taxbrewster

Ok, question came on my desk today from a fellow accountant who I have lunch with once a month to bounce ideas, thoughts, etc. Being Sunday at the Masters - my brain is not working. His client has a K1 - Ln 1 - $905,303 partner at a law firm Box 13W - 57,000 - with a note that these are payments to profit sharing and 401k plans He also uses atx - but when entering the k1 and entering the 57k in box 13W other deductions - misc (deducted from income) - it lowers the tax and income. Does he also take the deduction on the front page of the 1040 ln28?? I say no because you already lowered the income correct, would that not be a double dip - of subtracting from income and then doing it again?? Or do you not input that 57K from the k1 but just enter it on the front page ln28. It of course makes a difference....because of the original amount being taxed.. Need some confirmation or thoughts on what to do. Thanks!!!

Excellent. Thanks for the quick reply. Already have multi calls in to Vanguard and client so will wait and see what we find out.

I have a similar situation were T/P sold a large fund and has a very large capital gains bill this year. It is a noncovered security - long term - via vanguard. It makes me wonder if the dividends have been included in the cost basis because the cap gain is over 75K. Would the process be going back and adding the dividends that the T/P paid tax on in previous years to adjust the cost basis?? Not really sure how to verfify the information and cost basis..Any help would be great. Thanks in advance - this board is such a great resource for us small practices out there.

Thank you all for the information....very helpful as always...

Thanks for the input. "When an ISO is exercised and held to a future year, any excess of the sock's FMV over the option price must be added to the AMT taxable income for that year. There is an AMT basis adjustment that piggybacks on this. But if your client did not SELL that stock the same year (ad it sounds like he did not), then you have no AMT taxable income until the year of sale. Warning him about this future concern may help him decide how much to sell and when." Question about your comments - The t/p did not sell and his holding them. What is the AMT basis adjustment that piggybacks on this? If I am understanding this correctly - then really there is nothing that needs to be reported until sale. Correct?

hello everyone - just had this walk into my office. just need some clarification on what I believe I am doing....correct or not. Form 3921 Date Option Granted - 3/16/11 Date Option Exercised - 7/23/13 Exercise price per share - .01 FMV on exercise date - 1.85 # of shares - 78125 So, no sale as of yet but after reading materials and the board. I am reporting this on the 6251 LN14 - FMV at date of ex - $144,531 Stock purchase price at exercise of option - $781 ---- > confused - exercise price? (.01) OR am I missing information?? I feel like I should be using a different price?? Total adjustment for ISO options - $143,750 Because if I use the above calculation t/p get hammered with $37K of AMT. Thanks!!!

@rich yes T/P got 25k of earnest money as a deposit - deal fell apart - he got to keep the cash. Thanks for the information....that is very helpful.

Ok, here is something I have not seen before...Client brought this too me earlier this week. DId a bit of research and see some conflicting information and really could not find a case that was like the one I have. T/P was selling his house (primary res) - buyers put 25k in escrow - deal fell apart. T/P got to keep 25k. Now, I believe the 25k is ordinary income - line 21. He also incurred 20k in expenses in dealing with this process (lawyers and some changes to the home before the deal went south). Could those expenses go to Sch A? Now, I have also located a couple of times where the transaction was reported on Sch D - short term gain... Has anyone dealt with this before or offer any guidance? Thanks!

you have to uncheck the "link to federal return" at the top of the ny efile info form.

Ok, that makes sense, the way you describe it. And, it makes sense to include the income on the return. The student said the father was shifting income to him before death, he has never taken any funds and I don't think has access, but has to pay tax. That is what I get for listening to the student and just not go directly to the father. Long day.... Thanks again.

Well, getting ready to wrap things up, but one last item. Had a last minute college student stop in. Pretty simple stuff - w2, education, brokerage acct, etc. A nice piece of cake to close up shop.. Then his father faxes me 40 pages of another brokerage account - titled under the students name with "TOD on File" in students SS# on account. Now, I have dealt with these when someone dies and receives the monies. But does he include these on his return and have to pay tax on all these dividends, interest, and cap gains?? Why would the father send them to me now? Aren't they being captured in a trust or by the father since he still has control? My brain is mush...Need some help.

Just double checking here. I want to know if I am correct in my thought process. T/P attended U of M in spring, worked as a consultant for the summer in Illinois, then returned to Mi for the next semester of grad school . The company withheld taxes in IL and Mi as T/P is still employed with consulting company during the rest of the school year. I know there is a reciprocal agreement with MI and IL - so is the Non-Res IL the play and state all income was earned while a resident of MI and should not had any withholding, then have MI tax all income and use the IL refund to pay the state of MI or is this something that needs to be handled by the HR/payroll company? I don't see a Part Year Res coming into play since the intension was to return to MI...This should have been handled when T/P filled out w9 form, correct? Thanks... Just updated to 12 seems like things are running a bit better....but the jury is still out.

Me too, checked my back up folder, all back ups had 2kb next to them. ATX SM my back up folder was hidden so you might have to unhide all files.... I exported all returns to a back external drive. Question: can I create a new fold to backup on my desktop?? Or do I need to keep it local to the ATX program folders? If so, what other items should be included in that back up program wise. Thanks to everyones help in the forum...nothing worst than needing backups and them not being there...well I guess bad software trumps that!!!

Things seem to be somewhat stable, however, I feel the print manager has slowed down quite a bit....not really sure why.

Really? I am showing its still unavailable & it is not allowing me to create an efile. Am I missing something?

man, i always love this board, just wished i would have looked at this post before i changed the name on the return manager. just lost a return i had been working on for awhile because t/p was single and now married... note to self - read the board and the posts before starting the work day... back to work.

Thanks, just finished my 8th season. One man operation. This place is awesome!! Thanks to everyone that contributes to this forum. It is a wonderful resource!!!

Thank you for the assistance. Dont work too hard this weekend!!

To my understanding the debts were discharged near the end of 2010. Again, that was my understanding that the mortgage was included. As far as I know, they held off on getting married until everything was finished. Looks like that is not the case...

Ok T/P filled bankruptcy in 2010, home was included. Then got married in 10/1/11 to one of my clients who already has a home, rental, and solid career. T/P receives a 1099-a for 2011 with the date of abandonment of 4/6/11. Box 2 - $95,376.59 Box 4 - $32,000.00 FMV Box 5 - checked My question is, how should I report this? How does it affect my client? It shouldn't correct? Do I still report this on sch D and exclude it because it was T/P principal resident at the time before he got married to my client? Or is that going to cause an issue because they are married now? Any guidance would be helpful. Thanks again for this community...Good luck, we are almost finished!!

To everyone on the board, thanks for all the input, heres to other great season!!

Thanks for the info, looks like I have some more reading to do...off to the extension pile you go...

Client of mine got married to an Alien (guy from Australia) in Dec 2010. He moved/lived in the US starting in Sept 2010. He did not or could work legally in the US at all in 2010. She worked all year. However now was granted his US green card on 4/4/11. Now has a social security number as well. So, should I be able to use that number on the 2010 tax return to file them MFJ?? Thanks, never seen this one or dealt with something like this...

understood, thanks for your help.

Thanks for the input. I guess I am confused on if the IRS means 4 calendar years or 4 tax years. When does the clock start, the second you are a freshman? I still believe that if a student has been in school for 6 years. First 2 years, used hope, then decided to work and go to school so next two years, they are part time only achieve the "junior" status at school, using the life time learning credit. This year being their 5th year in school, but only a junior, why would they not use AOC this year. They meet the requirements. Still pursuing undergrad status and have not used 4 years of Hope and AOC...right??