Kea

Just a suggestion: I've never used Carbonite, but the software that came with my backup disk won't back up ATX files automatically. It won't backup anything in the Programs folder. I have to just copy those over manually. Not sure if that's the issue with Carbonite or not.

Thank you so much!

Thanks! In this case, a cell phone (no longer listed property) was recycled. Not moved to personal use (like I first "assumed" - dangerously). It does become a disposition - but at what "selling price"? Am I correct is using 1year SL depreciation to calculate a "selling price"? OR, do I show "selling price" as remaining basis so that there is no gain or loss?

OK -- turns out phone was recycled. Not really sure where this lands. I guess as a "sale" at the 80% cost (original basis - 20% for 1 year depreciation)? She used it for right at one year. And of course, adjusting the whole thing for % business use in that one year. And, just for future knowledge, want to find out if recapture rules apply the same for special allowance as for Section 179. I've got some reading to do.

Judy -- TRX is doing the same thing. I still think the recapture is appropriate since the usage will probably never get back to the 50% already deducted. Client told me she "retired" the old phone when she got a new one, but that she didn't sell it. (I believe she still has it and passed down to a family member, but I'm verifying that part.) In my brief glance at TaxBook I haven't seen anything about the recapture rules on Special Allowance like there is on Section 179. I'll do more digging this afternoon. An outright sale would be so much easier to handle. Randal - I actually advise most of my clients that Standard Mileage is better than Actual Costs. I only have 2 clients that use their vehicles for business enough to make actual costs work better. But, those are the folks that keep their business trucks several years, so I've never considered suggesting SL for them. Thanks!

I completely agree about how much a pain a true log is. Even though I am generally pretty frugal with my money, I'm also lazy. I have a separate computer and printer for business. Can I say I've never looked at personal e-mail on my business PC? No, but it is "de minimus" I usally have my personal computer close by, so there is seldom an occation to check personal e-mail on it. Most of my business clients now do the same and have a separate computer (so much easier these days now that computers are so much less expensive than they used to be) - or they just forgo the deduction. I only have a couple of clients that go to the trouble of tracking. At least they tell me they have a log!

Thanks jklcpa. I guess I should clarify that in my case the recapture is on a cell phone not a car. So I don't think I would use column b for 280F( b ) ( 2 ) for luxury autos. So, would column ( a ) be correct even though it isn't exactly Section 179? And, unfortunately, TRX doesn't have a link to line 6 on the Sch C. It just gives me a place to type in a figure if it doesn't carry from somewhere else. In this case it does automatically carry from line 35 of the 4797. Thanks so much!

I have a similar situation, but I'm using TRX software. It is not calculting the recapture automatically. My question is where to report it. Should it get reported on Form 4797, Part IV (line 33a)? I know this is Special Allowance and not Section 179 but it's the only place I see to show depreciation recapture. Or, does it just go directly on the Sch C line 6 without any indication of what it is? Or, something completely different? Thanks

Very interesting. I sent an e-mail asking for more complete data and explained why I wasn't comfortable with the return in its present form. So she sent me her other work expenses & the alimony. There was still some confusion about the assets, so I tried to explain that better. We'll see what happens there. She said she honestly didn't think IRS would have a problem with them not claiming all their expenses. And I have a hard time arguing that point while I'm also pointing out that they will disallow deductions for listed assets without a log. I basically said that it has to be as accurate but it also requires documentation. (My e-mail version was longer.) OK, so I guess I don't have to fire her after all.

The only deduction I KNOW they aren't taking is the alimony. I guess I have to bite the bullet. I've never fired a client before. I've lost potential clients when they found out I wouldn't lie for them. But this is different. Thanks to all.

Thanks Marilyn. I think I remember reading that thread at the time. I definitely wouldn't file an amended return to take off legitimate deductions. I'm just not sure about not putting them on in the first place. I'm feeling less and less comfortable with this return, but she's been a client since my 1st year in business. I'm not sure how to explain why I can't file a return to shows too much taxable income. It seems like she asked me about this a few years ago - clarifying that it was better to err on the side of caution by not claiming something. I believe at that time it was a charitable donation. My thinking at that time was hey, sure, IRS won't have a problem if you pay too much tax. Now to say I'm uncomfortable with this return for that reason would not be consistant. And I'm sure she would call me out on that. Did I also mention I don't like confrontation?

More wrinkles as they've answered more of my follow-up questions (although I still haven't said anything about the "consistent log"). --In 2010 they reported paying alimony, but this year they said they paid it but don't want to claim it. --She is a real estate agent and had a very large 1099Misc for 2011 ($93K which was much larger than the 2010 and I didn't have the 2011 form until last night). When I asked if they had any business expenses besides the car mileage and depreciation, she said no. In 2010 she had fairly significant advertising, fees & classes. They are buying a house and they therefore wish to "maximize their income" for the loan application. I always try to prepare as accurate a return as possible, but have not generally tried to convince clients to take deductions they don't want to take. (I've 2nd guessed a client who said "I'm not going to look for that charitable receipt -- it won't make that much difference anyway....") IRS is probably happy to get as much tax money as they can. However, I was hoping that when I told them they owed $33K they would decide they want to put in their alimony and business expeses. Even putting in the expenses may or may not make that big a difference. They took out IRAs & have the < 59.5 penalty as well as not paying quartely taxes on significant SE income. I've gone from wanting to disallow a deduction to wanting them to have more. OK, I realize I'm just getting paranoid, but I'm not sure how I should proceed. Any advice is appreciated. Thanks

Great info. Thanks.

Good thing I've been following it anyway. (Yes my PTIN was renewed in December.)

I've always tried to follow ethical standards. When reading the Circular, I noted the classifications of preparers covered, including the recent addition of RTRP. It was my understanding that by including RTRP, they would be covering all professional tax preparers by the end of 2013. I definately try to follow all the rules -- legally and ethically.

I was under the impression that preparers who are currently unregistered were not under Circular 230. Once they take and pass the RTRP exam they are then covered. Perhaps I misunderstood. That said, I've still tried to remain in compliance. Terry, I think your engagement letter comment is a good one.

Most of my cients who request extensions do so my phone or e-mail. If my clients need a Form 8878 and I don't see them, I'll e-mail or fax it to them. They can either sign and send back to me to e-file or they can mail it themselves. I haven't mailed any 4868s or 8878s. I e-file or they snail mail. Hope that helps.

No trips to Tibet or anything like that. Just "very consistent!" No other reason to question. She's been a client from the very beginning and no problems. Just the "very consistant" now that she is self-employed. Thanks.

This is why I'm asking. I want to trust my clients and I don't like to be at all confrontational or accusatory. And I can't say I know she is lying to me ... it just seems a coincidence. Perhaps she is just very consistent in her business. I am trying to conduct my business in a professional & ethical manner. FWIW, I'm not under Circ. 203 ... yet (hopefully soon I'll be an RTRP), but I do still try to follow the rules. While we are still required to do our due diligence for all items on the return, this isn't EIC and does not rise to the level of filing extra forms to prove our due diligence. I'm just trying to determine the level of due diligence required / expected. Perhaps, a better question would be what are the "reasonable inquiries" I should make? Thanks again.

Agreed. I just want to make sure I'm not leaving myself open to a $5000 IRS penalty. In general I do just take my clients' word. I agree with the many folks here who have pointed out it is not (or at least should not) be our job to audit our clients. But I've explained the rules to her, so I'm not sure how much more I can do.

How far do y'all go to check clients' listed property info? Client sells real estate & added several assets to her business - computer, printer, GPS, etc. I informed her of the rules about maintaining a log for listed properties. But she did indicate that she was maintaining a log and that all assets were used 80%. When I asked this year - Yes, maintaining a log & all asset use same as last year. (Since this was all done through e-mail, I know she didn't get these figures off MY ceiling - maybe hers.) Would y'all "accept" this and go on? Or, how would you go about asking that it is just really weird that everything has exactly the same usage both years? I don't really want to be accusatory or mean, but I do want to make sure I've done my appropriate due diligence. If my other clients have "lied to me" about keeping a log and giving me % usage, at least they had the courtesy of varying the amounts so that it wasn't suspicious. Thanks.

I always just thought the "P" stood for "PTIN". But I was ready to believe the "Peon" designation until I saw that others shot down that theory. So, I'll go back to my original assumption.

Thanks for the head's up. I have a client that has an inherited Roth and an inherited Traditional IRA - with RMDs from each. I'll make sure to extra-verify this one when I get it (in another month or so).

Thanks so much. Yep, I just missed that one. (I seem to be good at that this year.) I knew it was too minor to worry about - just wanted to make sure I filed the form correctly.

I apologize for this basic question, but I'm filing my 2nd ever Form 943. Total payments were calculated off the monthly totals. When filling in the 943, I'm calculating off the annual total and getting a whopping 6¢ difference (over paid). Is it permissible to round to the nearest $ on the 943 as on the 1040? Or, is it permissible to "fudge" the calculations on the 943 to match what was paid in? Since it does no one any good to ask IRS refund 6¢, I could apply it to 2012. It's such a minor discrepancy, but I want to handle it correctly Thanks!