Gail in Virginia

Thanks, everyone, for the help. I just could not wrap my head around this last night, and you all were wonderful to help!

I have a "new" client this year who has a basis in the IRA's that he and his wife are drawing from. They are traditional IRAs that had non-deductible contributions made in the past. I say new client advisedly because we used to do his return; the last year we did was 2000. Since he bought a computer and decided he could do it himself, no 8606 has been filed for either he or his wife. However, he does still have a copy of the last one that we filed showing the basis he had at that time. Can we pick up where we left off with the basis? Would we need to amend every year between 2000 and now? File a 3115 to change accounting method? Tell him sorry, it has been too long you just lose the basis you had left? This is a new one on me; any suggestions or source material would be appreciated.

I haven't checked recently, but I believe that in Virginia, you used to be able to take the first $1,000 of estate assets to pay for the funeral. I don't think you can get much funeral for that, but that is the amount that used to be allowed for a "bankrupt" estate. After that, everything went to the debts of the decedent. But I don't think it is automatic that someone is appointed to handle things - I think that someone must petition the court to appoint an administrator.

The lease is fully deductible. Just not necessarily in the current year. I am so glad that our customers have so many people to advise them on the proper tax treatment of everything, and all they need us for is to fill in the numbers and get them their refund.

My first question was "who is the beneficiary of the life insurance?" I am wondering if this is similar to "key man" insurance. However, I did not answer because I don't know and this is just not a good time for extra research. I would say that cbslee is probably right.

Did he by any chance terminate his employment with the company that the retirement plan was with? Generally, if the participant is no longer employed, the loan is treated as a distribution.

From the shareholder's instructions for Schedule K-1, on the IRS website: The line numbers in the summarized reporting information on page 2 of Schedule K-1 are references to forms in use for calendar year 2014. If you file your tax return on a calendar year basis, but the corporation files a return for a fiscal year, report the amounts on your tax return for the year in which the corporation's fiscal year ends. For example, if the corporation's tax year ends in February 2015, report the amounts on your 2015 tax return. Does this answer your question?

I am not trying to be political about this. I agree that getting huge refunds when you have paid NOTHING in is a mis-use of the tax system. I am just curious as to how much effect that has actually had versus the changing income structure in this country, and a longer trend line would show that. I am also curious as to how the actual income distribution over the same period of time has changed. I think that the negative refunds are not the ONLY cause of those trend lines.

According to the VA Dept of Taxation website, the answer is "it depends." Actually, that is my answer to every tax question but that is beside the point. If he did not file the return by the extended due date, the due date reverts back to May 1 and therefore the statute reverts back to May 1. From the website for VA DOT: Is there a statute of limitations for a refund if no return has been filed? Yes. Virginia law allows a period of three years from the due date for filing a return, including valid extensions, for filing a claim for refund. An extension is not valid unless the taxpayer files return by the extended due date. Therefore, in the case of a nonfiler, the statute of limitations for refund would expire three years from the original due date for filing the return. For example, the 2007 return was due to be filed by May 1, 2008, and the statute of limitations will expire on May 1, 2011. A taxpayer who is due a refund for 2007 and has not filed a return must file no later than May 1, 2011 to claim the refund. A return filed after that date will be processed to clear the delinquent account, but no refund can be issued.

Interesting chart, KC. I would love to see it also compare incomes by the top 1 percent of wage earners to the incomes of the lower 90 percent, and stretch those numbers back to the 1950s or 1960s. It would be interesting to see how they compare over longer periods of time.

And I agree with both of you: I just am not willing to tell them that it makes sense for them not to have insurance. I prefer to point out the facts on both sides of the argument IF ASKED and let them decide what if anything they should do. i am not going to tell them it makes economic sense to forgo insurance when I have not got a working crystal ball.

By your reasoning, Pacun, it makes sense for anyone to pay the penalty rather than purchase health insurance as long as the penalty is less than the cost of the health insurance. Nobody, no matter how healthy, can be sure they won't get sick or be in an accident and need medical care. That is why we have insurance. And when people without insurance get sick or injured and need care they can't afford, many times hospitals and medical practices wind up providing that care without getting paid. And that drives up medical costs for all of us.

I think they are in alphabetical order for the first 5 or 10 miles, after that I am assuming that it starts adding distance in as a factor. Fun to play with; not sure anyone other than other professionals uses it.

If they each gave the sister $7,500 as a gift, neither of them reached the limit to require reporting the gift unless there are other gifts during the year that you did not mention. i don't think a 709 would be required under these circumstances.

Sorry, Taxman, but I don't use ATX anymore. Do you run diagnostics on all your returns? I seem to remember forms like this and EIC among others populating when diagnostics are run.

May God bless you and give you peace in this time of your loss. You and your family are in my prayers.

Within ten miles of the zip code where I work, I am #1

The interest on a loan might be deductible as mortgage interest on a second home. The only expenses that would count as charitable, I would think , would be those incurred solely while he was performing the charity work. For example, if he has to pay for waste disposal while living in the RV in a remote site, then maybe. Property taxes? I would think not because they are the cover the entire year whether he is using the RV or not. But I have not done any research either - although I think that rfassett and I are on the same page with this.

Good thing they only ask about smoking. This stuff is going to drive me to drink like a fish since I am not allowed to smoke like a chimney. /s

From the tax professional section of Virginia Department of Taxation, "Guide to Tax Form Changes:" Last 5 digits of VA Driver’s License Number - New field(s) added to the Forms 760 and 760PY (not Form 763). The Department requests this information from each taxpayer who has a Virginia Driver’s license. However, it is not required information. The agency is requesting this information to better serve taxpayers i.e., additional information to assist with identity fraud detection. I think it has to be optional; some people who are required to file may not have a driver's license.

It is optional, so I am leaving it up to the taxpayer. Virginia apparently believes this will help cut down on identity theft.

Should I buy heavier paper stock and charge by the pound?

Bob, I know you are trying to do the best for your client, but they got married in November. Are you seriously suggesting that they were not together for even one night in the last 6 months of the year? Why did they get married?

My husband uses No Crack from Duluth Trading company. He hates any kind of scent in hand lotions, and this has done wonders for his hands. Considering he works outside a lot in all kinds of weather (he is an HVAC mechanic, among other things), anything that will work on his hands is good enough for me.

I guess this forum has spoiled me - I find the ProSeries chatroom so much more difficult to navgate, and so much more cluttered looking. I visit their chat room. and it makes me really appreciate Eric!