Edsel

I hope as many of you can come as wish, and are able. In particular, I'm speaking of those of you who have every intention of coming, but in the coming weeks allow the rigors of life to wrap themselves around you and feel like you have to bail out. The only defense against this is: circle the date on your calendar and simply don't let those "rigors" beguile you from a trip to Tennessee. Not only will Rita be there but I will be there to add character (or lack of it) to the event. How much more entertainment can there be? For those of you coming from far away, and in particular areas which are flat, I believe you will enjoy the terrain and beauty of our region. In order to get to Crossville from any direction, you have to drive up and land atop a mountainous plateau. Crossville is a pleasant and inexpensive place to stay, and the temperature is usually about five degrees cooler than the valleys due to its elevation. Also, for several of you who may not like me, now is your golden chance to reverse your opinion!! "Edsel" - Ron Jordan, Manchester, TN

I think it is fundamental that governments receive filings in any way the taxpayers choose as long as the filing is correct. Same thing goes for payments - Check, money order, cash, etc. Governments have the problem of thinking that everything is theirs and forget where their substances eminates. I'm aware of the operational dollar reduction in electronic filings and payments, but none of the rest of us are in a position to choose arbitrarily how our information and money comes in. Just got back visiting my wife's relatives in the Dalton GA area. Dalton is an old textile town, the leading source of carpets. Saw a chart where the average wage has dropped from $30K/annually to scarcely over $20K/annually since 2012. During the same period, the Dalton/Whitfield county government spending has risen from $50MM to over $120MM annually.

You can bet it is not a decrease or the Kentucky State government would not have done it. It appears that some will call the income tax "regressive" because those at the upper end of the income scale will get a tax reduction at the expense of those on the lower end. I'm up there occasionally doing bluegrass but not plugged in to the political scene like in Tennessee.

No I did not ask this, and don't think it is fair. Many of you will respond "Fair does not matter in tax law" but there logistically is no commuting other than the mileage to the first pickup and mileage home from the last pickup. Only those few miles would qualify as commuting under the "business stop rule". And if the driver does three pickups in a night, and comes home between pickups, then those commuting miles would be multiplied by three. Had I asked this, I don't know that any of those drivers would keep mileage records to that extent. All of them have other jobs and I'm sure they regard their "tax home" as being their residence for purposes of a 2nd job. In a town the size of Nashville it would be typical to drive 3-4 miles to the first ride, drive 1 mile, and then 3-4 miles home. My portrayal here is not strained at all, but really quite typical. In such a case only 10% of his total mileage would be deductible. I don't think the IRS is being ripped off under this scenario. It is the driver that is being ripped off. Interesting to hear from some of the rest of you - your drivers are making money. Judy, thanks for your response. Adds spice to the conversation.

Has been the subject of a lightly-reported news story, but it says that Uber drivers are not getting enough to pay their auto expenses. Won't comment on the news story, but I had four of these part-time Uber drivers this year. Each of them took the standard mileage rate, and without exception, all of them reported a loss on Schedule C. I believe they all deducted legitimate mileage because there was payment receipts to induce the mileage. The "true" cost obviously is not 53.5 cents per mile, but they are entitled to deduct that much. If this is going to be the case with Uber, I can imagine IRS will pass regulations. They are not going to stand for this. One possibility: I heard they are trying to make "employees" out of Uber drivers. Can't imagine the drivers or Uber will put up with the effects of that. Comments?

I haven't yet heard a specific reference to bailing out of a casualty gain with replacement property. If there is insurance proceeds covering the FMV, the result may be a large gain based on historical purchase value. If the owner is confronted with today's cost to replace, there may not be any gain remaining if he chooses to replace.

Ever since software packages came in "vogue", we have fashioned a treatment for capitalization. The initial purchase of the software package, including installation, would be capitalized and depreciated, and subsequent license renewals would be expensed in the years to follow. This would sorta make sense since the software package would be "owned." As software has migrated to the "cloud", initial purchases of software are much cheaper, software updates are done within the "cloud", and the customer in effect "rents" the software, even to the extent of being charged for access time and data. With this new and increasing pattern, should we: Capitalize the first year of software cloud costs, and expense the charges in succeeding years. Do not capitalize at all, but expense the charges as incurred. Feel free to comment for both GAAP and Tax purposes.

Abnormal, this is the best of all ideas, except the company is a federal contractor and the Texas guy has to be an employee. Thanks. Don't expect any realistic solution from the State of Alabama or Texas. They both fashion arguments to have this guy.

This is a topic for which much has been discussed and I don't know if anything is settled or not. I have a customer with Alabama employees, and is wanting to hire an employee from Texas to work from home. The question is "What state is his wages reported?" Of course Texas has no income tax so that is one complication that doesn't have to be considered. But this is only one employee and there are 10 in Alabama. The advent of "working from home" has brought state tax problems everywhere. One classic case involved a man living in NY while his employer was in NJ. This brought a lot of attention and don't know if it ever got settled. One solution, attempting to be "safe" and not requiring interpretation was to "Let each states courts determine the taxability." This doesn't really work. Each state is greedy and wants all the money. I'm told some state taxing authorities in the northeast hate each other. I had a conversation with one in Rhode Island, who told me it will be a cold day in h___ when we have reciprocity with Taxachusetts. After exploring the matter further, I found out the Tax rates in Massachusetts were relative benign compared to RI. The initial ruling in the NY/NJ case was that the New York courts ruled that all the wages were taxable to New York and didn't care how the NJ courts ruled. The New Jersey courts ruled all the wages were taxable to NJ and didn't care how the NY courts ruled. Neither state wanted to give the worker "credit for taxes paid to other states" which is usually available for venue workers. So the doctrine of "let each state court determine the taxability" doesn't really work. Should my Alabama employer open up a Texas payroll for this guy? '

Image counts. Brokers represent big money, and have office appearances to prove it. He works in a state-of-the-art building in an exclusive part of town, and people somehow think they are entitled to fees that they can hide on the back page of the statement. Lawyers same image. But US? They come to a modest office with papers stacked everywhere and talk to someone with none of the aforementioned image. Some of my customers come to my house. We're proud of it, but certainly not the Waldorf-Astoria. I'm convinced by the fees that I see (customers never bother to look), that some of the brokerage houses are making more money than the investor. p.s. in case any of you care, Rita has a very nice office.

Rag-tag administrations in churches abound here in the rural south. I'm not talking about the stoic multi-million dollar church buildings with 2500 members and at least 5 CPAs. We have them too. But if you don't live here, you don't see the hundreds of small church buildings with memberships less than 50. Sometimes one person collects (and counts) the money on Sunday and deposits it on Monday without anyone else ever seeing it. Others don't even give the pastor a W-2 - no one in the church even knows how. If you prepare taxes down here, you will encounter some of these pastors/preachers. Language such as "contemporaneous receipt" is not understood by someone who didn't learn to say "refrigerator" until yesterday. Many of these are good people, just simply not knowledgeable. I am quite liberal dealing with people for whom I believe honestly donate. If the IRS catches these people, then so be it. I am reluctant to enforce something I believe to be unfair from the outset. The IRS doesn't require contemporaneous receipts for equipment, supplies, other expenditures upon audit - why is it suddenly fair that the courts uphold their insistence on "contemporaneous" receipts? If I'm not mistaken, the first court case ruling against a donor was decided in favor of the IRS in 2013, so it may be rather recent legislation.

Which state is the resident state? If taxpayer moved during year, which was the resident state as of 12/31? The crudest, most time-consuming (and probably most accurate) method would be to analyze the statements (not the tax statements) and determine where the taxpayer lived when dividends and CGs were credited to the brokerage account.

The IRS has maintained throughout Cir 1230 that we are not auditors. After all they don't want us taking over their jobs, right? How did we as a profession allow this to happen? We have to answer the self-incriminating questionnaires about children? We have to collect this type information and certify that we have it, and have interrogated taxpayers about this/that. The statements we are forced to make actually perfect the case they can bring upon us - the taxpayer gets off scott-free. Have there been any court cases which uphold our role as a non-auditor?

Apparently some of you believe you are being diligent in reporting miniscule amounts and the IRS will appreciate you for being a diligent preparer. I agree that if this is your approach, you are a diligent preparer. But in reality, the IRS couldn't care less for amounts that scarcely move the needle up or down and create additional data to process, or worse still, wasted time if the client is audited. Remember that if the bank doesn't issue a 1099-INT for less than $10, it is because the IRS has approved the practice. My favorite to "ignore" are brokerage statements (e.g.Morgan Stanley and others) who move temporary money into a MM account with the brokerage house before transacting another security. Typical totals on a 1099-DIV statement is something like eleven cents, even though thousands of dividends exist, and tens of thousands of 1099-B transactions.

Thanks to all who have responded. "Fair" is very nebulous, but what seems to be unfair is the huge amounts being paid, so little credit being given, and then assistance being allowed to "dry up" the benefit leaving so much on the table. The days of the Reagan approach to allow COLAs to apply to standard deductions and tax brackets left many, many things that did not move with inflation. The subject Child Care is one of them. The $6000 base for credit has been around since at least 1979 and has never been increased. In the meantime, the cost of getting someone to watch your child has multiplied exorbitantly.

Rita, I think you need to plaster that egg back on your face. All your comrades on this board are giving you support that you really don't deserve. It's time for you to take deep and painful responsibility for your many misdeeds. Suck it up and move on. By the way, I'm sure you'll want to invite me to your June what-ever-is-happening. I may consider my elite status and condescend to the group long enough to show up. In fact, I'm certain I should be the guest-of-honor.

Thanks to all for suggestions. Resident bookkeeper is proficient only with coding invoices and doing basic banking. I'll answer questions about my resistance to QB - too user-friendly to non-accounting types. Like giving a 5-year old kid a loaded gun. The owner doesn't like them either, after having them mess up her multi-state payroll for 2 years. Was not the owner's fault either. One of the problems QB gives no resistance - keypuncher can doing anything they want. We all have problems with commingling personal and business expenses (and this can happen with any software, and the problem is universal for all of us who have clients). But when they bought an entertainment set for $1900 out of business funds and entitled the account "TV" its time to back off.

Yes not my favorite situation. I have some big time filthy rich clients who never give a cent to their church or the many worthy non-profit organizations, but they can throw at me 8-10 tickets to [Goodwill, Salvation Army]. Of course none of them have any representation of dollars. This is such concern for the underprivileged. Trophy wife wants a $5000 upgrade to her wardrobe or hubby wants new toys for his vintage electric train set in their basement. And they tell me their donations are worth thousands, until they find out they have to detail everything above $500.

Thanks to all. Not the answer I wanted, nor is it fair, but I will proceed as if your answers are correct. Apparently I didn't work through Form 2441 or didn't enter anything from box 10, W-2. Either way, my bad.

I won't be doing any of the bookkeeping except for advanced entries. Bookkeeper will do accts payable, payroll, etc. The package will have to resident on the client's computers and not mine.

A large client is looking for a General Ledger software. Should not be super-extensive, but should have a decent multi-state payroll module and a job cost module. Preference would be for a package instead of cloud-based as for the near term we don't want to give up control to the cloud. Are there recommendations? No QuickBooks, please.

Hard to find guidance on this subject. Taxpayer has W-2 with $5000 in box 10. This is a benefit which pays (or reimburses) taxpayer for babysitting expense. Taxpayer actually paid $18,000 for babysitting expense for 2 kids. As we know, the maximum base for the credit is limited to $6000, and these taxpayers are entitled to 20% of that - credit of $1200. Ugly letter from IRS disallows $1000 of the credit. They claim the $6000 base must be reduced by the $5000 employer benefit. Their reduced credit is thus only $200 and now they are wanting the $1000 difference to be paid. One problem - taxpayers net expense is not $1000, it is $13,000. ($18,000 actually paid minus $5000 from employer). This is still gobs and gobs of money to qualify $6000 of allowable base. What say ye? Is the IRS correct in ignoring the remainder of this huge outlay?

Won't be able to address the above situation, but will use the opportunity to run my mouth. I had about a half dozen clients who took advantage of the $7500 loan back in 2008. In every single case it turned out to be a curse and not a bonanza. The first thing that happened for a couple of them was less than a month later, the govt came out in 2009 with an $8000 payment that didn't even have to be paid back. My people wanted to bite a 10-penny nail half into. Divorce. Actually had a couple couples who thought getting a new house would make them happier and solve their marital problems. I'm not a marriage counselor but solutions for anything need to go to the root of the problem. Getting a new house just gave them something else to fight about. House ends up on the market (in a depressed economy) and the $7500 just becomes another debt to have to deal with. Bad economy. The end of 2008 was a horrible economy, and the $7500 just subsidized a home that was hardly worth the amount of debt. A couple more of my clients lost their job and had to move. Often not being able to sell the house meant converting it to rental property since two house payments were physically impossible to make. There is always the didactic axiom to beware of something throwing money at a situation too good to be true. From old fogies - advice unsolicited is usually unappreciated. If I'm still alive in 2024 when the last of these $500 installments have to be paid back, I will be quite happy to see form 5405 arrived at a much-welcomed demise.

Tom, generalizations are not meant for any client, certainly not yours or those belonging to anyone else. I am sorry you took offense. Hawaii Bowl Dec 24 2017: Fresno State 33, Houston 27.

Sorry, Max, I tried to post more about the situation but the system here said too much time had lapsed and disallowed my edit. I had begun my edit when the clock struck 12. Should not lapse in the middle of posting a narrative. Fact of the matter, I may not necessarily agree with Judy and Catherine if the company did not add to the W-2 until the sale.