rfassett

Now that you have knowledge, I would quiz the client as to the nature of the documents and attempt to clear up the ambiguity. You may find that you already know too much to sign the return that it is true and accurate to the best of your knowledge. And amending 1120S's is not just about amending the 1120S, the K-1s and consequently the shareholders' 1040's will need amended. If the two shareholders are putting pressure on you, re-direct that pressure to where it belongs. At this point, the S should already be on extension. Tell the shareholders that your hands are tied and until you can finish the S accurately, there is nothing you can do and they may have to extend their 1040s.

A fire can be very debilitating and disheartening experience. Anyone who has experienced it first hand will attest to that. Your guy is asking the right questions. And the rules are pretty simple. Use the insurance proceeds to rebuild and pay little to no tax. Use the insurance money to go play and the piper will need to be paid. Your guy needs to explore all of the different approaches and decide what makes most sense to him going forward. He needs to be honest with the insurance appraiser and gather all of the info necessary to make an informed decision. My first hand experience with fire? My parents house, 8 years after I left home, was the victim of a fire that spread from the neighbor's house. The neighbor's house caught fire because the kids in that house were playing with matches under the bed. At the end of the day, both houses were completely and utterly destroyed. They say no one died or was injured in the fire. My Mom, just a couple years later at the very young age of 58 years old, died never having gotten over losing every thing she owned in that fire. I attribute her death, from a massive coronary event, directly to the fire. I relay that story simply to reemphasize my first two sentences in this post. Your guy needs to understand that his decisions do not affect him alone.

Ask him if he kept a log as to how much time he spent actually performing his job after the implant vs how much time he actually spent NOT performing his job after the implant - you know, the personal use issue. My guess, the personal use will be well over 75% and still recognizing implants are pricey, I doubt if you have much of a deduction for the business. That is assuming he kept a log. Now, all that said, I am mostly joking, but I would swing the bat in an audit and see if I could make the ball fly.

and this one is not that bad; but it started off with a two and a-half hour delay due to a complete power outage. And it has progressed, or regressed, if you will, to just a little while a go, a retired Priest (new client referred from my other retired Priest client (upwards in age 75 to 85), turning left into my parking lot, turned right in front of a vehicle and the other vehicle hit his. Neither was injured too badly but both vehicles will not be driven away. So as of this moment, I have a police car, an ambulance, and two wrecked vehicles and a party of eight people in my parking lot with two wreckers on the way. And I have got to get some work done. Annie - where are you? Oh there you are: Tomorrow, tomorrow, bet your bottom dollar there'll be sun. And I will get some tax returns done.

This should leave you feeling warm and fuzzy. But this is actually saying that you reduce the sales price by the selling expenses as opposed to adding the selling expenses to basis. Gets you to the same place. § 103.13. Net gains or income from disposition of property. (a) Gain or loss. A gain on the disposition of property is recognized in the taxable year in which the amount realized from the conversion of the property into cash or other property exceeds the adjusted basis of the property. A loss is recognized only with respect to transactions entered into for gain, profit or income and only in the taxable year in which the transaction, in respect to which loss is claimed, is closed and completed by an identifiable event which fixes the amount of the loss so there is no possibility of eventual recoupment. (b ) Stock dispositions. Corporate reorganizations, acquisitions and recapitalizations shall be a sale, exchange or disposition resulting in a taxable gain or loss to the shareholders whether or not the gain or loss is recognized for purposes of the Federal income tax, except as provided in the TRC. The transfer of property or anything else of value to a corporation in exchange for an interest therein is a sale, exchange or disposition resulting in a taxable gain or loss. A resident shareholder shall report as taxable gain in the taxable year in which it was received or credited the excess of the fair market value of any ‘‘return of capital’’ distribution over the adjusted basis of his stock. A ‘‘return of capital’’ distribution is a distribution which is not made or credited by a business corporation or association out of its earnings and profits. The basis of stock or shares held by a resident shareholder shall be decreased, but not below zero, by a distribution which is not taxable dividend income. Example. B Corporation distributed from its capital account $100,000 to its sole stockholder, S, a resident of Pennsylvania. The adjusted basis of S’s stock was $75,000. As the distribution is not made out of earnings and profits, the $100,000 does not represent taxable dividend income to S. S must, however, decrease the adjusted basis of the stock from $75,000 to zero and report the remaining $25,000 of the $100,000 ‘‘return of capital’’ distribution as a taxable gain. (c ) Basis. If property is acquired by a taxpayer by inheritance, the basis shall be the fair market value at the date of death. If property is acquired by a taxpayer by gift, the basis shall be the same as it would be if the property had remained in the hands of the donor. Otherwise, the basis shall be the cost. (d) Sales made before June 1, 1971. Payments received pursuant to an installment sale made before June 1, 1971, are not subject to tax except as to separately stated interest payments. (e) Gain or loss on property acquired on or after June 1, 1971. The amount subject to tax shall be the net gains or net income less net losses derived from the sale, exchange or other disposition of property—real or personal, tangible or intangible—to the extent that the value of that which is received or receivable is greater than or, in the case of a loss, less than the basis of the taxpayer. The basis shall be increased by capital expenditures made after the property was acquired and decreased by depreciation or amortization, allowed or allowable, after the property was acquired. (f) Gain or loss on property acquired prior to June 1, 1971. If the property was acquired prior to June 1, 1971, the amount subject to tax shall be the net gains or net income less net losses derived from the sale, exchange or other disposition of property—real or personal, tangible or intangible—to the extent that the value of that which is received or receivable is greater than or, in the case of a loss, less than the basis of the taxpayer determined as follows: (1) The basis as of June 1, 1971, for determining gain shall be the cost or other basis as adjusted or its fair market value as of June 1, 1971, whichever is greater. (2) The basis as of June 1, 1971, for determining loss shall be the cost or other basis as adjusted without reference to the fair market value as of June 1, 1971. (3) The application of paragraphs (1) and (2) may be illustrated by the following example: (i) On June 1, 1966, a taxpayer purchased for $50,000 property having a useful life of 50 years. Assuming that there were no capital improvements to the property before June 1, 1971, the depreciation allowed or allowable on the property before June 1, 1971, was $5,000 (5 years at $1,000), so that the original cost adjusted, as of June 1, 1971, for depreciation allowed or allowable prior to that date is $45,000. On that date the property had an appraised fair market value of $90,000 with a remaining life of 45 years. The property was sold on June 1, 1980, for $120,000. (ii) For the purpose of determining gain from the sale, exchange or other disposition of the property on June 1, 1980, the basis of the property is the fair market value of $90,000 as of June 1, 1971, adjusted for depreciation allowed or allowable after May 31, 1971, computed on $90,000. Thus, the basis of $90,000 is reduced by the depreciation adjustment from June 1, 1971, to May 31, 1980, in the aggregate of $18,000 (9 years at $2,000—$90,000 ÷ 45), leaving an adjusted basis for determining gain of $72,000 ($90,000 less $18,000). Taxpayer would be subject to tax on a gain of $48,000 ($120,000 less $72,000). (iii) Assume the same facts as in subparagraph (i) except that the taxpayer purchased the property for $90,000 on June 1, 1966, and the property had a fair market value of $30,000 on June 1, 1971. The depreciation allowed or allowable on the property before June 1, 1971, was $9,000 (5 years at $1,800) so that the original cost adjusted, as of June 1, 1971, for depreciation allowed or allowable prior to that date is $81,000. For the purpose of determining gain the basis of the property is its cost of $90,000 reduced by the depreciation adjustment allowed or allowable in the aggregate of $25,200 (14 years at $1,800—$90,000 ÷ 50), leaving an adjusted basis for determining gain of $64,800 ($90,000 less $25,200). Taxpayer would be subject to tax on a gain of $55,200 ($120,000 less $64,800). (iv) Assume the same facts as in subparagraph (i) except that the property was sold on June 1, 1980, for $20,000. For the purpose of determining loss from the sale, exchange or other disposition of the property on June 1, 1980, the basis of the property is its cost, adjusted for depreciation allowed or allowable. In this example, the amount of depreciation allowed or allowable is $15,000 (15 years at $1,000). Therefore the adjusted basis for determining loss on June 1, 1980, is $35,000 ($50,000—$15,000). The taxpayer would report a loss of $15,000. (4) If the selling price is greater than cost but less than the June 1, 1971, value, there is neither taxable gain nor loss. The application of this paragraph may be illustrated by the following example: Example: Assume that acquisition cost is $10,000, June 1, 1971, value is $30,000 and the selling price is $20,000. If the rules in paragraph (1) for determining the basis for gain were applied, the result would be a loss—($30,000 less $20,000). If the rule in paragraph (2) for determining the basis for loss were applied, the result would be a gain—($20,000 less $10,000). However, the rule in this paragraph provides that there is neither taxable gain nor loss. (5) Determination of fair market value as of June 1, 1971, shall be as follows: (i) If the property on which a taxpayer is reporting was not listed on an established market or exchange, the fair market value as of June 1, 1971, shall be the opening price on Tuesday, June 1, 1971. If the property was not traded on that day, the price of the last sale during the preceding week shall be the fair market value as of June 1, 1971, for computing gain or loss. If the property was not traded during the previous week or in the absence of an opening price for Tuesday, June 1, 1971, the average of the high and low price or the average of the bid and asked quotations on Tuesday, June 1, 1971, whichever is appropriate, shall be used to ascertain the fair market value as of June 1, 1971. When a return is filed involving property acquired prior to June 1, 1971, an explanation of the method utilized in computing the June 1, 1971, fair market value shall be attached to Schedule D. (ii) If the property on which a taxpayer is reporting was not actively traded in an established market or exchange, the fair market value as of June 1, 1971, may be established through a bona fide, independent, written appraisal as of the date by a competent appraiser of recognized standing and ability. The value as established by the appraiser shall specifically exclude the value of improvements made subsequent to June 1, 1971. A copy of the appraisal shall be attached to Form PA-40 when filed. When an appraisal is utilized, an explanation of improvements made subsequent to June 1, 1971, including the date and cost of the improvements, shall be attached to Schedule D. (iii) The following table illustrates the application of the rules for computing gain or loss as enumerated in this subsection. It may be used as a guide when securities or other nondepreciable assets are involved, assuming that no adjustments are necessary for capital additions or capital reductions. Cost June 1, 1971 Value Selling Price Gain Loss 500 750 1,000 250 — 500 250 1,000 500 — 500 1,500 1,000 none none 500 100 50 — 450 500 25 50 — 450 500 1,000 50 — 450 (6) If the fair market value of the property was not ascertained as of June 1, 1971, by the methods enumerated in paragraph (5), the gain or loss shall be computed by subtracting from the sales price selling expenses and the historic or cost basis of the property and multiplying that figure by a fraction—the numerator of which is the number of full calendar months the property was held subsequent to June 1, 1971, and the denominator of which is the number of full calendar months in the taxpayer’s entire holding period for the property. When the proration is used, an explanation shall accompany Schedule D, setting forth for each asset the date and costs of acquisition and the date and costs of any capital improvements, both prior to and subsequent to June 1, 1971. Proration fractions utilized shall be included in the explanation. Paragraphs (1)—(5) do not apply when this paragraph is used. (i) The application of this paragraph may be illustrated by the following examples: (A) Taxpayer purchased his home on June 1, 1960, at a cost of $20,000. He sold the home on June 1, 1980, for $100,000. He incurred selling expense of $5,000. The taxable gain is computed by subtracting from the sale price of $100,000 selling expenses of $5,000, leaving a net sale price of $95,000. Next the $20,000 cost basis is subtracted from the net sale price of $95,000. This $75,000 gain is multiplied by the fraction of 108/240 resulting in a taxable gain of $33,750. Source: http://www.pacode.com/secure/data/061/chapter103/s103.13.html

I can not give you a site, but being a cost of the sale, I have always included it in basis. Just because I do it doesn't make it right. But my guess is, I looked into this many years ago and confirmed my treatment was correct. I will look and see if I can find some support.

Four weeks from today it will all be over but the crying. We are taking returns for the rest of this week and committing to tax season completion. Starting Monday, anything that comes in gets extended. That means I will have 22 work days to complete the over 150 returns that will be in house at the end of the day Saturday. 22 days because we take Easter off and we are done preparing at the end of the day on the 12th of April. We will be extending returns on the thirteenth and fourteenth; put out small fires for a couple of hours in the morning on the fifteenth and be closed by noon. I can see the light coming from the end of the tunnel.

As a 1065 K-1, there is a good chance that there is an inside basis different from the outside basis. The preparer of the 1065 would likely not be privy to the outside basis. In my unbiased professional opinion, having worked in this industry since 1984, there is no more complicated area of taxation than the partnership and K-1 area. I have several partnership clients - but if it were my choice they would all be corporations. At least I have a fighting chance in that arena. But there is always room for a good partnership. Keeps us on our toes.

I was under the mis-informed impression that slavery had been outlawed - until I was in the position you find yourself and reality set in. Better days are coming Rita - if you can survive the tide. Frankly, I worked 105 hours per week during the past ten or so tax seasons for very similar reasons. Those reasons don't exist anymore and I am getting by with 80 hours per week. There will be a lot more extensions, but frankly my dear............. Glad that one is behind you!

Wow - bless your heart! I do not believe I would touch that one. When the client comes in pretending to know more than I do, it is time for us to part company. Not that I am all that smart - but they are paying me to know more than they do. Wow!!! Go have an ice tea girl!

And you haven't? Are you OK Rita? That does not sound like you.

I deduct the value of my time on everyone else's return, why not mine?

Must have been what happened at my house. In a very few short years we went from two dogs to seven - and no, the first two did not breed. A long story for another day.

Are you using ATX? If so, there is a worksheet for the K-1 info. But your question is more complicated than it appears on the surface. He can only deduct that loss if he has basis. You do not know that by looking at the K-1. You will need to determine that separately.

My wife just mentioned how pleasant tax season is since we ridded our practice of some of the the real PITA's a few years ago - the kind that just like to keep everything in their world stirred up. So I had this thought. Would it be wrong to ask our prospective clients to submit to a personality test before we agree to take them on? Here is a sample of the client we will accept: Phone call yesterday: Client: Hi Ron, I just wanted to check and make sure you received the package I mailed a couple weeks ago. Me: Yes, client, we did get it. Things are just a little bogged down around here with the new reporting requirements and....... Client cuts me off mid-sentence: Ron, I don't care about all that. I have complete and utmost confidence in you and your staff. I just wanted to make sure you got my stuff, that's all. Have a wonderful day! Me: Thanks Client, we will be in touch. I want all of my clients to be like that.

You are asking about one of the greatest inequities in federal tax laws. You would think that you should be able to use a loss carry forward to offset income where the loss originated. And in the case of C or F, you would also be offsetting self-employment income. Doesn't work that way. Capital loss carry forwards offset current capital gains. But it does not work that way for C and F. You put your NOL carry forward on line 21 of form 1040.

Ha - especially one named RitaB!

Agree.

I think the IRS needs to add a space on Schedule A next to the charitable contribution line that says "it's actually more". I can not tell you how many times I have heard that this year.

Yes, contact support. Unless you (or someone else) deleted the file, the assets are still there. The system is just not finding them. Support can fix that for you.

One of my restaurant clients for whom we do EVERYTHING picks up his payroll every two weeks. With no rhyme or reason, every now and again he will come in carrying one of his pizzas. And he always seems to know the exact right time to do that. Nothing like food to change the tone of the day. I don't know why i did not think about the cookie angle before Because if there is one thing I like more than pie, it is a good cookie. In fact, the girl scouts were on the side of the road today selling cookies and I almost ran them over because I saw them too late and got all excited and started my turn too late. I never pass up a girl scout selling cookies. So I bought a case of the do-se-do things. Should last me a little while. Of course, that is in addition to the five cases (mostly thin mints) that we bought last week. But getting my clients to make me cookies - I have got to develop a plan for that. I send out a weekly email to my clients. Next week I am going to put in a blurb about how much I like cookies and how stressed I am right now and see if anybody is listening. It is worth a shot. And I have never been above begging.

I did a return last week that I had quoted a low price on because the person is the 94 year old mother of one of my very,very nice clients. Well, when I finished the return, I realized there was an opportunity here. So I billed her $50 and one pie. The next day she sent her son-in-law in with an apple pie made with snow apples. Oh wait............we are talking about the other kind of pi. Never mind!

Honest to God - I am not timid in the least sense. But I always try to give folks the benefit of the doubt. And I always try to put pressure on the folks where it most belongs. And Momma always said, if you can't say something nice, shut up! (Momma had some of that tough love thing of her own, even before the book was written.) That said - Rita, could you swing your tough love club on tech support for me? ............................................I will still love you if you say no.

I did not install the beta test version,

1. I just spent several minutes reviewing the criteria for the Schedule D entry for covered securities in total for LT and ST because when I opened the envelope for this return I am working on, I pulled out three brokerage statements and did not want to hand enter all of those 8949 entries that were there. Well, alas, the first statement had uncovered sales. So to the 8949 I went. Well, there were a total of three entries on the 8949 - one from each brokerage statement. That was it. If I would have looked at the brokerage statements first, I would have went right to the 8949 and been done with that in less time than I took looking at the Schedule D short cut. Sheesh!!!