Patrick Michael

The mother's discretionary income does not matter when looking at the support test. Food, clothing, shelter, education, medical and dental care, recreation, and transportation make up support amount. The amount she saves, gives to charity, gifts the the kids and grandkids, etc., are not considered in determining her support amount. The amount of support for shelter costs takes into account the fair rental value of the lodging, including a reasonable allowance for the use of appliances, utilities, and furniture, not the actual amount spent. So if it would cost the mother $1,000 a month to rent a furnished apartment equivalent to what the daughter is providing, that is the amount used for the 50% support test.

I tell my clients that as long as their home is their principle place of business under § 280A(c)(1)(A) (“principal place of business” includes a place of business which is used by the taxpayer for the administrative or management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business) they can deduct all mileage, from the time they leave the house until they get home, as long as they are logged into the app and ready and able to take on passengers, under Rev. Rul. 94-97 (Rev. Rul. 94-47 amplifies Rev. Rul. 190 and Rev. Rul. 90-23 to provide that, if the taxpayer’s residence is the taxpayer’s principal place of business within the meaning of § 280A(c)(1)(A), the taxpayer may deduct daily transportation expenses incurred in going between the taxpayer’s residence and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.

I don't understand enough about how Uber works to tall intelligently about there behind the scenes processes. He was a salesman all his life and really missed the personal interaction when he retired.

The "Check Box" expiring after a year is so frustrating. I often wonder why they even have it since, in my experience, most issues come to light after the year is up. It should remain in effect for at least the 3-year SOL period.

It's been almost 25 years since I took my cost accounting class and am looking to see if this makes sense or if I'm missing something. I am using round numbers. A friend started driving for Uber and we discussed whether or not it was financially worth the effort. He is not concerned about his time since he is retired, he enjoys it and it gets him out of the house. He had made about $10,000 and racked up about 7,500 miles. His taxable income would be $5,125 ($10,000 less $4,875 mileage deduction), $3,900 after taxes. This got me thinking: is this the true income? I would argue it is not. The only true variable cost in the mileage rate is gas. He would have to pay for insurance and licensing whether or not he drove for Uber. Repairs and depreciation are a mixed cost, as he would still have to make the repairs and the car would still depreciate even if didn't drive for Uber. I used Kelly Blue book to see what impact the added mileage had on the value of the car, which was $600. He had $500 in repairs (none of which were directly attributable to driving for Uber) and the business usage was about 40%, making the repair costs attributable to business use $200. He gets 25 MPG and gas in this area is $3 a gallon, 12 cents a mile, making his cost for gas $900. Looking at the cash flow, the true cost of driving for Uber is $1,700 ($900 for gas, $200 for repairs, and $600 for depreciation) making his true income $8,300. After taxes, he has about $7,000 more in his pocket driving for Uber.

There is no need for apologies. I have been using Drake for about 20 years and find some new features every year! I just filed it and it worked just like any other e-file, sending the form to Drake. I have to wait anywhere from 2 days to 2 weeks for acknowledgment. This is only if the 114 is more than 2 years old. Current and prior year can be done through Drake.

Judy, I'm a little confused. Here are the instructions from the Drake Knowledge Base on how to file e-filing through Drake. Am I missing something?

Thanks for the information. I use Drake and believe I can file it using the software. And I am charging for this.

After 25 years I finally have a client with a foreign bank account with a balance over $10,000. I have read up on it and is it really as easy as entering the bank name, address, account number, and maximum value on Form 114 or am I missing something? They don't meet the filing threshold for Form 8938.

I'm not sure what program you are using for tracking the depreciation. Many years ago I used a program (I believe it was MAS 500 Fixed Asset Manager) and it had the capability to assign a department to an asset that could then be used to generate reports based on the department. So instead of setting up separate categories, we used the department field to assign the assets to the specific units.

What a great father! Mertz's father was an 80% owner of the company and left his son holding the bag.

I freelanced for a CPA firm and helped with several ERC claims. We would analyze to ensure they are qualified and provide the client with a detailed report with the numbers. The payroll provider would have a form to fill out and file the 941X and either give a copy to the client or make it available on their website.

You can not use the installment method if there is a loss. See Pub 537.

Same here in NY. I do a quick calculation to see if they are close to the NY standard deduction. If yes, then I'll ask for missing items; if not I don't bother. Most don't come close.

From what I know Instacart requires you to have auto insurance. But most personal policies do not cover you if get in an accident while making deliveries (and many companies do not offer the riders). Not sure if Instacart checks to make sure you actually have insurance and it covers you while making deliveries. I am surprised NY, which highly regulates the insurance industry, has not addressed this issue.

Client recently started driving for Instacart and obtained a rider on their car insurance policy to cover them while delivering. They asked if the premium for the rider, which is separately stated, is deductible in full as a business expense. At first, I thought it is included in the insurance portion of the standard mileage rate, so no additional deduction. But then I got to thinking that it would be deductible, in addition to the standard mileage rate, since it only covers them while making deliveries and is separately stated, so you know what the amount of additional premium is. Has anyone else run into this situation and what are your thoughts?

If itemized deductions revert back to the old rules I dread the "use the number as last year" responses when asked about charitable contributions and the "I donated thousands of dollars of used clothes". Right now about 95% of my clients use the standard deduction and I may retire if I have to go back to filing out Schedule A for a majority of them.

Workers’ compensation coverage IS NOT required for partnerships, LLCs, and LLPs that do not have employees. Members and partners are not considered employees for the purposes of obtaining workers' compensation insurance, but may voluntarily cover themselves under a workers' compensation policy. I would respond with a copy of a copy of their most recent 1120S showing they are a single member LLC. https://www.wcb.ny.gov/content/main/coverage-requirements-wc/llc-llp.jsp

McDonald's recently announced that they were scrapping their test of using AI to take orders. Although they did not give a reason, insiders say the system was getting orders wrong. If AI can't handle my order for a Happy Meal, how will work with much more technical issues?

I had the opposite problem with a practice I purchased several years ago. She was charging less than the going rate. I figured I would raise those rates by 15% every year until they aligned with what I charged. I lost some clients in the first and second years but it didn't matter since I only paid her for returning clients. The third year came around and many of the clients that had left returned when they didn't like the cheaper preparers.

All zeros if you use bulk extensions. Most of my clients don't make any payments with their extensions. I always inform them of the penalties and interest if they do end up owing. For the handful the do make payments, you have to file manually.

Thanks for input. It sounded too good to be true.

Owner of a rental property wants to sell and will have a hefty tax bill. The son wants to gift the property to his father (there doesn't appear to be any gift tax issues other than filing the return). The father has a terminal illness and is not expected to live for more than 6 months. The father gets the son's cost basis and reports the rental income/expenses on his tax return. The property is then willed back to the son when the father passes, and the son gets the stepped up basis. Son then sells property, possibly at a loss when the selling expenses are factored in. There is no other purpose of this transaction other than avoiding the tax. This doesn't pass the smell test to me. Can the IRS disallow the step up in basis? Any other issues with this scenario?

Been with Drake for over 20 years and am very happy with it. There is a little bit of a learning curve as it is not always intuitive. Customer support, although not as good as used to be, is still very good. Usually answer in a couple of rings. A lot of new people answering now and don't always have the answer right away but are very good at calling back within a day. I really like the macros that you can write to automate the routine data entry that has to be entered on every return, saves a lot of time. I don't believe Drake low balls you for the first year. I have always paid the same with small increases over the years. It integrates well with Grunt Works and their portal, although not perfect, is good and works well with the tax program. The portal has gone up in price quite a bit over the past few years and I will be looking for a replacement for next year. I do mainly 1040's with a couple of simple 1120's and a 990. I have heard that Drake does not handle multi state business returns as well as the higher priced programs. PM me if you have any specific questions.

I believe the IRS does require ID verification (see below from IRS Website). Does Verifyle include identity verification and do they charge extra for it? I know Drake uses a soft credit inquiry to generate questions used to verify identity. What are the ERO’s responsibilities with regard to e-signature? If the taxpayer uses the e-signature option, the ERO must use software that includes identity verification. The software must record the following data: Digital image of the signed form; Date and time of the signature; Taxpayer’s computer IP address (remote transaction only); Taxpayer’s login identification — user name (remote transaction only); Results of the identity verification check validating that the taxpayer’s ID verification was successful; and The e-signature method used to sign the record. The ERO is also responsible for maintaining a tamper-proof record in a secure, access-controlled storage system for 3 years from the due date of the return or 3 years from the IRS return receipt date, whichever is later. ERO's must be able to retrieve and reproduce legible hard-copies of the signed form.