Sara EA

Also instant gratification. Picking up that "deal" on Amazon and having something desired in your hands the next day is much easier and more exciting than sticking that $500 in the bank and someday being glad you did.

I agree with Tom. There will be a 1099S issued to the trust, and neither IRS nor CA will know the basis unless you file the tax forms. The trust may actually show a loss that can be passed through to the beneficiaries. It may have paid tax prep fees for the decedent's final tax return and will pay for the 1041 and CA forms (allowed to deduct even if not paid by the filing date if amount is known). If the house was sold within six months or so of death, the sales price is the FMV, but surely there were closing costs that will net in a loss. The trust can also deduct any real estate taxes paid before and at the time of sale. Were there any attorney fees to handle all this? Did the trustee receive a fee? Court fees? More deductions.

You can't take a loss when selling to a related party.

One investment choice that 401ks have that IRAs don't is a stable value fund (essentially insurance contracts that pay a nice rate of interest and can't lose money). In my experience, Fidelity has very knowledgeable agents and they are not paid on commission so really do look out for their clients. Your sister should start there.

Don't the cc companies base swipe fees on volume? Small business pay more, so I understand why some of them charge that fee to the customer. We had a service person at our home this week, and I asked if he preferred check or card. He said check. We always try to use cash when we patronize small local businesses because they get to keep all the money. I send checks to charities because many of the online donation sites charge upwards of 5% for cards, money the charities can put to better use than Visa or Mastercard. That said, although our tax office is a small business we saved a fortune in time and expenses when we began accepting credit and debit cards. Prior to that, many clients "forgot" their checkbooks so we billed them, often multiple times. Our office manager used to spend a good half day a month printing and folding bills, stuffing envelopes, standing in line at the post office. The card fees were worth it. CT gas stations got around the no surcharge rule by offering cash discounts.

A lot of estates don't go through attorneys or Probate. A personal representative, usually a family member, takes responsibility for tax filings and signs the returns as such. I don't demand documentation to deal with them if I already know them. If there is a refund and an administrator will be appointed, you do need the court appointment to file the 1310 but not to just deal with the person filing the taxes.

How would you know if the contractor has business cards or a state listing? If a client's records show payment to a plumber, say, do you look up the state records and call the guy for a card? I can see denying the deduction when a client says their nephew helps out once in a while and gets paid under the table.

UltraTax has had MFA since the beginning of the year. It's no big deal and takes maybe 15 seconds extra to log in. The big deal is that we only have one cell phone for the office, so everyone had to give Thompson Reuters their personal cell numbers.

What happened to both of you is sick. More and more people are realizing that you just can't trust online reviews. They can be written by bots, family members, competitors, AI, or jerks like you two encountered. I used to chuckle over the HRBlock reviews when clients degraded them because their refunds weren't big enough. And whose fault is that? Unfortunately too many people turn to reviews without a critical eye and believe everything they read. Hopefully that will change as people sense that reviews are too often gamed and not reliable. Not soon enough.

How much data does Google collect behind your back? Anyone look at the Google Voice privacy policy?

I never believed that the IRS keeps track of the 8606s anyway. What's in it for them? If you take a distribution and claim that some portion was post-tax, the onus will always be on you to prove it. You are the one who will have to produce 8606s from possibly decades ago, records that will long ago have disappeared from IRS systems. I even wonder how long gifts reported on 709s are retained by IRS.

This is reported as the sale of the home, so it is capital not ordinary income. With a recourse loan, the amount realized is the FMV of the home as reported on the 1099A. Basis is the usual: purchase price plus improvements. There may be a capital gain, but a loss will be personal and disallowed. Ordinary income will come into play when a 1099C is issued.

Back before there was the Security Summit, there was one year when ID theft soared. We had 12 cases in our office alone, compared to one or two in prior years. It took a lot less time to resolve then, and people got their refunds within a few months. I guess the IRS had more staff then. It takes a human and time to determine who the real taxpayer is. My most memorable case was a physician who made hefty estimates. Before he even filed he got a letter informing him that his refund was increasing by $46k! Apparently the thief filed the usual fake return claiming a refund of $3k or so, not knowing that estimates had been paid. I immediately called the IRS to alert them not to pay out the refund, but I don't know if they ever did. I hope they realized that I was representing the real taxpayer because the thief wouldn't call and tell them to send less money.

How does the bulk extension fill out the 4868? I hope not all zeros!

I don't like the practice of criticizing other professionals because it's not, well, very professional. When a client brings me a return prepared by someone else, I never say "that person messed up," but maybe something like "s/he did this differently than I do" or the code changed that year or whatever. We never know if the prior person had all the docs the client brings us, or if the client answered questions the same way. I respect letters after names, like EA and CPA, because I know how hard it is to earn them. And all of us, letters or not, make mistakes. Think of McDonald's commercials. They never even mention competitors (unlike their competitors) but just highlights how wonderful their own offerings are. I disagree and have only been there maybe once in five years because it was the only quick place around, but that doesn't mean they don't know how to cook.

You would have to do interest tracing.

Where is IRS interest deductible? It is not an "ordinary and necessary" business expense, and for an individual taxpayer it's personal like with a credit card.

I had a self-employed client who owed in the five digits every year. The first time I prepared his return I dreaded telling him he owed something like $20k. He didn't even flinch. He said he makes better use of that money in his business during the year and the profits more than make up for the interest and penalty. He had figured out what was best for him. I like Dennis's idea of having all the withholding in December. For clients who take their IRA distributions in December, they could have their year's taxes withheld and not bother with estimates. Now that banks actually pay decent interest, putting the estimate money into a savings account could yield some profit. I usually pay all of my estimates at once in April since I make most of my income in the first quarter and have the cash. I might rethink that strategy.

This is a legal argument, not the bailiwick of the tax professional. Don't go there. While we aim to please and serve our clients, sometimes they ask too much of us.

The remainder interest is subject to gift tax and Form 709 should be filed. This from the instructions: "The value of all annuities, life estates, terms for years, remainders, or reversions is generally the present value on the date of the gift." Since this is a gift of a future interest, there is no annual exclusion.

Isn't that what Excel does, with speed and accuracy? I know, sometimes it feels like you're more connected with your finances when you interact with them manually. I still keep a paper checkbook register and balance it almost monthly (tax season doesn't count).

Part-year residents are generally taxed on income earned in the states they lived in in each part of the year. Check the two state websites. In the states I am familiar with, wages, interest, dividends, etc. are broken down by which state the taxpayer lived in when they were received--there is no credit for taxes paid to other states because each one only taxes the income received while t/p was a resident. If your client was truly a resident of WI when he sold property in KY, it will probably still belong on the WI return. Only if he was a full-year resident of WI would his income be taxed a WI rates with a credit for taxes paid to KY.

A revocable living trust usually goes on the grantor's 1040. The exception is when the trust has an EIN and it is used on bank or brokerages accounts. The trust gets the 1099s and must file a 1041. You can elect Treas. Reg. § 1.671-4(a), which leaves the 1041 blank and provides a statement of income and expenses to be shown on the grantor's individual return. It essentially tells the IRS that these amounts are being reported by the grantor.

What are you reading? Form 1310, Part 1, Line B is where you check the box that you are the personal rep. It says nothing about amended returns. Read further in the instructions that are part of the form and it says: "For purposes of this form, a personal representative is the executor or administrator of the decedent’s estate, as appointed or certified by the court. A copy of the decedent’s will cannot be accepted as evidence that you are the personal representative." Why is everyone making this so hard? File the 1310. If you don't, you'll get an IRS notice and refund will be delayed for who knows how long.

Form 1310 is definitely required. For purposes of the form, a personal representative is someone who is CERTIFIED, and that includes a court-appointed executor. Spouses and someone who was not named by will or the court are the only ones who get away without filing 1310. Read the instructions to the form: "For purposes of this form, a personal representative is the executor or administrator of the decedent’s estate, as appointed or certified by the court. You must check Box B.