Kea

Estate over $3.5 million - assuming appraisal on land does not come in significantly less than county tax records. Form 56 has not yet been filed. I have not yet found it in Taxwise - it didn't pull up with a regular 1040. I haven't yet tried with a 1041 or 706. Still considering the extension. Since the regular due date for the 706 will be October, and it's a 2009 death, I will need to determine when the 2009 706 form will be available in software. I have not yet researched this. I'm mainly trying to clarify the portfolio alternate evaluation. Reading the code, I see that when a stock is sold the alternate valuation is date of sale. However: The phrase “distributed, sold, exchanged, or otherwise disposed of" ... does not include a transfer of assets to a corporation in exchange for its stock in a transaction with respect to which no gain or loss would be recognizable for income tax purposes under section 351. I'm taking this to mean that if you buy another stock (with proceeds from the stock sale), then you do use the new alternate valuation on that new security. Since the sale price includes the basis of the new stock, I'm assuming you only adjust by the change in value of the new stock. Or, am I misreading it and you don't count the new stock at all? Thanks so much.

I still don't have a feel for what my baseline (no internet backups) Sprint use will be when I pull the cable plug. I only used it a few days last month and still managed 1.5 gig. I do also use the Sprint wi-fi server for a wireless print server. That's not going through the internet (or is it?). So that may be adding to my usage. If so, I'll probably go back to a wired print server. And it's not even the busy season. I may need other options.

My friend's mom died in January. She is considering using the alternate valuation date since the portfolio had decreased by July. I just want to make sure she's valuing everything correctly: Bank accounts and money markets - use value on date of death since "mere passage of time" changes are not included. Don't count money spent or interest earned. Stocks and bonds owned the whole time - value in July Stocks sold - value of shares (held in January) on date sold - don't include reinvested dividends. Mutual fund exchanged by fund company - fund company closed a fund and merged it into another one. Use July value of new fund (not counting reinvestments) Stocks bought with proceeds from sale of other stock - this is the main one I'm having trouble with. I think it gets included, but you would only include change in value from purchase date to July? Purchase price amount is already included in the value used for the stock that was sold. For any real estate - do you need 2 appraisals? Since anything sold within a few (I think I read 9) months can use the selling price as the FMV, should she worry about a 6 month change? (Can you tell I've never had to deal with estate tax issues before?) Thanks so much.

It sounds interesting, but I'm still afraid I'd go over the 5 Gig allotment per month I have with Sprint. And that wouldn't even include all the other web use I have for the month. I was hoping they had an unlimited option but, sadly, no.

I've been debating about signing up with a program like yours or sticking to my thumb drive backups. I like that yours are automated and take care of everything. However, I may soon be giving up my cable modem for my Sprint card. Since they limit me to only 5 gig per month, I was afraid your regular backups would kick me over. But if they are incremental, then I might still be OK. What do you include in your backups? I'll assume our tax files. What about e-mail, browser bookmarks and other data that is harder to find to backup? (I can find the invisible e-mail files to back-up, but I don't usually take the time to do it.) What else? Is 10 gig usually sufficient for all important files? Thanks

When they called today and read through their boiler plate speech. I asked if that meant I would only be dealing with them (CCH) now, and not TRX. She answered by re-reading the boiler plate. She had most of my info except my business name. She gave me a customer ID to use when accessing the website and customer support. This was not the same as my old ID. I asked about that and she didn't seem to know anything about my being a prior customer. But it has been a few years. When she asked if I had any questions, I just said, none that you can answer. I guess that was kind of mean. It probably wasn't her fault. I'm guessing she was just hired to make the calls and read the script.

That option wasn't listed in her paperwork. I don't know if it's available in this case.

Interesting. If she wants to do the Roth conversion, it would probably be better to do it in 2010 to avoid the $100K cap. Maybe by then, they will have decided on the clarifications. At which point she can choose the 5 year payout if the Roth option is eliminated. Maybe better just to wait. Thanks

If she converts to inherited IRA, she still has to take it out over 5 years (with the options listed in the instructions). She's in her 40s, so even if she pays tax on the whole thing now, she can potentially get a lot of tax free growth over the rest of her life. Also, it is not the pension being converted to a Roth. The pension stopped with the death of her father. This is a lump sum $10K death benefit that is the same for all TRS retirees' beneficiaries - regardless of the amount of the retirees' pensions.

That's a good article, but it doesn't really apply (I don't think). She's not inheriting a Roth IRA. This is a death benefit from the company where he had his pension (Teacher Retirement System of Texas). Her dad never contributed this money to any kind of IRA. But the options for how to receive the death benefit seem to be identical to how to receive an inherited traditional IRA - with this new Roth option. With all the other options, you pay the tax on the amount and then pay tax on any future earnings. But if you can turn it into a Roth and never pay taxes on it again seems like a pretty good deal. It does seem plausible, since this is an option with your own IRA.

Client's deceased father was receiving a pension. Client can now receive a death benefit that is treated like an inherited IRA. Other options include lump-sum or Inherited Roth. I've never heard of this last option. If she takes this option, she pays tax on the full amount. When it goes into the Inherited Roth, there are no more taxes? This sounds like a really good deal. With any other inherited IRA, the tax benefit cannot be extended past 5 years. This sounds like it is a conversion to a Roth just like for your own. (The $100K income limit does still apply - so she may want to wait until next year.) Am I missing something? Has anyone else heard of this option? I could not find any reference to it in Quickfinders. She did not see this option when working with her Dad's other IRAs. Is this option available on any inherited IRA? Thanks

New client is married and lives in TX (community property) and her husband does not live in US. Last year's tax return shows a SSN for the husband. I do not (yet) know what his income situation or residency status are. I know I have to fill out the community property worksheet if she wants to e-file the return. My question is what to include on the community property worksheet? If he does not have any US taxable income, I won't enter anything for him. But it doesn't make sense to split off half her income to him if he has no reason to file a US tax return. (I'll ask about him tomorrow when I meet with client. - Just want to make sure I'm asking all the appropriate questions.) I'm guessing it will raise red flags to IRS if I fill out the community property worksheet and allocate 100% to the wife. Might be best to paper file. I'm also not sure how to apply community property rules when one lives in a community property state and the other does not (but does live in the US). -- This question is for a different client. Thanks

Not only is my Vista PC running slow, I've started getting "windows is not responding" messages when changing programs or opening a new window or doing almost any activity. It usually does it 2 -3 times per hour. I've run the various Norton and SpyBot tools I already have. I'm not sure the Advanced SystemCare will help much since it is for spyware, too. Any other programs anyone wants to recommend? It's time to replace Norton anyway and I will be switching to Advanced SystemCare and AVG. I've been troubleshooting most of my own PC problems for years, but haven't been able to fix these "...not responding" messages. I usually tell it to "close program" at which point it clears all the icons off the desktop and takes away the menu bar. They come back about 30 seconds (+/+) later and then it will work again for a while. I haven't lost any data (yet), but the time lags are annoying. Thanks

Gail - that's a good point. I'll ask about that.

I got the 2007 tax return. It looks like the previous guy put it on the passive activity loss form 8582 (worksheet 3). Then he took that to Sch D as a short term PAL. Is that reasonable? I think I would rather add it to the ordinary business loss on line 28 column (h). I'm not sure why the Xmas bonus should be treated any differently than the salary or any other expense. Any help is appreciated.

Partner is non-passive. There are 2 partners and everything is 50 / 50. Also there is no code listed with the line 11 amount.

Client has a K-1 for a partnership he is involved in. There is a $300 loss entry on line 11. The amount was what was paid as a Xmas bonus to the employee. Where does this get entered on the Sch. E? The activity is non-passive. The K-1 worksheet in TaxWise (oops - TRX) says to enter it manually. Thanks!

The uncle doesn't remember ever doing anything with the State. Is there some way to check?

Thanks. BTW, my friend went to the bank with her uncle to change the name on the bank account. She took the death certificate and letters of testamentary. But the people at the bank told her that they couldn't change it without a new partnership agreement. The uncle doesn't remember ever having a previous agreement. Both the uncle's CPA and my friend's lawyer said that the agreement was not necessary. I thought changing it with IRS might be sufficient for them. But the IRS doesn't seem to be in any hurry to get the new name. And even if they send them a letter, I'm not sure how long it takes for IRS to respond - if at all. I'm not sure what else they should need to change the name at the bank. Maybe just find someone else to talk to? Thanks

They want to change the name from Doe and Smith PTR (Uncle & Mom) to Doe and Jones PTR (Uncle and Daughter). It was and is a 50 / 50 partnership.

A friend of mine (not a client - yet) recently inherited her Mom's share of a partnership (other partner is her uncle). From reading the FAQs on the IRS website, they do not need a new EIN. I can find all kinds of info on getting a new EIN, but I can't find how you change the name (or anything else) on a EIN. How is this done? Can it be done online? Thanks.

Even being a community property state, you should be OK. Since he purchased it prior to marriage, it is his separate property. She was not legally responsible for any payments, so even if she did help pay them, that would most likely be considered a gift from her to him.

Looks interesting. You can take advantage of what is essentially a Section 125 plan - except for self-employed. I remember something similar offered by NASE back in the 90s when I was 1st self employed.

Thanks for the tips. I've tried various weight loss programs and always gain back twice what I lose. I've been participating in an aerobics (land and water) program for several years. I may not be losing much, but I am healthier. I'll look into the Mega Health group, too. And welcome to the board!

After doing a pre-screening with the insurance companies, it appears almost certain that they will all decline both of us. This is still really amazing to me. I always knew that getting insurance on our own would be the biggest hurdle in retirement, but I just figured it would be a cost issue. Never did I dream we were unhealthy enough to be denied outright. We are fortunate in that we have the option of going with a more expensive group policy. It seems like for the size of my business, becoming a partnership with my husband makes more sense than my hiring him. Does anyone know how formal this needs to be? I'm sure I will need to get an EIN from the IRS. But would I then have to start filing a 1045, or can I use the husband / wife Schedule C method? Since we are in a community property state, I can split everything 50 / 50 on each Sch. C. I'm hoping I can stick to the Sch C route since I have never filed a partnership return. I used to think it would be a good idea to learn all the business returns to expand my business. But with my husband retired and our plans for travel, I'm not really looking to expand anymore. I wasn't retiring since my clients won't let me. And now I CAN'T retire!!! Thanks.