kcjenkins

Presumably the lot should be worth something, but given that city, in many parts it might not be. Or the lot might be, but the cost of demolishing the house would be too high.

If it's an "arms length transaction" between unrelated parties, then the house IS worth the price of the phone. I'd be more worried that there is some problem with the seller's title, or liens against it, condemnations action, etc.

And you need to be careful that he's not trying to commit fraud, by lying about his prior business activity success. At least, you don't want to be part of it if he does.

Once he loses control of his stocks, he gets the deduction. That is why that letter also states that the charitable foundation has exclusive legal control over the TP Charitable Giving Fund.

I'd still use the Form 8594, if only for your planning, although as this is a friendly deal, it's possible that the seller will be happy to work with you and your client to agree now on the numbers on a Form 8594. Since it tends to protect BOTH SIDES from being audited when they both file matching forms. It removes the question of whether the numbers reported match, the IRS can check them within the system. Since the building is not an issue, and only the former owner's clients who stay are part of the value of the 'list', most of the cost should go to the equipment. Value off the location is minor, since the seller did not own it. Maybe some value to the lease, if she assumed it and if it was better than 'current value'.

Joey, Jack is a true expert on such problems. Click on his avatar, then chose "Send me a message" to start a Private Message to him. I'm sure he can help you.

And the chairs, of course! Certainly a significant part of the purchase should go to the equipment.

I'd put it on Sch C, since she IS "in the business of renting personal property". From the IRS: Topic 414 - Rental Income and Expenses Generally, cash or the fair market value of property you receive for the use of real estate or personal property is taxable to you as rental income. You can generally deduct expenses of renting property from your rental income. Income and expenses related to real estate rentals are usually reported on Form 1040, Schedule E (PDF). If you provide substantial services that are primarily for your tenant's convenience, you report your income and expenses on Form 1040, Schedule C (PDF). Income and expenses related to personal property rentals are reported on Form 1040, Schedule C (PDF) or Form 1040, Schedule C-EZ (PDF) if you are in the business of renting personal property and directly on Form 1040 (PDF) if you are not.

Still, the rules on 'renting personal property plus providing services' are fairly clear, and at a minimum she's providing utilities and maintenance. What about laundry of towels, etc? Who provides the towels? Does the shop have washer/dryer? Or do they all provide their own towels, and take them home to launder? "Substantial services" needs more than utilities, but not a lot more, to most auditors. I'd generally advise taking the safe route, because that's 'easy pickings' for a loss on an audit, and it's best she starts off right. You don't want to invite an audit of any business that does a significant cash business, in my experience.

LA should have no claim on him. His travel is commuting.

And when in doubt, on that one, answer YES. As my mother told me about whether clothes needed to be washed, "If it's doubtful, it's dirty."

They do it every year, because the employee union has it in their contract.

Could this be a 403(b ) annuity? Is it a qualified employee annuity? Sometimes coding is wrong, and since the dad would have been at or near 80, I'd wonder about this one. Most annuities pay for a specified length of time or for life, but end when the annuitant dies. Need more info..... Beginning in 2013, annuities under a nonqualified plan are included in calculating your net investment income for the net investment income tax (NIIT). Just one more fun detail, but if he took it out in 2012 he misses that bullet.

Clearly, there can be no 'standard' time, because there's so much variation in the complexity of the amendment. Simple 'this ___ form was left off the original return' type for a recent year should be fairly fast. Older ones usually take longer, ones involving new deductions and/or significant changes may take much longer.

I'm afraid I have to agree with Bart, as an attorney, professional referrals are a normal part of business. Common to refer to a specialist a case that is outside of your areas of expertise, and for them to pay a referral fee. So I would include it as SE income. From the Attorneys Audit Technique Guide Referral Fee This is a fee paid to an attorney who refers a case to another attorney. This generally occurs when an attorney receives a case that could be better handled by another attorney due to his area of specialty or because of his geographic location. A portion of the ultimate award is generally remitted back to the attorney that originated the case or referred the client. Examiners should ask an attorney whether or not they have referred any cases to another attorney. These fees represent recognizable income when received.

AR asks the same thing, Jack, but they have a special fax number for preparers to send the copy of the other state's return. And instructions how to mail, if prefered. Maybe your state does something similar. I'd call the state help desk and ask them how they want it sent

Agreed. BUT it can be done through a Sch C which has no matching. I favor W-2 matching, don't misunderstand me. And putting bogus preparers in Fed prison, But until they also put more of the filers in there too, it will continue, because there are many ways to do it, and it pays so well. And the filers play innocent, blame the preparers, and mostly get off with fines at the most.

New York (October 2, 2014) By Michael Cohn A tax attorney is sounding a warning about some unfavorable estate tax consequences for surviving spouses in many states across the country from the use of so-called “QTIP trusts.” Seymour Goldberg, senior partner at the law firm Goldberg & Goldberg in Woodbury, N.Y., contacted Treasury Secretary Jacob Lew and officials with the Internal Revenue Service earlier this year about the problem. In his letter to the Treasury, Goldberg—who is a CPA—warned about how the problem could jeopardize the tax treatment of qualified terminable interest property, or QTIP, trusts. “It appears, based upon certain state trust law changes in many jurisdictions, that the state trust laws as modified may adversely affect estate plans throughout the United States,” he wrote. He noted that the issue can arise when a QTIP trust holds an interest in a limited liability company or in a partnership and suggested it could be resolved by the IRS by means of a Revenue Ruling so practitioners could advise their clients accordingly. Goldberg pointed out that many estate practitioners provide that a decedent’s interest in a limited liability company or partnership interest be held in trust. The trust thus provides for a mandatory income interest to be paid to the surviving spouse at least annually for QTIP trust treatment. A mandatory income interest under the Uniform Principal and Income Act, or UPAIA, which has been adopted by most jurisdictions around the country, “means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.” According to the UPAIA, if a limited liability company or partnership makes a distribution to a trust, it is for the most part considered to be income, except when money is received in partial liquidation, Goldberg noted, while money received in partial liquidation is considered to be principal. “The issue is triggered when the trustee receives a K-1 from an interest in a limited liability company or partnership in an amount that is greater than the actual cash distribution from the interest in said entities,” he wrote. “For example, a K-1 of $100,000 is issued to the trust from a limited liability company and the cash distribution is only $30,000. In many jurisdictions, but not all, the $30,000 distribution is not paid to the income beneficiary and is used by the trustee to pay the income tax liability on the $100,000 K-1. In other jurisdictions, the $30,000 gets paid to the trustee income beneficiary and the trustee pays income tax on $70,000 while the beneficiary pays income taxes on the $30,000 distribution amount. My concern is that most jurisdictions are amending their statutes to preclude the $30,000 from being paid to the mandatory income beneficiary. This may jeopardize QTIP trust treatment in these jurisdictions.” If the mandatory income beneficiary is the surviving spouse, then a spouse in most jurisdictions would not receive the $30,000 of accounting income, Goldberg pointed out, which seems to be in conflict with the QTIP trust rules. “From a practical point of view the majority of jurisdictions are concerned about the fact that the trustee may not have a sufficient amount of cash to pay the income tax liability on the phantom income that is triggered when the K-1 and the cash distributions are not the same,” he added. On Thursday, the American Bar Association published a book by Goldberg, “Can You Trust Your Trust? What You Need to Know about the Advantages and Disadvantages of Trusts and Trust Compliance Issues,” which examines the benefits and pitfalls of creating and administering a trust for an estate, especially as states revamp their trust laws in response to the UPAIA and other laws.

Washington, D.C. (September 30, 2014) By Michael Cohn The Internal Revenue Service is providing more time to farmers and ranchers in 30 drought-stricken states to defer taxes on any gains from forced sales of livestock. Farmers and ranchers who previously were forced to sell livestock due to drought, like the drought currently affecting much of the nation, will have an extended period of time in which to replace the livestock and defer tax on any gains from the forced sales, the IRS said Tuesday. Farmers and ranchers who due to drought sell more livestock than they normally would may defer tax on the extra gains from those sales. To qualify, the livestock generally must be replaced within a four-year period. The IRS noted that is authorized to extend this period if the drought continues. The one-year extension of the replacement period announced Tuesday generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes due to drought. Sales of other livestock, such as those raised for slaughter or held for sporting purposes, and poultry are not eligible. The IRS is providing this relief to any farm located in a county, parish, city, borough, census area or district, listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center, during any weekly period between Sept. 1, 2013, and Aug. 31, 2014. All or part of 30 states are listed by the NDMC. Any county contiguous to a county listed by the NDMC also qualifies for this relief. As a result, farmers and ranchers in these areas whose drought sale replacement period was scheduled to expire at the end of this tax year, Dec. 31, 2014, in most cases, will now have until the end of their next tax year. Because the normal drought sale replacement period is four years, this extension immediately impacts drought sales that occurred during 2010. But because of previous drought-related extensions affecting some of these localities, the replacement periods for some drought sales before 2010 are also affected. Additional extensions will be granted if severe drought conditions persist. Details on this relief, including a list of NDMC-designated counties, are available in Notice 2014-60, posted today on IRS.gov. Details on reporting drought sales and other farm-related tax issues can be found in Publication 225, Farmer’s Tax Guide, also available on the IRS Web site.

I agree with Judy, Bank may well be the best route, as these days they usually ask for a copy of the IRS letter with the EIN. in which case it will be in their file.

September 28, 2014 By Jeff Stimpson You’ve left unanswered voicemails and sent a dozen ignored e-mails. On those blue-moon occasions when they actually keep appointments, you walked these clients through returns line after line, time after time. Before next tax season begins, how can you pinpoint and fire your worst clients? If you don’t let bad clients go, you’re not alone. According to a recent survey from the National Society of Accountants, almost two thirds (63.5 percent) of practitioners review and potentially fire problem clients as difficulties occur. Almost one in seven practitioners take these actions once a year – but more than one in 10 never review and fire problem clients. When you do decide it’s time to say goodbye, who goes? “Ones that are more work than they’re worth,” said Enrolled Agent Allen Beatty at Apple Tax Services, in Jackson, Ohio. “In my opinion, these are not just ones with sloppy records but clients who don’t directly answer my questions [and] who cause doubt in my mind about their data.” “Some clients simply take up more time to serve than one can reasonably charge for, and those are the ones we sometimes have to let go,” said JeanMarie Hinds, an RTRP at TaxxDog in Appleton, Wis. “We’re a small and very personalized practice, so it’s always a difficult thing to do, but there is a tipping point that depends on the particular client. Sometimes they do refer other clients, however, or bring something else to the relationship that must be weighed.” ‘Gut’ reactions and butterflies Cheryl Morse, an EA at Wellesley, Mass.-based Emerging Business Partners, has two ways to decide which clients to fire. “First is my gut reaction to seeing their name on my client list,” Morse said. “If I have a physical reaction – headache, pit in stomach – it’s time for them to go. The other is that I keep all message slips and e-mails from clients. I also write on the back of messages the time and date that I returned the call and whether we talked or I left a message, so if a client says I didn’t return their call, I can refer back to the message. If it looks like I just released butterflies when I open their file because of all the messages, it’s time to evaluate the cost and benefit of dealing with that client.” “There’s a difference between the client who keeps in touch and the client who wants you to fill out their FAFSA line by line over the phone for free,” she added. “The other sort of client that we terminate is the result of situations where we learn or experience that they are less than honest,” added TaxxDog’s Hinds. Making a list “Never an easy process,” said Kathleen Fitzpatrick, owner of Padgett Business Services in Princeton, N.J., of firing. “We appreciate our clients and develop strong working and many times personal relationships with them.” But, she added, successful practices best divide clients into three categories: A clients: Strong working relationship, highest profitability, frequent interaction with them monthly or quarterly; they follow the agreed process of record-keeping and supporting documentation and are timely in providing information and addressing questions. “All of us would love 100 percent of our clients in this bucket,” Fitzpatrick added. B clients: See them less often, such as just at tax season; still profitable; easy to do business with; and follow established agreements and timelines. C clients: The lowest-profit clients on whom you spend significantly more time due to poor record-keeping or who call regularly about topics already discussed; don’t pay their bills on time and not easy to do business with. All attempts to work with them to come up with a better process of interacting and get paid fail. Andrew Piernock of Philadelphia-based Piernock Accounting and Tax Services also has clear criteria for firing. “Those who are constantly late, for whom not all info is there but who expect their return yesterday and those whose return is not worth the fee I charge,” he said, adding that he’s sending letters to these clients stating that “I am limiting my tax service and can no longer service them.” When and how “Firing clients for me is pretty much an ongoing process,” said John Stancil, a CPA in Lakeland, Fla. “I continually evaluate each client and whether they’re worth retaining.” “If I choose to fire a client, I simply tell them that I feel that I can’t continue to service their needs and that they might be better off finding another preparer,” Stancil said. “When the client is a fairly decent client but takes up a lot of time with questions, extra help and so forth, I tell them that the preparation of the return includes only a limited amount of consultation and that additional questions or consultations will be charged at a certain rate. That way, I at least make the client profitable to me.” “As to how you fire clients, I’d always give them another accountant to use,” Fitzpatrick said. “I’d tell them my practice has grown and I can’t maintain my current client base. To ensure they get the best possible service for them, I’d give them the name of an accountant I’ve already pre-agreed would get these clients. This may be a person just building their practice who may have more time to focus on this client.”

Back in the days before scanners, I used a 'Posted' red stamp to mark items as entered, when there were a lot, or I felt a need to CYA with a client, And would make a copy of handwritten notes, so that they could not bring it back with some forgotten item 'added'.

That may be the real problem area. The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors, according to internal documents at HHS. Under federal rules, consumers are notified if there is a problem with their application and asked to upload or mail in pay stubs or other proof of their income. Only a fraction have done so, according to the documents. And, even when they have, the federal computer system at the heart of the insurance marketplace cannot match this proof with the application because that capability has yet to be built. So piles of unprocessed “proof” documents are sitting in federal contractor Serco’s Kentucky office, and the government continues to pay insurance subsidies that may be too generous or too meager. Administration officials do not yet know what proportion are overpayments or underpayments. According to various recent internal documents, income discrepancies are the most frequent kind of inconsistencies among insurance applicants, and they exist on 1.1 million to 1.5 million out of nearly 4 million inconsistencies overall. Of the total inconsistencies, the documents show, consumers have uploaded or mailed in about 650,000 pieces of “proof” — or for about one inconsistency in six. The federal rules say consumers have 90 days after applying to try to prove that their information is correct and, if an inconsistency is not resolved by then, whatever the federal records show is assumed to be correct. By now, about one-third of people with inconsistencies have passed their 90-day window. But because of the trouble verifying incomes, the government has not lowered or raised anyone’s subsidies. That's where I see problems for preparers, as we seem to be set up in this situation as the "bearer of bad tidings". Remember back when the feds changed the withholdings tables, to reduce 'overwithholding'? People got a few dollars extra per week, which they hardly noticed, then at tax time, got a noticeably smaller refund. H&R was urging people to come in and let them 'fix' your withholding, FREE. Because they knew the dummies would blame the preparer if the refund went down.

My position was always that the tax is on them, just as it would have been had it been on the return, Penalty and interest on me, if I made the mistake. That part bothers me, because I always ask each client if they had any unusual activities, sales, withdrawals, new dependants, etc. I guess all experienced preparers do. Assuming you did that, the client should have mentioned the IRA withdrawal. Still, either way, the tax on the withdrawal is hers. Explain that to her in a letter, with a check for the penalty and interest, and put on the front of the check, in the "For_____________" space "Payment in full". If she cashes that check, that's the end of it.