Slippery Pencil

I had a client replace siding that was expensed. About 40% of the siding was stolen off the house while it was vacant between tenants. The auditor claimed ripping off the rest and replacing it was an improvement, thus a capital expenditure. If he had left the remaining siding and replaced only the stolen stuff it would have been a repair. The auditor said if I found some court cases she'd change her mind. I came up w/ Oberman Manufacturing Co. v. Commissioner, Northern & Cox vs Commissioner, & Illinois Merchants Trust Co. In Oberman, the Court held that the cost of replacing a roof as well as the cost of inserting an expansion joint in the roof was a deductible expense ($20,791 in 1961 or 159,000 in 2012 dollars according to the federal govt’s online CPI calculator). The Court observed that "it is necessary to take into consideration the purpose for which an expenditure is made in order to determine whether such expenditure is capital in nature or constitutes a current expense." Since Oberman's "only purpose in having the work done was to prevent leakage and keep the leased property in an operating condition over its probable useful life and not to prolong the life of the property, increase its value, or make it adaptable to another use. There was no replacement or substitution of the roof." The Court allowed a deduction. In Northern, the Court held that the cost ($49,308 in 1998, equal to $69,000 in 2012) of replacing roof covering was a deductible repair expense. The repairs were done to maintain normal operating condition. In Illinois Merchants Trust the court allowed deductions for repairs to the foundation ($46,562 in 1920 or $469,000 in 2012) stating the amount was not required to be capitalized. I also relied upon temp reg 1.263(a)-1 1.263(a)-1. Capital expenditures; in general (f) CAPITALIZATION OF BETTERMENTS-- (1) IN GENERAL. A taxpayer must capitalize amounts paid that result in the betterment of a unit of property. An amount paid results in the betterment of a unit of property only if it-- (i) Ameliorates a material condition or defect that either existed prior to the taxpayer's acquisition of the unit of property or arose during the production of the unit of property, whether or not the taxpayer was aware of the condition or defect at the time of acquisition or production; (ii) Results in a material addition (including a physical enlargement, expansion, or extension) to the unit of property; or (iii) Results in a material increase in capacity (including additional cubic or square space), productivity, efficiency, strength, or quality of the unit of property or the output of the unit of property. Numerous examples are included in the reg. I pointed out three of them. EXAMPLE 9. Not a betterment; replacement with same part. X owns a small retail shop. In 2008, a storm damages the roof of X's shop by displacing numerous wooden shingles. X decides to replace all the wooden shingles on the roof and hires a contractor to replace all the shingles on the roof with new wooden shingles. Assume the shop building and its structural components are the unit of property. The event necessitating the expenditure was the storm. Prior to the storm, the retail shop was functioning for its intended use. The expenditure did not result in a material addition, or material increase in the capacity, productivity, efficiency, strength or quality of the shop or the output of the shop compared to the condition of the shop prior to the storm. Therefore, the amounts paid by X to reshingle the roof with wooden shingles do not result in betterment to the shop building. X is not required to capitalize as an improvement under this paragraph (f) amounts paid to replace the shingles. EXAMPLE 10. Not a betterment; replacement with comparable part. Assume the same facts as in Example 9, except that wooden shingles are not available on the market. X decides to replace all the wooden shingles with comparable asphalt shingles. The amounts paid by X to reshingle the roof with asphalt shingles do not result in a betterment to the shop, even though the asphalt shingles may be stronger than the wooden shingles. Because the wooden shingles could not practicably be replaced with new wooden shingles, the replacement of the old shingles with comparable asphalt shingles does not, by itself, result in an improvement to the shop. X is not required to capitalize as an improvement under this paragraph (f) amounts paid to replace the shingles. EXAMPLE 11. Betterment; replacement with improved parts. Assume the same facts as in Example 9, except that, instead of replacing the wooden shingles with asphalt shingles, X decides to replace all the wooden shingles with shingles made of lightweight composite materials that are maintenance-free and do not absorb moisture. The new shingles have a 50-year warranty and a Class A fire rating. The expenditure for these shingles resulted in a material increase in the quality of the shop building as compared to the condition of the shop building prior to the storm. X must capitalize amounts paid to reshingle the roof as an improvement under this paragraph (f) because they result in a betterment to the shop. The auditor denied the deduction. The auditor's decision was overturned on appeal. The appeals conference consisted of a five minute phone call where the appeals officer stated I presented a pretty solid case and she was allowing the deduction.

If so, is there something different we do or is it the same procedure?

If that was true, ATX PDF wouldn't show up in the list either. Just another indicator that ATX/CCH doesn't give a shit how difficult they make it to actually prepare a return. Is it still showing up? Mine just disappeared after updating.

No time limit. See question 39 http://www.irs.gov/irb/2004-33_IRB/ar08.html#d0e1935

Diarrhea - you, the dog, or the client?

I ordered one online the first week of January. Got it about a week later.

Mine came a while ago. Does anyone actually use this? When it arrived I threw out the 2011 and noticed it still had the plastic wrap on it.

Programmers program from a programmer's perspective not from a user's perspective. Every year I suggest CCH hire tax preparers as consultants to the programmers so the programming gets done from a user's perspective. CCH refuses that common sense suggestion.

There's no way the platform doesn't allow it. They were just too lazy and stupid to code it into the program.

Nevermind. Corps are the only business returns IL accepts for efile.

If yes, what form do I need to add to the return?

Unnecessary wars in Iraq, Libya, Afghanistan, Pakistan, etc - $Trillions Unconstitutional and immoral social programs - $Trillions

I bought a used Toro Recycler self-propelled mulching mower five or six years ago at a garage sale for $40. Looked about 10 years old at the time. Even being a scrawny out of shape accountant I've started the thing with one pull every time. So I'd highly recommend something from your local garage sales, though I think this is even a better idea: http://www.msnbc.msn.com/id/21134540/vp/31390031#31390031

Not necessarily. If by definition of joining an organization you are a crook, then yes. If an organization is made up of members who happen to be crooks, that doesn't mean all new members are therefore crooks. I make no claims to Traficant's guilt or innocence in regards for what he did prison time. Even if is innocent, he may well be guilty of other things. Knowing the nature of congress, knowing that truth and dissent are ostracized in this country, the probability that he is dirtier than most members of congress seems slim.

An organization of crooks imprisons someone pointing out their flaws and the sheeple just keep bleating. Hopefully he wins.

Some of us aren't shrills for the govt. We prefer peace and freedom vs the tyranny represented by a govt symbol.

Oh Jainen, you'll never persuade jingoists with logic.

Thanks. That was the problem in IE. For some reason I had to turn the blocker back on in Firefox (had turned it off the other day while talking to support and forgot to turn it back on). Odd, but it's working.

For the past couple days I can't get the atx knowledgebase to work. If I do a search the page just reloads. Worked fine a few days ago. Anyone else having problems with it?

Supposedly we can do so already. P58 of the User Guide (which I can't link to because I can't get the ATX knowledge base and support site to work) has instructions.

It wouldn't be hard to determine. Make a modification to the master copies of the letters in 2009. Create a backup copy of those two files. Copy the FED_LTR.vtd & ZZST_LTR.vtd file from 2008 into the 2009 Master folder. Open the 2009 program. Create a new return or open one w/o letters. Create letters for that client. See if it has the same modifications as 2008. I'm assuming it won't work, but easy enough to try.

I can't imagine you'll get this fixed without numerous calls to tech support. If you can get it to work correctly, go to C:\Program Files\ATX2009\Years\2009\Masters\Modified and save a backup copy of FED_LTR.vtd & ZZST_LTR.vtd somewhere such as My Documents. Save a new copy anytime you modify the master. Then if the program reverts to the unmodified version, you can just copy & past back into the Modified folder.

If efiling doesn't work for some reason, or you prefer mail, just use black on white. I've been using black toner on white paper for a handful of years and have never heard from them on it.

The instructions don't state much of anything, which is why I'm asking if anyone has experience with a waiver request. All the instructions state is: Extensions of time to file federal tax returns do not extend the time for filing this report. There is no extension of time available for filing this report. If a delinquent FBAR is filed, also attach a statement explaining the reason for the late filing. See “When and where to file” (above) for filing instructions. The account is with goldmoney.com, which is a storage facility. With the huge rise in gold, the account rose above $10,000 two or three years ago. If it is only a storage facility, I don't think it needs to be reported. However, the website states: Is GoldMoney regulated?Since 1 April 2008 GoldMoney has been licensed to operate in Jersey as a money service business (MSB) and is regulated directly by the Jersey Financial Services Commission (JFSC). GoldMoney's MSB license can be verified by going to the JFSC's website at the link below and clicking on the letter "N" to see Net Transactions Limited's (the legal entity that operates GoldMoney) listing: http://www.jerseyfsc.org/money_service_bus...ities/index.asp Aside from being a regulated entity in Jersey, Net Transactions Limited (NTL) has been domiciled in Jersey since 1 April 2008. NTL's status as a Jersey-domiciled company can be verified on the JFSC's website at: http://www.jerseyfsc.org/registry/namesear....aspx?id=127166 That makes me think it needs to be reported. Now maybe, since it has been licensed as a MSB since April 1, 2008, there are no past due reports. But I don't really know how it was operating prior to that date.

Anyone have experience filing past due TD F 90-22.1 forms regarding foreign bank accounts? A friend has been using HRB's Taxcut for years to prepare his own return. This is the first year the software has asked him about foreign bank accounts and he has had a foreign account for 3 years. I told him I'd either be able to help him out or help him find an expert in this area. I don't think there's anything too complex here I just want to make sure I can get the penalties waived. Is the irs fairly lenient in waving penalties on this? I think he had reasonable cause: His return is fairly basic (one W-2, no house), the software claimed it was as good as having a professional prepare the return, the software never informed him of a requirement to file. If we attach a statement explaining all of this, will the penalties be waived? In regard to an foreign requirement expert, is Brian Levy still around? If I recall correctly he did a lot of foreign filings. If my friend wants someone who has dealt with this numerous times I'm wondering if Brian would be qualified. Thanks, dave