals pay tax, not business entities? Or only certain business entities but not others? In my opinion, the whole idea of a flat tax is nonsense.

>>My understanding is that he has to split the loss C/F with the ex-wife<< Is your understanding based on an actual determination made by the family court? Because that is the only thing that counts, and it is readily available.

>>a COURT RULING came out in 2002<< There have been dozens of court rulings on this question, but only two that particular year. One indeed said that roof repairs can be expensed, but that was only a summary opinion that can never be cited as precedence. The other was a memorandum decision that even partial replacement of a roof did have to be capitalized. In my opinion, it is irresponsible and unprofessional to have a "policy" of expensing roofs. Tax treatment should depend on the facts and circumstances of the particular property for the particular taxpayer. Follow the links in this thread to learn how to analyze those.