Gail in Virginia

I am using Windows 7, 64 bit, and I have not had any problem with ATX 2008 or ATX 2007, even though my operating system is not supported. Good luck.

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A belated to you!

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I have a new client, S-corporation. In verifying loan balances, there was an adjustment of $183,000. made to their loan balance at the beginning of this year. According to the finance company, they wrote off 90% of their portfolio of loans when they converted to a new system. Upon advice of their legal counsel they are not issuing any 1099-C's because their is some doubt about the legitimacy of the loans. It appears that there should have been a write off of about $100,000 the year before. However, I don't have any exact numbers for 2008, and the prior accountant apparently did not verify the balance with the finance company at the end of the year. How do I treat this on the tax return? Do I report it as income even though they were not issued a 1099C? If the original amount was reported "in error," should it just be an adjustment to the loan balance and not income? I have never had anything remotely resembling this. And the client needs the return right away for the bankruptcy attorney. Of course. :scratch_head:

Isaac Asimov wrote a short story long ago about the cold war wherein one side rediscovered doing math using paper and pencil rather than a computer. This gave them a tremendous advantage because they could put a man into a rocket rather than an expensive computer. The day when math will be need to be rediscovered seems to draw closer all the time.....

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http://www.maylin.net/Fireworks.html Happy Fourth to all!

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I am not expecting high performance from the IRS in regard to this particular issue. When it became impossible to file these forms electronically, they obviously were not going to get refunds within 10 days. When word came down that they were examining everyone individually, I began telling people to not look for their refunds for three months minimum (not that they remember I told them that, but I did.) I don't find that unreasonable for an item that has such a huge potential for fraud. However, when they are looking at a specific return in June, get all the paperwork they request by the end of June, I think that six months additional time indicates that these refunds are going to take a very long time, and I personally was hoping this would all be over with soon.

I had a client come in yesterday who had gotten a letter from the IRS requesting documentation of the home she bought in 2009. We had sent copies of everything with the tax return, and the client called the IRS and told them that but they could not find any record of the documentation. No problem - we faxed the documents to the number we were given. The part I found surprising, and a little concerning, was that they told the client that even with proper documentation received now, it would be December before they issued the refund. Has anyone else heard this? :mad:

It sounds like the problem is that they never filed form 1023 for federal tax recognition.

If you will re-read my post, I did say that there could be other facts and circumstances that would change my mind. If the taxpayer does dig ditches for the developer and therefore did not provide any skilled labor of his own on this house, but rather hired sub-contractors to do the work, then this could be investment property rather than inventory. Many times in these questions we do not have the entire picture and can only offer opinions based on past circumstances and situations we have dealt with. A real estate salesman would be in a different situation than a contractor.

A belated to you!

I have to agree with Jainen on this one. The increase in value comes not from appreciation, or even the addition of materials, but from the addition of the skilled labor this contractor is in business to provide. This might be a one-shot deal for him, but it is so closely related to his business that I don't see it as anything other than an extension of his business. There could be other facts and circumstances that would change my mind such as they he did not do any labor of significance on the house, but as it stands it looks to me like it is Sch. C.

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I would be curious to know how that first meeting went, and what kind of things were discussed, if you are allowed to say.