ILLMAS

Ah you think you see them all, it seems the TP was so well advice that he is skipping on paying SE taxes. TP is a real estate agent, he setup a corporation (S-corp), he got paid and didn't draw a salary, profit is reported on the K-1, is there a way to calculate SE taxes, I believe if he gets audited, IRS is going to hit him for avoiding payroll taxes. On his personal income tax return he is only paying income tax from the profit on the K-1. Your thoughts?

Anyone?

A new TP came to see me last week, he started a C Corp in 2007 and had no activity until 2009. I was wondering if I only prepare 2009 return as an initial return and might as well make the election to be treated as an 1120S, TP has not filed his personal tax return. Your thoughts? Thanks

I guess this part of the IRS being more friendly. This past monday I participated in the first meeting of an audit for one of my associates client (Form 1120) that has been audited for 2005, 2006, 2007 and now 2008 and possiby 2009 (depending on what they find in 2008). The auditor told us the IRS is taking new approaches and is trying to be more friendly then before, supposely is this something new because of the bad rep the IRS has always gotten, she took the time to talk to us about "Your rights as a taxapayer", the examination process (she showed blank IDR's and explained what they were), privacy act and talked about your appeal rights. She talked about Fast Track Settlement (www.irs.gov keyword Fast) and something new I had not seen in prior audits before, a sort of affiadavit for the taxpayer to sign and to commit to provide requested information within a certain amount of days the taxpayer decides, for example if you write 10 days, then the auditor expects the requested info in 10 days for all the requests, however they can allow you more time if you notify them. And finally customer service, the assigned agent will be a one stop shop, for example if you recieve a notice from the IRS non-related to the actual audit, you can deal directly with the agent instead of calling the IRS. If you have time, you can read the following publication to learn more about the new steps the IRS is taking: http://www.irs.gov/pub/irs-pdf/p4837.pdf MAS

Just wondering who are they auditing the client or the tax preparer? I hear compliance and research, why don't they just call it an audit, because at end they are going to have findings if the tax payer cannot provide support.

I agree, you don't have to reinstall it, the archive cd comes in handy if you buy another computer and want to move your clients and don't have to go through the whole online update process.

I get a lot spam from red gear, don't forget to add your number to the do not call list or simply tell them you are going to report them and to remove your number.

TP is a musician as a hobby, he sings and plays at bars on talent night and owns a derisable guitar. So someone back in 2009 paid him some money to loan him the guitar on/off for a couple of months. He is not in the business of renting equipment but the opportunity came up, can the amount he recieved be reported on line 21 as other income?

FYI Illinois had the longest ballot in the national, page & half of judges no one knows or heard of.

Great can you point me to where you read that, that is what I need. Thank you MAS

A school wants to give $25 gifts card to its student, there are about about 100 students, $25 to the student isn't much, but to the school, they rather not give out the $25 if it requires a gift tax return which I don't think is needed, or if there is threshold amount on gifts the IRS might have. Does somebody know where I can get information on this, I checked the IRS website but what I found is more like giving someone a large amount of money or a house. Thanks FYI school is not reconsidered a NFP, files a 1120S

I am thinking of scanning my files and saving them on the computer and shredding the paper returns onced scanned, does anybody know if this is acceptable or a hard copy is always required? Thanks MAS

I bought the gliem ea package used off craigslist, however the material was relevant up to 2009. I am going to start studying already to take the exam in mid December.

I am just wondering much do you charge (for those that offer payroll services)to process payroll, prepare 941's and year-end forms. I charge between 15 to 40 per payroll run, must of my clients are bi-weekly and between 40 to 90 for quarterly filings and 40 to 100 for year end fomrs (W-2, 940, etc...) I don't know if I am charging to much or too little, but about 80% of my clients call me the day payroll is due. I know paychexs charges a same day fee. MAS

A new TP came to see me, back in 2007 he formed a corporation to recieve payments as a real estate agent, now in 2010 he wants to do his tax corp tax return and elect to be sub-chapter S, if thought he can make the election the when he is ready to file a tax return. For 2007 and 2008 he recieved a check payable to his corp and he took it out, so now he is on the hook for corporate tax and tax the distribution he took on his 1040. He didn't pay himself as an employee, simply just took out the money. I was wondering if it would be possible for him to request for the 1099's to be amended and instead of paying the corp, paying him? Not breaking any laws of course. MAS

Thanks. I did mention about converting the it to a IRA, but once I asked the amount she wanted to withdrawal was very little 3K and she doesn't need the money until Feb 2011, finacial aid covers most of it, she only needs to pay $3,500 out of her pocket. I recommended for her to save from here to Feb, or to withdraw the money in 2011, then she has about a year to save for the tax and penalty. I did make her aware that her current loan against her 401K, the remaining balance is considered a early withdraw because she is no longer employed. So she is on the hook for 3K in 2010. She did ask me another question I was not able to answer her husband just recently finished his term in the arm forces, and wanted to know if the pension he was with the military can be rolled over to his current account, he works for UPS. I told her to have her husband ask the HR department.

TP left her job to focus 100% on school, she has now ran out of savings and would like to withdraw from her 401K to pay for her tuition. This is not considered hardship right? So she would be liable for the 10% penalty + federal and state tax if she does indeed take out the money. Has anyone else encounter a suituation like this or is aware that this might qualify as hardship Thanks MAS

I think the farmville postings might be automatic, a friend of mine past away over the summer and I was getting updates months after her passing. At first I was scared, but let's hope she is okay.

Amen to that!!!

No, no rollover, we called the broker to confirm if there was any rollover because TP didn't remember if he had returned some money back. And TP hasn't made any contributions in many years, for the last couple of years he has pretty much took out all his and his wife IRA to buy real estate.

1=early distribution

I had a TP go with someone else to finalize their tax return, he called me back to let me know the other tax preparer was able to reduce his liability by only making a certain portion of a IRA distribution taxable. TP took out about 210K (early distribution) form his IRA account, he had them withheld the 10% for the penalty, box 2a (Taxable Amount) is zero and box 2b is checked off (Taxable amount not determined). According to what I see, the total amount should be taxable, if there was an amount on box 2a, then the difference between box 1 and box 2a is what would be taxable. Can someone please let me know if this is possible, or what basis is used to determine what portion of the IRA is non-taxable, I am afraid that once the IRS sees the attached 1099-R will right away know 100% is taxable. Your thoughts?? Thanks

suburban strip club owner was charged Thursday with criminal tax offenses seven years after Internal Revenue Service agents seized $12 million in cash he had stashed in a warehouse. Authorities began investigating Michael Wellek in 2000 after he had gone 11 years without filing a personal income tax return, according to the charges. Despite operating profitable "gentlemen's clubs" in Elk Grove Village, Harvey and Markham, Wellek told the IRS he never paid taxes from 1989 through 1999 because he didn't earn any income, authorities alleged. His attorney, Terry Ekl, said he anticipates that Wellek, 63, of Libertyville, will plead guilty to both counts he was charged with — obstructing the IRS in collecting taxes and filing a false tax return for 2000. Ekl said Wellek still owns the three clubs, Heavenly Bodies in Elk Grove Village, Skybox in Harvey and Cowboys in Markham. In 2003, IRS agents found bags holding $12 million in cash in an Elk Grove Village warehouse controlled by Wellek. Each bag was marked with a date and the name of the club from where the money had come. The seizure of the cash came to light in 2004 after Wellek filed a federal lawsuit seeking the return of the $12 million. U.S. District Judge Amy St. Eve turned down the request. Wellek later challenged the government's seizure of all $12 million, contending he owed less to the government, but St. Eve concluded that an IRS levy of more than $11 million was "appropriate under the circumstance." In court filings, prosecutors contended that the $12 million was the "fruits of the crime" and couldn't be used to pay taxes he owed the IRS. But a federal appellate court disagreed on that point. Prosecutors alleged that in 2000, Wellek made more than $2.1 million in income from two of the strip clubs but that he reported making only $115,769 to the IRS. When the IRS began investigating Wellek, he made false statements to federal agents, claiming he had no personal income from 1989 through 1999, authorities charged. In 2002, he underreported the gross receipts of the three clubs by at least $1.45 million. Wellek paid $3.1 million in taxes on the revenue from the clubs in 1999 but actually owed more, prosecutors said. Wellek was also slapped with a $1.2 million fine for fraud by the IRS in 2004. His challenge still is pending in U.S. Tax Court. If convicted, Wellek could face up to six years in prison, authorities said. A spinoff of the federal investigation led to charges against 15 individuals, including 14 former Chicago or suburban police officers, who didn't report income they earned moonlighting as security guards at Wellek's clubs. FYI I have never visited any of these establishment so I really don't know how these establishments can rack up so much money.

No no no, you don't hate Quickbooks you hate your client for not knowing how to use it. If QB is PROPERLY setup and your client knows what he is doing, you wouldn't have these problems. But I think just made you more money, because now you are going to charge your client for fixing his/her mess + the tax return preparation fees. Nothing is free in this world, hey I charge extra if I have add clients receipts. MAS

For the first time, I am not going to fill out Sch L (balance sheet) on a 1120, client only brought in income and expenses plus they are under 250K in assets. I always make sure the BS ties to my accounting record, but for once the hell with it.