joelgilb

Definitely agree that adequate insurance is necessary in any entity. Courts like to burst the bubbles of protection we create when they see empty shells. Also, would rather see an insurance claim than lose my properties. One more thing I forgot to say, you can tier the LLC's to protect each property from the others and still have one tax reporting entity. Similar to a consolidated corporation. Glad I could help.

WHat kind of pricing structure does ProSystem FX have? Thought it was as much or more than 10 times ATX. Think Lacert and UtraTax for the full product is closer to 4 times.

It might be interesting if others on this board shared their thoughts as to various document management software. I have been looking for a good solution for sometime now. Have tried ATX's, Drakes and a few others and all but the very high end ones costing thousands have left a lot to be desired. Many of them force you into there file structure, move your files to a different place on your hard drives and some even make you convert the file into their proprietary formats. Not sure if it was Drake or ATX, but one of them required a clients social security number to setup the folder. At least in my case i do not always have this, as not all my work is tax related. So, what happens to all the other files we are trying to organize in that case? OCR within document management seems almost an essential feature. CCH's higher end product has this, but I have not tested nor do I know the cost of this product. Creative Solutions is supposed to be adding this to theirs or already has. If I remember correctly it was not unreasonably priced. I don't remember the features or front end though Another issue with both Drake and ATX, is the limited search functions. I have a better chance of finding my files with a desktop search engine and saving PDF files in client named folders. I personally like Copernic as it seems the fastest and least intrusive to my system, but it is really only a temporay fix for not having Document Management Software. Also, tried the Windows Desktop Search and found it was more integrated with Outlook and did a better job there, but it was constantly searching my hard drives and updating them, and therefore drastically slowed down my system. Finally, I have found that the programmers of document management software from tax and accounting software companies have blinders on and don't consider the other files we need to deal with. This may be OK for some on this board, but for those of us that do other things, you will end up will files the document manager doesn't deal with well, or possibly at all.

and which entity would this be that you are nudging? S-Corp or LLC?

Jainen I originally had no intention of going over the reasons in this post due to the length and complexity of the discussion. I only intended to have MJG PM me so I could send her the information directly, which I did. However, since you ask, below is the email I sent the original poster MJG. I also sent her 6 documents with additional information that I thought were beyond the scope of this forum. Note that I steer most clients away from LLC for other types of entities due to cost, lack of support for case law etc, but for RE it does tend to make sense and we do have the bank of law for Limited Partnerships to fall back and analogize to. Hope this helps. SENT VIA EMAIL TO MJG: Note that I have done this research in the past for several clients and although an S-Corp can work, the general consensus among attorneys that assist in entity choice for holding real estate is that has too many pitfalls. I have copied a few of the concerns with S-Corporations as an entity (from previous research), some of which might not apply to CLIENT. Still I do not think it is the entity of choice. Taxation of a Corporation. Corporations should generally be avoided as entities to hold real estate because of the a potential for a double income tax on gains - once at the corporate level, and a second tax at the shareholder level. (While people often get steamed about getting taxed once, you should see their reactions when they learn they get to pay twice.) While "S" Corporations can potentially negate the issue of double taxation, it can still arise through a number of unfortunate circumstances. Additionally, pass through of tax losses to shareholders may also be limited with a corporate entity. With the growing popularity and availability of LLC's there are typically few instances warranting placement of investment real estate in a corporate entity. When the S corporation sells the real estate, no tax is levied at the S corporation level. The gain on the sale is passed through to the shareholders who will report this gain on their individual income tax returns. The gain is then taxed at individual income tax rates. If the sale were considered long-term capital gain then the 15 percent capital gain rate would apply. Thus, with an S corporation the shareholders avoid the onerous burden of double taxation, which occurs with C corporations. Pass Through Entity. S corporations are intended to assist businesses that operate in corporate form by permitting operating losses to be passed directly through to shareholders so that the losses can offset outside income of the shareholders. Thus, the shareholders enjoy the benefits of having a corporate entity that offers them the usual advantages - limited liability, continuity of corporate life, centralized corporate management -- while at the same time enjoying the tax advantages of partnerships. S corporations are limited to 100 shareholders. No debt basis for third-party loans made to an S-Corporation. Unlike partners in a partnership, S-Corporation shareholders do not receive debt basis for loans made by a third party to their corporation. The only way the shareholders can acquire debt basis is to personally make loans to the corporation. Even a personal guarantee of a third party loan will not give a shareholder debt basis. And since basis (both stock basis and debt basis) is the driving force in determining the taxation of distributions and the deductibility of losses, not receiving any debt basis from third party debt is a major disadvantage for S-Corporations holding real estate. S-Corporations cannot refinance their properties and distribute the proceeds to the shareholders tax-free unless the shareholders have adequate stock basis or debt basis. Since the shareholders receive limited tax benefits from leveraging the real estate inside an S-Corporation, this scenario is unappealing for real estate investors. No step-up in basis for your beneficiaries. If you own real estate individually or through a partnership, your heirs may inherit the real estate at its fair market value when you die (this is known as a step-up). They can then sell the property without incurring any (or very minimal) capital gain. However, if you die owning shares of stock of a corporation that owns real estate, there is no step-up available for the real estate. The shares of stock will be passed on at their fair market value, but the real estate inside the corporation will not. If you heirs want to sell the real estate, they will either have to sell the stock of the corporation or will likely incur double taxation if they sell the real estate separately. And you may have a difficult time selling the stock in the corporation. If you decide to sell the stock of your corporation, you will likely run into resistance from potential buyers if there is real estate inside of it. Buyers will generally not want to buy the stock of a corporation that owns real estate because they will not get a step-up in basis for the real estate and they will also be responsible for any mortgages on the property owned by the corporation. Buyers will usually want to buy the real estate only, which may lead to additional tax to the heirs. Ease of Sale. LLC's have an extra advantage over an S-corp. (or a C-corp.) where you want to convert a property to personal use, or trade it (called a "like-kind exchange" and subject to special rules) for another home of similar value. If held in an S-corp. the conversion or trade of property would be considered a sale with the accompanying tax consequences. Held in an LLC, there are no tax consequences to converting or trading the property. Tax-Favored Status. An S corporation can lose its tax-favored S status if it fails to carefully monitor passive rental income. This risk occurs when an S corporation has prior accumulated earnings and profits at the close of three consecutive tax years and when passive investment income exceeds 25% of gross receipts [see IRC section 1362(d)(3)(A)(i)]. The loss of S corporation status can result in adverse tax consequences. Corporate earnings would be subject to a two-tier tax along with gains from the sale of corporate assets. Gains from the sale of capital assets would be taxed at corporate tax rates. In addition, the personal holding company tax and the excess earning tax penalty might apply. Even worse for an unsuspecting S corporation, IRC section 1375 provides for a tax on the excess net passive income, computed at the highest corporate income tax rate of 35%. To avoid the imposition of the section 1375 tax and the potential loss of S corporation status, many S corporations distribute their accumulated earnings and profits at the reduced dividend rate of 15% (through 2008). If that is not possible, a recent private letter ruling (PLR 200527013) highlights how, with proper planning, an S corporation’s rental income can escape classification as passive investment income.

Jack. I find ATX works for my business returns but I do think that software like Evan suggested "UltraTax" and Lacerte, both of which I have used are far more sophisticated and do a better job. For instance, in Ultratax, I loved the feature that automatically brought the K-1 information direct to the S-Corp Shareholder or Partners 1040' with no effort on my part at all. Both were a bit pricey, but I still wonder if they could save me enough time to make the switch worthwhile. And if they can keep me from killing myself with all the overtime I have to do using ATX

You are looking for "Mel-Tax"!!!

Didn't you already renew ATX? As for Drake, I really did not like not at lease seeing the changes to the 1040 as they happened. Thought TAASC did the input sheet method much better with a copy of the graphical tax return (or line by line when in DOS) behind the input sheets. Really sped up preparation time. Also started looking at TRX already and can't see why so many are switching to it other than that its dirt cheap. Here are some preliminary observations: 1. My main issues is that I felt it was too low level. 2. Had a graphical look and feel like ATX, with a + sign rather than the rabbit. 3. Look and feel being similar to ATX, made the transition in the demo quick to adjust to and reduced the learning curve. But if I were to switch, the learning curve is not an issue to me 4. Navigation was not as smooth as ATX but workable 5. Found the finding of business codes in TRX MUCH EASIER with a ful sheet of codes to look through and choose. Ok so this would not be enough to make me switch 6. Had a drop down calculator on fields that was useful, Did not like that it did not work like a 10 key. 7. Had a nice bookmark and note feature 8. Did not have near the forms or depth that ATX has, and that is important to me (ie: sales tax forms, State Corp Forms etc) 9. Forms Menu fixed on the side was easy to adjust to 10. Easy to add lists but did not appear to be available on many of the lines unless you override the line 11. Speaking of Overrides. took 3 steps to override a line. Now this may be picky, but it does slow the prep time down. 12. Did not like the front end interface and lost the return a couple of times and had a hard time finding my way back in. Once accidentally clicked the interview and could find my way back to the actual return. I think ovre time with the software would fix that though. Not sure I will keep looking here, since I am sure I am not switching to TRX (still plan on renewing with ATX if it exists, even if I lose the early bird discount), especially since we now have a TRX forum and several have switched.

Tried it and found it very low level. Not sure I remember all the issues, but I know it did not have OCR (may not be an issue for you), and I thought the search function was useless. Also, if I remember correctly (but I may be wrong here), it made me move my files under its folder structure, totally changing the way I save my client data (most of which is already in PDF format).

Personnally as an Illinois Attorney, I like LLC's for a number of reasons. Have a 7 page article from an attorney online, that summarizes many of not all of the reasons very well that I can e-mail to you. PM me you email addy and I will send it.

And as for old years, I would guess that CCH is not very concerned about losing profit by pirating here. In the past ATX practically gave me their old software (a few years of software for years when I used others - TAASC, so I wouldn't have to use 2 different softwares for back returns), charging basically shipping and handling charges only. They also gave me network codes for some of the old software for free, to allow me to put it on my network.

Interesting observation Mel. Did you notice that in past years you could use Profit Developers Inc (PDI - http://www.profitdevelopers.com/) for E-filing of returns, but in the 2007 season you could not. I actually used PDI several years ago, because it was cheaper to file the couple of e-files I had that year. Switched to ATX unlimited e-files the next year, when I had built the e-file base back up. But I did notice that last year PDI dropped support for ATX, but supports CCH's Prosystems FX. My guess is that this way they can monitor who e-files as a check for pirating on ATX, but due to pricing on their premier product (and probably customer base) have no concern over pirating of that software.

Oh, and one more thing. If we now trust CCH, why don't we close this board and jump back to the ATX community CCH put back up? I'll answer this one myself. Because we don't trust them yet! (ps: ok, well also because Eric did a great job setting this board up)

I forgive CCH for most of their Sins during this last tax season. Change is hard for them and for Us, but I would not forgive myself if I were to be blind and let them switch my product. The discount, although resonable is not enough incentive for me to play Karnack the Great and look into the future in my crystal ball, rather than deal with this using hindsight later in the year. Now, as I have said before (attorney hat speaking this time), a written, contractual agreement from CCH will solve my problem!

Ok KC, I hear what you and your source are saying, and this has made me feel a little better, BUT.... I just received my 4th or 5th phone call from ATX (also saw that Mel won't be ready next season, thx for the update Mel) BUT I Still have concerns. Had the bate and switch done to me by another company that bought my tax product won't mention any names, but they make and sell the top low end accounting software which starts with a Q! Received all the same promises and in the end was switched. I ended up purchasing 2 programs that year and never got my money back on the first. As for the call, ATX promised me over and over that they would not be discontinuing the product, but refuse to give me the basic guarantee I requested as follows: "If for any reason the ATX product is discontinued in the 2009 (2008 tax returns) season, and CCH is going to switch them to an alternative product in their line, then the customer, at his option may choose to cancel the product and request a full refund" This should be a NO BRAINER! If they are not discontinuing the product, the have no risk in giving me that Guarantee, because with that guarantee I only have one way to get a refund, if CCH, who has full control here, discontinues the product and attempts to switch me. Real simple if you ask me. When I switched to ATX (it was the software I had to pay extra for as I had been renewed byt that other company and couldn't get my refund), I was a substantial drop in price for me. I had been used to paying over $3,000 several years ago. So, what do I save if I renew now, $150.00 maybe? To me $150 is nothing, just insurance. And if I have to switch there are a few good programs at my old cost + inflation that I will consider. As for TRX, downloaded it, tried it, T IS CRAP in my opinion. Way to awkward and low level for my needs.

Like what Mike says!

I tend to agree with KC, that you most likely have a partnership. Note that you do not need a partnership agreement to create a partnership. Uniform Partnership Act, which has been adopted by every State in some form or another becomes their partnership agreement and governing rules if they do not or choose not to draft one. From what you have indicated in your fact pattern, they fall under this act and therefore must file a 1065. You should look at the agreement they wrotethough as it may change the fact pattern. I never trust clients to tell me what is in a document as they generally don't have a clue. Also agree that you need to see the Court Order, so you can see what theory they recovered under. At this point it odes not look like you really have enough facts to make a decision.

Never do a 1040 ex, always a long form as I find it is actually quicker for me to do a long form as I know the line items better. But minimum, if it could be an EZ, I have a min of $75, based on a $225 hourly rate and getting the return done in 20 minutes or less. Of course if they cause me to take longer the fee will go up.

If its an integral part of the building and is attached and not easily moved it is an improvement. Replacing all the cabinets, not repairing a few or repairing a door or drawer front is not a repair. And if it is structurally attached to the building ... 27.5 years.

Jainen, I think you are being overly paranoid. As a tax attorney I get these all the time. Big question though is how far back to go. Not sure about CA, but IRS can be as little as 5 years to as much as all the missing returns. A lot depends on what needs to be negotiated after the returns are prepared. For instance with IRS, if it becomes necessary to set up payment plans or an Offer in Compromise, IRS often requires that all mssing years be filed. I have even had to file years where the return was ZERO, just to get the IRS OIC division to negotiate. Start with the most current years and then work backwards as CA requires. Also talk with the CA Franchise Board. They will likely tell you what they are looking for and may even have information to help you file. As for IRS providing CA withholdings, others here are correct, IRS will not be able to provide this. If CA can not or will not provide this, you may be able to estimate it by calculating it from their rate tables and showing them the calculation. I have successfully done this with Illinois.

More likely they will go after him in a civilly suit rather than criminally. And if they have started going after him civilly unlikely they will switch.

I think you should call Jarvis and have him go at that Racoon. Maybe he can Vomit on him.

I agree that it is not a concern that my info is available on taxwise. Have logged in over there as sometimes the information was different, more complete and more current. Now., would you be so kind to tell us who you are? Do you work for CCH, and if so it is OK. Would be nice to get someone from CCH let us know what is happening and calm the fears here.

Received the same letter and have used this program before. Definitely pricey but it is a good program. Still unlikely they will get my business. I also agree that CCH is trying to fix what they messed up and am concerned about the users that are jumping ship. And TRX does not offer enough and seems to low level for my needs.

I have to say that this is not necessarily true. I have been here before and had the same thing from another vendor trying to save a customer base and then switched me to another product. I want to believe, but then CCH GAURANTEE IT!!! If this is true they can stand behind it.