Tax Prep by Deb

Yes, Jainen. This all happened in the Central Valley which has been hit extremely hard with the houseing crisis. In 08 when he passed away the property value had already dipped. They held onto it in hopes that things would recover, however where this house is situated is in a very small rural town and things just aren't happening, so they made the decision to sell now in case things continue to get worse. The offset on other capital gains was exactly my thinking on the difference of refunds, but it's difficult to make a client understand that what works well for one person may not work well for them. I told her she can not compare apples to oranges, something else is taking place on his return. Thanks for jumping in on this. So I'm right in saying she can only claim 3,000 loss and carry the remainder forward? Deb!

I have a client whose father passed away in 2008. His only assets was some money and his personal residence. Because of the size of the estate, no need for inheritance return. My client is one of four siblings and the house was to be divided evenly between the four. The property was appraised at 135,000 when he passed away. They held onto the property in hopes that the market would improve, they finally decided to sell and by the time the basis is adjusted by the four siblings each sufferred a 25,000 loss. My clients brother told her that the loss helped him greatly on his tax return. Before the loss he was only getting a 1,000 loss but with the loss he's now getting around 9,000. I tried to tell my client that alot of factors could be at play here and that she can't compare her situation to his. At any rate because she has no other investment income to use the loss against, she is only able to claim the 3,000.00 loss and then carry over the rest. Am I right in this situation, or does the other tax preparer have some magic? The property was never used for rental or any other income producing business. Basically it has sat empty since the fathers death. Any feedback would be greatly appreciated. My client is suppose to check with her brother before we finalize her return. Thanks, Deb!

I would check in the recycling bin. Mine is a shortcut on my desktop. Somethings I delete goes there, sometimes however as was previously stated are permantely deleted. If it's in the recycling bin, all you need to do is click on it and choose restore. I hope this is the case for you. Deb!

I would think so to, however when you look at the worksheet they give you, (I even looked at IRS own worksheet), it seems to indicate that the grant needs to come out.

Yes, but with the code G it isn't calculating the 10% penalty. Deb!

I've been having somewhat of a problem with this form as well. My problem isn't what the previous poster's problem was but it's still driving me nuts. I have several clients who are going to school and receive grants that exceed their educational expenses. Therefore I include the excess on line 7 (worksheet where we are to put the excess scholarships, grants, that are not reported on W-2. The worksheet within ATX has calculated the 8812 by taking the total income and deducting from it the scholarship/grant, thus figuring the credit based on W-2 income only (clients usually have very little earned income, therefore little or no additional credit.) IRS refigures the credit based on the the whole amount, W-2 Income and taxable grant, thus boosting the additional child tax credit. Incidently this same issue has been affecting the Making Work Pay Credit. I believe ATX is correct, and IRS is wrong, but I don't know what to do about it. Any thoughts! Deb!

How would this situation be handled: My client has a traditional IRA. He switched banks so he rolled over his IRA to his new bank, but with a twist. Because of the timing, his old bank would not do a trustee to trustee transfer. Instead they cut a check to the new bank for the total distribution, gave the check to my client who immediately went to new bank and deposited all but 3500.00 of the check into a new IRA. Old bank issued my client a 1099R for the whole amount and coded it G, however the FMV of IRA on the new bank clearly shows 3500.00 difference. I asked my client if the new bank had issued a 1099R for the 3500.00 and was told that they would not be issuing it. My clients distribution is subject to the additional penalty and I'm having a real tough time getting the program to show this without me chaning the code on the 1099R. Any suggestions on how to do this? Deb!

This likewise happened to a client of mine. I had not prepared the return when he purchased the home and requested the credit. I asked the client to bring in all his paper work and guess what, he didn't have the payback credit, his purchase qualified for the refundable credit, not loan. Whoever prepared his return in 08 did not waite for the form to be updated, (if you remember the credit was extended and the nature changed early in 08 and for any purchases made in 08 whereby the client had not yet filed, we could claim it on the current year or ammend, if we claimed it on current year we had to wait for the form to be corrected to change the credit from 7500.00 to 8,000.00. My clients return was prepared on the old form claiming the credit for 7500.00. I'm going to try and ammend to get the additional 500.00. The bottom line is even though my client thought he owed the 7500.00 loan payment of 500.00 he did not. Perhaps this is the situation with your client. Deb!

I have had at least a couple that have received their refunds already. Had one who had his refund increased by 500.00. Took a look at the return where he received the original credit. Turns out he doesn't have to payback (his date was for a purchase in Feb 09, thus qualifying for the 8,000 credit, however previous preparer didn't wait to file his return until the corrected form was available so only claimed 7,500.) I am going to ammend his 08 and see if I can get him the extra $500.00 that he was due. Funny thing that IRS caught the payback mistake but didn't catch the mistake on the original credit request. Deb!

The one I'm looking at is pre-configured. I could probably order the same unit thru Dell and have Pro installed, but when I tried to compare the two units, the one from Costco had a larger hard drive and more ram than the one offered thru dell. I would prefer to order thru Costco because of their return policy. I hope I don't need to return it, but if I do all I have to do is take it to my local Costco. Not sure what the procedure would be thru Dell. Deb!

I'm getting ready to buy a new computer and am looking at one from Costsco. It comes with Windows 7 Premium Home Version. I will only be using the computer for tax work and Quickbooks. Will the home version be O.K. or should I try to get one with Pro? Any thoughts would be greatly appreciated! Deb!

Exactly! My first computer was an HP and it left a very bitter taste in my mouth. It had problems from the start and fortunately their customer service guy had my dad do something that totally fried the machine and HP had to buy it back. Next computer was an NEC. Great machine but my business soon grew to the point that it could no longer keep up. Was talked into another HP, bought two of these for my office, totally a piece of junk. Finally purchased a Dell, actually within one year I purchased 4 Dells. All have been trouble free, not even a hiccup, and the youngest of these is 6 years old. Nothing is technically wrong with my work computer now, except either it is getting slower or I'm getting faster. Anyway I love my Dell's and at this point would not even consider anything else. Just my thoughts! Deb!

A very good illustration. Costco had a real good buy on one but it was a 64 bit and I was a little shy. Sure wish I had gone ahead and ordered it. Deb!

I know very little about computers, but what is the difference between a 32 and a 64? My main reason for wanting the 32 is because I've heard of some issues with older software. I will be installing 2011 Quickbook Pro, but I have ATX going back for many years. Deb!

I'm in the market for a new computer. I definitely want to stick with Dell. But I'm not sure which make or model, or configuration. Any suggestions? I've heard there are some issues with the 64 bit operating system. I don't do any gaming or watching of videos, I will be using this computer strictly for business. I run mainly ATX software and Quickbooks. Any suggestions would be greatly appreciated. Deb!

I'm sure you've already considered this, but I just have to ask because I have been faced with this exact same issue several times this year. How much did the boy earn? Can he show that he provided more than 1/2 of his own support? I have several clients with children in college, who are working part time jobs, and when I put the figures together the students are in fact supporting self more than 1/2. It's kind of weird, but with the economy they way it is and so many unemployed, I've seen incomes of parents drop drastically while their kids go to work and can prove their own support issue. Just a thought! Deb!

Only include the taxable amount on line 21. If total cancelled debt is excluded, the form 982 tells IRS that you have handled the 1099C Deb!

It's not just with that particular form. I have a client, a very basic 1040 no schedule a no nothing. His refund has also been held up do to processing delays. I think IRS was not ready for the flood of returns filed the week of Feb. 14th and rather than come out and publicly admit it, they prefer to let us hear the yells and screams. I also have two clients who filed the injured spouse claim, the one back on January 25th, and we still are waiting for them to process anything, a refund, letter, or anything. Anyone else file with the injured spouse claim, were the refund has come through? I'm in California a community property state so there should be no problem. I've filed them in the past for the same clients and 1/2 of the refund was sent. I don't remember it taking this long in the past. Deb!

Pretty Please? Deb!

Had one call yesterday, but mine is showing March 15th. Client very understanding, realizes that after I push the button I have no control. Deb!

Only way the annuity would pay out was to the trust. The trust did establish a EIN of it's own and it is reported on the 1099R. Deb!

We have confirmed that the distribution was only the return of her investment. The surrender charges ate up all of the earnings. She had been drawing on this annuity for sometime and we have been filing a 1040 for her with the 1099R income, and up until the surrender there was a taxable amount. I am certain that the 1099R is correct as we have called and discussed it extensiveley with the company that issued it. This was money that was invested in this annuity when grandma sold her home. It was used for her care while alive as she was living in a extended care facility. So again my question is if there is no taxable amount, Do I even need to file anything and if so what? Any help would be greatly appreciated. Thanks, Deb!

Please help. Deb!

I just received this e-mail: CCH SFS: CCare closed temporarily due to tornado warning 2/28/2011 CCH SFS Customer Care is temporarily closed 5pm to 6pm Monday Feb 28. The tornado sirens went off and we are under a severe warning. We had to put customers on hold and move to safety. We are in the process of putting a message on the phones to let callers know the situation. thank you, CCare Deb!

I have a client whose grandmother had set up a living trust (grantor trust) along time ago. The only asset was an annuity. The client's grand mother passed away in 2009 and a personal return was filed for her in 2009. Because she died in November, it took my client several months to get the funds released from the annuity. She and her father are trustee's. For 2010 the only thing that has come in is a 1099R for the annuity distribution. It shows it as a total distribution . Box 1 $264,413.91 and box 2 (Taxable amount) is zero. We have confirmed that there is no taxable amount. My question is what do I need to do with this if anything? The money was split equally between the two trustees. I don't really see any place on a 1041 to put it. I've never done one of these before, and I just don't know how to proceed. Any help will be greatly appreciated. Deb!