BulldogTom

Second question Can any of you with great research software tell me if Rev. Ruling 68-114 has been superceded? If not, I have my answer. Thanks Tom Lodi, CA

Is the rule that a corporation with a fiscal year end may accrue year end bonuses and deduct them on the corporate tax return if paid within 2 1/2 months? If the employee is 100% shareholder, does the above rule still apply? Regulation §1.267b seems to take care of the first question, but I think I remember something about the loss of deduction on related parties, even if paid in 2 1/2 months. Thanks for your help. Tom Lodi, CA

I hope they all get hit with AMT. And I hope they have to fill out the forms by hand. And I hope that they have to call into the IRS to get help with their returns. And I hope that no tax professional will allow them into their office, let alone prepare their tax returns. That would teach them. I am not angry with the government! AM NOT AM NOT AM NOTTTTTTTTTTTTTTT! I feel better now. Tom Lodi, CA

Jainen, I did take your advice and wrote a 1 page letter asking for the reconsideration based on IRS misapplication of the 2005 Working Families Tax Relief Act. I assumed they would just deny (which is what I expected) via a form letter. It is possible that the letter "got lost" in the office, but I think you are on the right track about the "round filing" of it. Don't think I will be getting over the hill anytime soon. 2 boys active in sports, a full time job, and a tax practice keep me pretty busy. I may be that way next summer when our church takes the youth group to the boardwalk. Merry Christmas. Tom Lodi, CA

Jainen, I finally was able to talk to someone at the audit reconsideration office in Kansas City about the 2005 return. She told me they never got my letter (I have proof, but oh well) and that even if they got it, they probably would not open a prior year audit on a point of law, only on new evidence. Then she said they take up to 6 months to decide if they are going to open the audit, and about a year to process the second audit if it gets that far. So much for that idea, we will look for a new strategy. As for your warning above about 2006, we have been waiting for 4 months for the return to be transferred to the local office. Practioner priority line operator gave me a number in the local office and I got in touch with them. The return is still not there. No one knows for sure where the tax return is. The Atlanta office sent it out and it is not there anymore. That is the only thing they know for sure. So we wait. Please send me an e-mail with your mailing address. I would like to get something in the mail to you (it won't be a Jeroboam - but I hope you like it). Tom Lodi, CA

Just a follow up, after about an hour of working on it, I found that there was not enough profits on those activities to get a deduction. It is interesting that there are three levels of computations depending on the size of the company. I was unable to use the easiest method because the company was too big. The client was able to use the second method, but it resulted in no deduction. Did not have to go to the most complicated method. Pretty cool to learn something new. Not sure how much I will need this in the future, but I can say I know something about it now. Thanks again to Taxbilly for his help. Tom Lodi, CA

Are you picking on me KC? Saying I can't do something simple? Well, you probably are correct. But that don't make it right. I knew there was an easy way, but I just couldn't remember because it is something that you don't do very often. Tom Lodi, CA

The first time you roll over a return, it will ask you if you want to roll the billing rates, preparer info, etc. Check the box and they will come over. If you forget to do it on the first rollover, there is another way, but I forgot how. Tom Lodi, CA

We were last year. I hope it is the same this year. We have 2 computers in the office and one laptop for traveling. The office computers are networked and the laptop runs ATX stand alone, even though we can access the network from the laptop when in the office. Tom Lodi, CA

Listen to Jainen, Make it simple and easy to follow. Concede on the property settlement portion and fight like a dog for the rest. A paper trail of regular, even payments in accordance with the decree underneath a 1 page summary of the terms of the divorce and the payments made in compliance with those terms might be enough to win. Good luck. Tom Lodi, CA

I sat on the fence too, just renewing 2 weeks ago so that I could get my banking set up. I almost went with DRAKE. In fact, I sent an e-mail to the sales rep last night telling her I would not switch. Very similar feelings as BJM. I am pretty certain that ATX will not be my long term solution, because CCH will price it out of the market. BJM - please post the name of the software company (no one is going to pull your post here - CCH is not controlling this board) and your experiences. They are really valued, as are you in this community. Just because you don't use the software, don't leave us. WE may be joining you with your company. Anyone who switches to Drake, please let me know how it goes. Especially in CA. I was all set to switch until the sales rep said "We are going to be much better with CA this year". That scared me away, since they admitted they had issues to get better at with CA returns. It was that unknown more than anything that prevented me from leaving ATX. Its the devil you know versus the devil you don't. I have been through the worst of ATX (remember the e-file fiasco 3 or 4 years ago complete with airline vouchers?) and can get through it again if need be. I don't want to figure out how to get through some new issues with another software company. Tom Lodi, CA

Not technically correct, but I would make the argument that all of it is maintenance, and that the amounts are de minimus anyway, and expense the whole thing(perhaps I would depreciate the dishwasher). Tom Lodi, CA

Thanks Billy, that was a real help. Tom Lodi, CA

My prayers are still with you both. Keep the faith and it will all come out for the best in the end. His attitude sounds like it is good, and that is the most important thing. Tom Lodi, CA

Totally unresearched - BEWARE. It looks like the first 2 items are property settlements, and if the spouse was my client, that is the position I would take. Tom Lodi, CA

Thanks Gail, Actually, I started looking at this by getting the instructions for form 8903, and there "might" be a way to make this work. There is a simplified deduction method that I may be able to apply to the qualified production activities income. There is a general rule about allocations of cogs and other income and expense that I may be able to use to my advantage. I need to get into the code and regs to see if the IRS instructions are too basic for this situation. I am still looking deeper, and would appreciate any other comments. Tom Lodi, CA

I am not an expert on Production Activities Credit. I am going to do some research on this, but I thought I would ask for some direction before I get into it. Situation: Corp has a profit of 300K. Has several divisions for managerial reporting purposes, but reports all activities on one return for tax purposes. The activities that give rise to the credit are in a division that posted a loss. Approximately 10% of the activities of the company as a whole would qualify for the credit. Approximately 30% of the activities of the division in question are qualifying activities. Overhead costs are the reason for the loss in the division in question. Question: Does the corporation have to have a profit on the division where the activities took place to claim the credit? In other words, does the company need to segregate and show a profit on the qualifying activities? Sorry if this is a basic question, I just don't deal with this credit enough to know what I don't know. Thanks for your input. Tom Lodi, CA

I believe the stock was down 40% before yesterday's announcement. The slight upward move was investors signaling approval of the activist board members ousting of the top managment. The worst is not over for them, they can't find a buyer for their mortgage business. Until they can dump that division, the losses wil continue to mount. Tom Lodi, CA

Hey all, Have any of you added Kleinrock research products to your order? I finally broke down and ordered the software, but when I tried to add the 1040 essential package, I was on another completely different shopping cart, and I did not have a login that worked. Seems like they would have a way for me to buy more stuff, unless they are divesting Kleinrock products. Tom Lodi, CA

Here was the "on the side" advice we got prior to amending the plan. If no one is fussing about the match, and doing what you want to do is not going to cause a fuss, then do what you want to do. If the plan can be interpreted many ways, and one of those ways is the way you want, do it the way you want. But don't put off making the amendments. I don't think the fear should be in how the deduction flies with the IRS, it is in how the employees will react to your decision. I would rather face an audit than a lawsuit. Tom Lodi, CA

We just went through something similar. In our case, it was bonuses and terminations (do we have to match the severence pay or bonus pay deferrals that an employee may elect to make?). Our answer was - "How is your plan written?". We went back to the plan and it was not clear. We ammended the plan to spell out exactly wat was eligible wages for matching contributions. Canned 401K plans can be good, but you have to understand them when you implement. The language governs the rules, and if the language is not clear, you could end up matching more than the owner anticipated or vice versa. Tom Lodi, CA

This is why I won't join the EA society. Until they work on making the designation known and respected in the public eye, I will not pay them dues. EA's have been around long enough that the public should know who we are and what we do for them. The society, for some reason, thinks they should spend their time and money lobbying in congress. While that is important, getting the public to recognize and value our services is more important. When I see a major national advertising push to make the EA designation known, I will join. Tom Lodi, CA

This has been a long time coming. The 4137 method was cumbersome to explain and file. I am happy to see this form. Tom Lodi, CA

Welcome to the family. We are all so cool with our "offishul" certificates. Tom Lodi, CA

There was a thread on a transfer fee being charged on the software? Did anyone find out what it is? Are only ATX customers from last year being charged? Did the salesman tell you it was coming, or did it just magically appear? Inquiring minds want to know. Tom Lodi, CA