Tax Prep by Deb

I don't know about the others but for CA as long as you don't work in California or actively advertise for work for California returns you do not need to register. They accept federal o.k. for CA as well. We in California have to register with CTEC and meet educational standards but again this only applies to those of us who work in CA and actively seek California business. Deb!

Also if they did itemize, look to see which option was checked on state taxes, the one that is withheld or did they take the general sales tax deduction? If the general sales tax deduction is checked the refund would not be taxable. Deb!

It was for the rental property. The bank when they did the loan modification lopped off that much of the principle.

I have a client who had a cancellation of debt of 105,000. We did the insolvency worksheet and they are definitely insolvent way past the amount of 105,000. When I do the form 982 I have chosen #5 to reduce the basis of depreciable assets. They have a rental property as well as their personal residence. Which of these two would I reduce and if the rental property do I do it now or at the time they get rid of it? The basis in the rental property is 188,000 and the accumulative depreciation prior to this year was 41,302 leaving an adjusted basis as of December 31, 2008 146,698. So then on the asset tab would I change the original amount of 188,000 to 83,000. How would any of you handle this? (this is new one to me, so I welcome any comment) Deb!

I have a client who passed away the 2 of December 2009. She had a trust I believe it was a revokable trust. Prior to her death all income from all sources was reported on her personal tax return not involving the trust at all. When she passed away the only thing she had to pass on to her heirs was the proceeds from an annuity. To receive the funds her grand-daughter (one of the trustees)applied for a FEIN number for the trust. The trust will not receive the funds until this year 2010. How do I file my clients return. Do I go ahead and file the usual 1040 and have the grand-daughter sign, or do I need to start the trust return as of 2009? Nothing fancy, social security, and distributions from the annuity. She basically will have no taxable income if filing a 1040, and I haven't a clue about the 1041 as I have never filed one of these before. I would appreciate anyones thoughts on this one. Thanks in advance! Deb!

My thoughts would be that you can use an exception to the penalty up to the amount paid for the medical insurance. In other words what it is saying is that not all of the distribution applies to the exception, only the amount actually used to pay for his health insurance would be. The remainder would be subject to the penalty. That's just my thought! Deb!

I guess what I should have stated was that there is nothing to be distributed to any heirs. He may have a pension and I will have to check with wife how that is being handled, but I do not believe there is going to be a need for a 1041. It's just that for reasons they haven't told me about, they always wanted to file separate even though filing jointly would save them a little money. Deb!

I have two clients, a husband and wife, who have filed separately for as long as they've been married. I've been doing their taxes for the last six or seven years and even though I have discussed filing jointly with them, they wanted to keep everything separate. I've discussed the community property info with them, however they insist that they keep everything separate so therefore each files with their information and pays the taxes based on their own information. In December the husband died. The wife has sent me his information to file his return. I understand that if they were filing jointly she could sign as surviving spouse, but they will still be filing separate. I haven't confirmed but I don't believe there is an estate, so no court appointed representative. How should this final return be signed? There is no refund on the federal, just a small amount due. On the California return there is a small refund. Any help would be greatly appreciated! Deb!

From what I have read you are correct. The hardship withdrawal from a 401 (k) is from within the plan. There are very few exceptions to the penalty on the withdrawl, hardship is not one of them at least wise I haven't been able to find it. Deb!

My client has a piece of rental property that they have had for some time. They are getting up in years and are considering gifting the property to their daughter. The purchased the property in the early 1980's for $86,000.00 of which $56,000 was for the building and $30,000.00 was for the land. The $56,000.00 has been completely depreciated. Besides doing the gift tax return how do I dispose of this on their tax return? It doesn't seem like it would be a sale however I realize I have to do something with the asset. Any ideas? Deb!

I would love an animal of some sort to take care of the lawn however city ordinances wouldn't allow it. I have selected a Toro Recycler self-propelled mulching mower. I'll give it a try on Friday. As to buying one at a garage sale, well if I wanted a used mower I would have mine repaired. I want something I don't have to wonder if it will work this week. I want to know that when I'm ready to mow my mower is ready to mow. Fortunately I can buy it from a place that will allow me to use it for a month and if I don't like it I can take it back. So I will keep my fingers crossed that this one will do. Otherwise it will be back to the drawing board. Deb!

I have a client who just came to the office and asked some questions that frankly I haven't a clue about. He and two other guys are currently involved in a business that was recently set up as a LLC. The LLC was set up by a single member that we will call "A". My client and another person are currently being paid by the LLC as employees with all employment taxes being withheld. Member "A" has recently informed him that he and another person will be switched to being paid as a sub contractor and a 1099 will be issued at the end of the year. My client (when all the operating agreements ect.... are drawn up) will become member "B" and another man will join and become member "C". Member A will have 60% ownership and B & C will each have 20% ownership. My client is just a bit concerned about the 1099 aspect. Basically he was informed that he would have to form his own company, and that it would come under the umbrella of the LLC that is already set up. The main purpose supposedly in doing this is to save taxes, (I'm assuming payroll taxes as well). Does this sound right? If this is the correct way of doing this, besides the self-employment taxes on the 1099 income, what other taxes might my client be responsible for? Any thoughts would be greatly appreciated. I have absolutely no experience when it comes to any form of corporation so I feel somewhat at a loss on how to direct him. Thanks in advance, Deb!

Add the 1040 e-file to the return just don't create the federal e-file. I had the same problem but it allowed me to create and send the state e-file doing it this way. Hope this helps! Deb!

I can't remember when I had laughed so much. Your post was perfect on timing! My old mower would take you for a quick jog when you engaged the self-propelled feature. The funny thing is that on this Honda the one thing most people disliked was how touchy the self-propelled part was. Some said you either go too slow or way to fast. I had that sucker pulled back as far as I could get it and it was about 1/2 the speed of my old mower. I hate change! I love my old mower but it has broke to many times in the last year and I have no one to fix it for me. So I pretty much have no choice but to go new. I'm looking at a Toro at Home Depot, thinking about throwing in one of the day laborers that was on your post as well. Deb!

I need to replace my lawn mower. I purchased a new Honda Mower, but it has some serious problems and will be going back. I want self-propelled and have about 1600 square feet of mainly flat lawn to mow. Does anyone have a particular make and model that they like? It has to be easy to use as I will be doing the mowing. Any help along this line will be appreciated as I have already wasted way too much time looking, researching, buying and returning. I want my next selection to be my last! Deb!

Fortunately I watched your clip without anyone in my office. I needed a laugh like this as I have spent the better part of two days looking for a new lawnmower. After purchasing three different mowers, I was finally able to mow my lawn. I'm sure glad I didn't buy the Toyota Model! Deb!

I understand, however your opinions do often make us think in ways that perhaps we haven't considered. I don't always agree 100%, but I do respect you in many ways. The bottom line is that we have to act in the best interest of our clients within the scope of the law and even within the IRS circle there are many situations that they can't even agree with. I had a situation like that many years ago and the agent I was speaking to admitted even they didn't know how to handle the situation. She told me to go with whatever benefited my client, document our conversation, she even told me that if it was ever questioned to use her agent # and name as the authority I relied on. In the case of this original post however, I printed the information and handed it to my clients. They stated that the bank said husband #2 would qualify for new home buyer credit, but my client said he knows other in the business that he would talk to. I asked him that if he found someone who stated differently than the info I printed, to please ask for source info and then please call me as I am always eager to learn. I still haven't heard back from them. Deb!

Thank you Jainen. In researching this I was looking mainly at the scenerio's section and for some reason didn't even look at frequently asked questions. (I feel soooooo dumb)! It's been said about KC that when we grow up we want to be like her, well the same goes with you. Even though sometimes you come across a bit harsh, I trulllllly appreciate anything you contribute. You are the type of person I would want preparing my taxes as I have trust and confidence in your opinions. Again thanks for the link! Deb!

New husband has not owned a home in the past three years. In fact for the past three years he has lived with his now wife but never on title or anything to do with the home as it is still owned by husband no. 1 with husbands no. 2's wife. This is the strangest divorce I have ever seen, but both parties are happy and totally agreed to everything without hiring attorneys, going to court, ect... Anyone else have an opinion? Deb!

I have a client who has owned a home for the past ten years. The home was originally purchased when she was married to husband no 1. Since the divorce, husband no.1 and my client have continued owning the home together with my client living there and raising their two children. My client re-married two years ago and is now in the process of purchasing a home with husband no.2. I know they will not qualify for new home buyer credit (8,000) but what about the 7,500 credit? She has lived in this home for the past 10 years or so, but new husband has not. Does that mean they don't qualify? Any thoughts! Deb! :scratch_head:

I too, would be worried if it is an e-machine. I had tried to use one of these seven years ago and boy what a joke! My salesman kept telling me that they were good machines, but after three of them in less than a month I asked for my money back and allowed him to sale me a HP with a Celeron processor. That too was a big mistake! I personally will only use a computer with a Pentium based processor. I would never recommend anything less for a commercial use computer. Deb!

It only affected returns that where in the 6:00 p.m. drain. Earlier during the day it went through without any problems. The error field was added effective the 6 P.M. drain. This was accordign the the quick alert that I recieved. Do not blame ATX for this. This is something that IRS has changed, this is not a programming problem from what I can find out. It would be nice however if ATX had a fix that would enable us to pre-enter this info on the preparer tab of the software. Deb!

Forcing it as you do. Last year there was a sample in one of the publications how to do this, I haven't looked for it this year. As for a 1099C if it is a non-recourse loan then you shouldn't get a 1099C as this was part of their original contract. The bank agreed to take the home back if loan was defaulted on and they would have no other recourse against the owner, so therefore no cancellation of debt. Deb!

There was a quick alert issued yesterday afternoon indicating that they were adding this field in their error info. Earlier this year there was a thread on this board that indicated a change in the way they wanted that filled out, but I do agree the message we got doesn't make since as it was and always has been done the way they indicated. My clients like that I'm third party designee so I filled in my name, phone number, and selected a PIN so that it will go through. Earlier this year I had to contact the practicioner hotline, and I was able to help my client with just the preparer on the name and using my PTIN number. I was hoping that if this was the true case that ATX would have a fix in the works in the preparer manager that will let us check this box and fill the info in one time. Maybe next year? Deb!