BulldogTom

<<so if i read it right 1/3 of cost [since 1/3 of fmv] was sold. thus a non-deductible personal loss of $5k and a donation of $40k>> I don't think what you just described is the correct treatment. I believe if he sells it for 20K, it is a 55K non-deductible loss. No charitable deduction. If he gives it to the charity, 60K deduction. (assuming he does not exceed 50% of income) If he sells it to the charity for 60K, non-deductible loss of 15K, then write a check to the charity for 40K to get the charitable deduction (assuming 50% limit met). Tom Hollister, CA

jklcpa - where is the "final" box on the input screen? That is what I am looking for. I thank you all for the advice on the tax aspects, but I was only looking for the little checkmark or box for how to tell the software that the client is no longer a partner in the partnership. I only saw the boxes for the "complete disposition of a passive activity" and "complete disposition of a PTP". Just looking for the box that says "final". Thanks Tom Hollister, CA

Not doing the ps return, just the partner. Just can't figure out how to make the software do the disposition of the ps interest. Thanks Tom Hollister, CA

Client was a GP and an active participant in a partnership. Left the PS mid year. How do I show the disposition of the partnership in ATX? The K-1 only has complete dispositon buttons for a PTP or a Passive Activity. I know I am going to slap my forehead when you tell me the answer. Thanks in advance. Tom Hollister, CA

That is actually an interesting site to comb through for marketing information. I found it valuable to look up my "new" hometown and see how many EFIN's were out there and how many returns were being processed. Tom Hollister, CA

I think KC has exposed Jainen. If there is a notice of deficiency, and you went through all of the audit process, I don't think you are going to get a free pass because your son's middle initial is the same as your first name. Who would name their kid John Jainen Doe anyway? Tom Hollister, CA

KC, whatever you need, whenever you need it....just say so. Prayers and hugs to you. Tom Hollister, CA

Jainen, Thanks for your words of advice. UC San Diego is the lowest of his choices. Right now, MIT and Embry Riddle are at the top of the list. He is taking 5 AP courses this year at his high school. Does about 4-5 hours of homework every night. Will be taking the SAT this spring. His challenge is the extra-cirricular. Moving this year put him in a small bind because he was "in" at Lodi High, but now he is "the new kid" in Hollister. With his homework and church activities, he barely has time to spend with his family. He gave up football this year to focus on his classwork. We have told him he needs to find a group that he can get into and get his resume filled out. But I worry that we are putting too much on him. A 16 year old should not have to live the next two years so focused on getting his education plans in place. He still needs to be a kid. Tom Hollister, CA

The problem with this thread is the original post does not say what happened to the insurance proceeds. It also does not say if the property will be sold as land or if it will be sold as a rebuilt home on the land. The question leaves way too many options open to interpretation. That is why I stayed out. But I am enjoying the back and forth about what a fire is. President Clinton would appreciate the banter over "what the definition of fire is". Tom Hollister, CA

Sending you the biggest electronic hug I can KC. I implore the Holy Spirit to envelope you with love and comfort in this time of trial. May God Bless you. Tom Hollister, CA

<<Same thing for a dancer's tip jar in a bar>> And how do you know that? You continue to amaze me Jainen. Just pokin' fun at you. No malice intended. I am sure it is just from a dancer client that you had and you did the research to make sure you gave them the proper tax advice. Tom Hollister, CA

Lets say you show up on a Sunday and do some light bookkeeping, W2's and 1099's for them at the end of the year. You don't expect to get paid but they pass the plate and give you a "gift" of $500. What would the IRS say to that? Just because it is a church giving it out does not make it tax free. Tom Hollister, CA

While I love ATX, it is not as robust in the diagnostics as other software packages. I don't know how long you have worked with ATX, but I learned a long time ago that it does not have many bugs, it does however have many ways for the operator to miss a check box, entry date, or question that needs to be entered to make the software calculate correctly. It is my opinion that this is the reason ATX users are better preparers than other software users - we have to be to make sure the answers the software spits out are correct. Just my humble opinion. Tom Hollister, CA

My oldest is in a JC and the government is paying for all out of pocket costs via the AOC. Next year San Jose State (we think). About 10K per year tuition and fees. My youngest has dreams of MIT, UC San Diego, Embry Riddle or Cal Tech. I don't even want to know how much that is going to cost. Tom Hollister, CA

My CPE this year seemed to have alot of those kind of questions as well. Poorly worded questions. Questions that after I saw the answer I could see how anal they were. Tom Hollister, CA

Or what do you do when you buy a heavy duty truck and take the original bed off so you can put on a specialized bed. The old bed is scrap metal and that is all to you. Tom

IF (note the caps on IF) the purchase was made with the intent to demolish the home, the purchase price should be allocated to the land. The 20K of demolition costs would be added to the land in order to make it servicable for the new structure. New construction would be allocated to the home (provided that all the demo costs put the land in position to build on). Basis of the land is 270K and basis of the home is 400K. Depreciation for rental purposes would have to be determined at time it was placed into rental service. Lower of FMV or 400K. If sold, we would need to know the intent of the buyer at the time of purchase. IF it was purchased with the intent of building a personal residence, 20K non-deductible personal loss. IF it was purchased with the intent of building a home for immediate sale as an investment, 20K loss deductible as an investment loss. IF I knew more, this would be my humble opinion. Tom Hollister, CA

Notes to the financials say "books are maintained principally on the accrual basis. Revenues from fixed priced construction contracts are recognized on the completed contract method. However, for purposes of these financial statements, revenues from long-term construction contracts are recognized on the percentage of completion method." Tom Hollister, CA

I am finishing up my CPE for the year and came across something I did not notice. The FTB is asking for all sources of non taxable income on the Child and dependent Care Credit form (3805 or something like that). So I went into the software, and there is a tab for those items to be included. Funny thing is, no matter how much non-taxable income I put in (I went to 250K of child support), it did not affect the credit. And they do not appear anywhere on the form. I went through the instructions, and while the instructions call for the information, there is no place where those amounts are mentioned as a qualification for the credit. What is the FTB after? Are they just being "big brother"? Is this just a free audit item that will give FTB the right to deny based on incomplete information? I don't get what the FTB is searching for. Tom Hollister, CA

Reviewing a tax return for a construction company. At first glance, everything looks OK, but presented kinda funny. But the numbers seem to tie out to the financial statement (prepared by the CPA as well). Then I start looking at the M1 and M2. There is no correlation between the Book Income on the FS and the M1. There is no book tax depreciation difference noted (and there is a big difference). He gets to the same income number on the tax return, but I have no idea how. The M2 is more of a mystery. Book Retained earnings are 40K. Tax retained earnings are <780K> Sched L is off by same amount as retained earnings. Any idea what would cause this Retained Earnings discrepancy. Asking the CPA is not an option as the taxpayer is looking to check up on him. Tom Hollister, CA

I always look at who is on the board when I come on. Right now, there are 32 guests and Google on the board. That looks really weird. Tom Hollister, Ca

Good idea. I will claim the credit on behalf of the client and reference Jainen as the tax preparer relied upon for making the claim. Will you please sign the tax return? Tom Hollister, CA

I was hoping for some magic bullet like "if the adoption is substantially complete" or "if the child has lived with the parents for XX months". Too bad. Tom Hollister, CA

I think the deadline has passed for the special needs enhancement of the Adoption Credit, but I thought I would ask. Taxpayer's grandchild is a total loser. Gangbanger and sent to prison. Has a girlfriend who is just as bad. They made a baby. Then he thought they made another baby, but it turns out he was not at the conception like he thought he was. She is a druggie. When they both end up in jail, my client steps in to adopt what she thought was her 2 great-grandchildren. The state placed the children with her in Jan 2011. The adoption was final in May of 2012. Because of her income level, the state paid all the adoption costs. The state has declared the two children "special needs". If I am reading the requirements correctly, the adoption had to be final by 12/31/11 for the enhanced credit for adopting special needs children. Is this correct? I would like to get this lady a nice credit if the opportunity has not passed. PS, I understand because of all the fraud that these tax returns are taking forever to process. I get that. This is definately not a scam. Thanks, Tom Hollister, CA

Of course you have pointed out the weakness in the argument. The post above does not say that the taxpayer questioned the treatment of the payment, nor did the preparer give them advice that it was non-taxable. On the other hand, the placement of the item on the form with other items of income distorted the clarity of the item, causing the oversight by the taxpayer. Also, as the payments started a new phase of the taxpayer's life with new forms and third party reporting documents with new areas to look for data for the tax return, and the tax treatment of those items was new to the taxpayer, it is understandable that they were unable to pick the error out of the amount shown on the tax return. It is also possible (given that these were retirement payments) that the taxpayer's mental facilities were impared by age, causing confusion over the tax treatment. Not saying that is the case, but it COULD be the case. Tom Hollister, CA