Corduroy Frog

For an accrual basis taxpayer, reduction in receivables, inventory, etc. would be tax free so long as the income was recognized in a previous year. By the way, I appreciate your posts, not withstanding your seeming doubt of my applications. Your answers are accurate and thought-provoking, and for the most part, helpful..

Dan, for a C Corp, Stock Basis of the shareholder is very basically the same as capital, with exceptions for non-taxable income and non-deductible expense, unless there are non-cash transactions such as donated equipment, etc. For purposes of the question, one may assume basis is the same as capital balances.

Good question Kathy, but cash could have come from non-taxable sources, such as a reduction in receivables, inventory, or disposal of fixed assets,,,,

This is messy. Not sure I know the best way to present this without giving hypothetical numbers as an example: Facts for a C Corp: 01/01/23 C corp Capital Stock $1,000 01/01/23 Retained Earnings $12,000 CY2023 Taxable Loss ($9,000) CY2023 Dividends (Distributions) $7500 a) If the dividends are applied FIRST, they are all taxed as Dividends, as beginning equity $13,000 accommodates dividend charges of $7500. b) If the dividends are applied AFTER the Y/E, there is only enough equity ($4000) to accommodate $4000 of taxable dividends, and the remaining $3500 are considered liquidating and non-taxable. Which of the above a) or b) would be correct? Or this there another answer? Thank you for your patience in reading this messy situation, and for responding.

Marilyn, best wishes for you. Much of your weariness reflects a growing disenchantment with the electronic age and all the problems which have multiplied dramatically in recent years. If you have to quit, you are living in a great state. I mail order cheese from WI.

Yes, in a strange turn of events, effective 01/01/24 employees that are paid overtime premium have their OT Premium totally exempt - not only from withholding, but from taxation entirely.

Drake does not populate the DR License from the previous year. You have to re-enter it every year.

My information (from limited sources) tell me most CPAs and EAs won't touch this because of the penalties, and their E&O insurance won't cover them. Again, I'm not sure my sources are as numerous as to conclude anything...

Abby, thank you for your usual response. Code # is 62(a)(2)

Does anyone know the IRS section that governs accountable travel plans? IRS.gov allows a search and you get 63 pages of responses. That's why this board is so useful.

I do several Alabama returns each year. Your new client is horribly confused about a number of things, including differences between Federal and Alabama taxation of ministers. Part of the problem, especially with smaller churches, is that no one in their church is knowledgeable about issuing W-2s, 1099s, housing allowance, etc. Larger churches who have CPA members generally don't have that problem.

Thanks to all who responded. I was able to recover Windows 10 in about 15 minutes once I figured out how to do it. Abby, the information in the link was really great - step by step for someone not very good at I T stuff.

A Microsoft update appeared as necessary for me to schedule. It did not announce that the update was to change from Windows 10 to Windows 11. I didn't want Windows 11 and all the garbage that Microsoft wanted me to have that comes with it, not to mention the change in navigation. Is there any way to get Windows 10 back? Thanks in advance for advice.

Thank you. I'm glad the article was from the tax advisor and not the IRS.

High-income elderly couple rented out a residence when they were younger. During the time they rented, they accumulated $215,000 in losses they were unable to take because of high income. Never sold the property, but instead moved into the home that they formerly rented. They have been carrying the impounded losses on 8582 ever since. 1. Can they take advantage of the $215,000 without renting other property at a profit? (I don't think so). 2. If they die (they are in their 80s) and leave the property to their beneficiaries, can the impounded losses be taken when the estate sells the property, or does the $215,000 die with them? Thank you in advance...

I'm sure many of you have heard the same story. Some clients ALWAYS have to pay...never get a refund. Client speaks up with an air of genius: "I don't want to let the gubbermint use my money interest free for a whole year, so I keep the money for myself." As if we should admire him for his financial prowess. Funny, I've never had a single one of these "genius" clients have any interest income to report. I believe the threshold for a bank to issue a 1099-INT is only $10. Go figure...

Sigma Tax apparently is a software company, and if they are reselling Drake, it appears as though they are cloning it. Guess I had better bite the bullet and pay up. Thanks for the discussion.

artp, is the price really $999? My renewal notice says $1895 plus tax...

I have been with Drake for years and years, but a couple years ago, Phil Drake cashed in his chips and sold the business. Since then, there have been changes, most prodigious change is a whopping price increase. A recent post from another member advised simply to cover software increases with our fee structure next year, e. g. changing to an unknown product is risky. Good advice, but I am going to look around if their are other recommendations. I will need invidual returns, all entity returns, and all state returns that work. Years ago I had TaxSlayer, which had excellent, excellent customer services, but was weak on state returns once you left SCarolina and Georgia. If there is nothing better to look at, I might be best advised to take the gentleman's advise - don't risk changing and build the increase into next year's fee structure.

I won't purchase anything from Intuit - I do hear that their Pro Series is good, but their TurboTax product overtly tries to put us out of business. Their advertisements really irk me - one of them shows a guy with a briefcase and the impact of the ad is that if you buy their product, you will be just as good as a CPA. For years they also advertised "free, free, free" which was a blatant lie, and I think they finally had to stop. There are no telling how many people buy Turbotax to avoid paying for a real professional, and forego the service we can render to them.

The benefit of the QBI is elusive indeed. At first glance, it sounds really great - a 20% reduction of profits available in addition to standard/itemized deductions. However, it has hoops to jump through. First of all, if there is EVER a loss, the loss must be applied IN FULL to the current benefit. However, if a positive result is ever squelched for any reason, the amount lost is NOT carried forward. Next, the 20% is applied to the taxable profit, or taxable income, WHICHEVER IS LESS. If any benefit is lost thereupon, it is lost forever. The 20% is a great thing for taxpayers with regular profits, and regular taxable incomes.

Thank you to all who have participated in the answer. Often I am responded to with a IRS link, which I believe to be perhaps the most official answer in existence. I am admittedly lazy for not researching on my own. I ask questions because I do want an alternative to spending 45 minutes reading something. One link a couple years ago resulted in 71 printed pages. But for Kathy, Judy, and Catherine, thank you so much for responding. I have my answer.

Mortimer owes $10,000 to MegaBank, among numerous other debts, and declares bankruptcy. Through the arrangements, MegaBank agrees to accept $1500 as part of the bankrupt settlement. Question: Although MegaBank has agreed (reluctantly) to accept only $1500, can they (or should they) issue 1099-C to Mortimer for $8500?

Will you be doing another live one later this year? A long distance for me, but I remember one year you made it down to Tennessee. Will there be more than 2 CPEs?

Thank you. There are differences between S Corps and Partnerships, and I guess this is one of them. Even with a partnership, all the elements mentioned in your post should be observed. Thank you for your knowledge and expertise.