BulldogTom

Thank you Judy. That is how I saw it, but I wanted to make sure I wasn't missing a rule. Tom Longview, TX

TP is a 20 something professional. Parents started a Roth IRA for him when he worked in the family business as a child 15 years ago. Used all the contributions to the Roth IRA to pay for college. Now in his later 20s and is looking to purchase his first home. Wants to know if he can pull the earnings from his Roth IRA for the down payment. I say yes, but only 10K, even though there are no contributions left to pull from. Please confirm. I think I am missing something. Thanks in advance. Appreciate you. Tom Longview, TX

They ususally send me an email telling me I am "one of the special few" who get to pay them early. I have not gotten that email yet. Tom Longview, TX

If the insurance company paid for the rebuild and the taxpayer did not kick anything in other than deductibles, then the basis is the same as before the fire (plus any out of pocket improvements after rebuild). Tom Longview, TX

Congrats Joel. Enjoy your retirement. Tom Longview, TX

I have some Canon compatible Linkyo 120 and 128 toner cartridges that I no longer need. You can have them if you pay the shipping (or come pick them up, I always like company). Tom Longview, TX

I have been ordering my 1099s, W2s, W3s and 1096s from Costco for the last several years because the price was so cheap. I dropped my membership because there is no Costco close to Longview. I need a new vendor this year for forms, preferably one that sells in smaller quantities (I don't need 100 1099INTs for my 1 client that I prepare them for) and has all the forms. Thanks Tom Longview, TX

I don't think so. Off the cuff, I think if he is insolvent so that there is an exclusion of income, the basis of property has to be reduced for the amount of exclusion. But I think the exclusion of income has to come first. Tom Longview, TX

I like the tax prep, and until recently, representation was my favorite part of my practice (hopeful the IRS will start answering the PPL again soon). There is no satisfaction like getting the client the right result when the IRS is treating them improperly. I don't do much bookkeeping, but what we do I hand off to my employee spouse. She enjoys that work more than I do. Tom Longview, TX

Your reply to mom should be - "Here are your documents. Sorry I could not be of assistance. I am sure XXXX or Turbo Tax can complete the forms for you" and then move on to the next return. No one tells me what number to put on a tax form that I sign. Tom Longview, TX

1. You are correct on the Wages. The W2 should have broke that out but if it did not you will make the manual adjustment on pg 1 of the CA 540 CA form. Hit the green arrow (aka bunny hop) to get to the adjustment input screen. 2. Go to the form 2106 form and go to the state tab, add all expenses related to CA work and earnings. 3. Tax Prep is entered on the Fed Schedule A. Go to the very last tab called "State Use Only - Misc Deds" and you can enter the Tax Prep. You will also see your 2106 totals on that worksheet. Tom Longview, TX

I read that as well, and my take was the same. 8 RMDs over the remaining 8 years of the withdrawal period and all of it withdrawn by the end of the 10 years. I think the IRS is not going to write a reg with a retro-active penalty. However, it does appear that the IRS is standing firm on its change to the regs requiring RMDs over the 10 year period (with the 2 years forgiven per the above). The IRS regs for the 5 year law did not require RMDs, just full withdrawal by the end of the 5 year period. When Congress changed the law from a 5 year withdrawal period to a 10 year withdrawal period, the IRS decided that was too long to wait for the tax and started looking at this new reg to require the RMDs. I am still unclear if the reg depends on if the decedent had began their RMDs or not. Anyone have clarification on that? I am pretty sure that if the decedent had begun RMDs, they need to continue, but I am not sure if the reg is applicable if the decedent had not begun their RMDs. I am still unclear about the table to use for calculating the RMD, the decedent's age or the beneficiary's age? Tom Longview, TX

This looks like the same wording and justifications that California used when they passed AB5. It has been extremely challenging law with lots of exceptions. Trucking is the one most affected in CA (although some would say Uber/Lyft). The AB5 regs say that if you hire a contractor to do work that your company normally performs, they are an employee. Lots of trucking companies hire independent truckers to fill in when they have more freight than they can handle with their own trucks. AB5 says they have to be hired on as employees, even for short term gigs. The truckers went to court and lost when the Supreme Court refused to hear their case. Tom Longview, TX

Ask your congressman to ask IRS? They made this mess when they wrote the law and the regs. /s/ (I think "/s/" is how you say "sarcasm") Tom Longview, TX

Got a bulk email this morning in several languages saying my website has been hacked and they are going to release information from my databases if I don't pay up in bitcoin. It also said that if I pay up, I don't have to worry about any of my clients finding out because bitcoin is anonymous. My website has nothing on it except my name and contact info plus info about my business. There are no databases containing anything related to any clients. I hope the fraudsters distribute it far and wide. I need some new clients. Tom Longview, TX

I have to amend a client's 2020 return. I plan to efile, but I am not seeing a new 8879 in the return. The numbers populating the 8879 are from the original return. How do I populate a new 8879 for an amended return to get the client signatures? Thanks Tom Longview, TX

I don't know why anyone would make the election for rental properties that throw a loss. You have to take into account losses from the time you make the election and use them up before you get the benefit of the deduction. Plus what Sara just said above. There are situations that make sense to make this election, but for most small rental property landlords, there is more risk than benefit in my opinion. Tom Longview, TX

Just seeing if any of you have had any updates on these proposed regs. Have these regs become final? Or still proposed? My clients don't like this requirement. We do have to follow the proposed regs, right? The old law was 5 years and the regs said take it out any way you want so long as it is gone by the end of 5 years. The new law only changed the number of years, so IRS is making the required distribution rules up themselves (not unusual, no judgements being made). Tom Longview, TX

They can still deduct the travel, they just have to do the mileage log and keep all the receipts and take the percentages. No shortcuts for bikers. Tom Longview, TX

Nope. Automobiles only. Tom Longview, TX

I don't think the support part is an issue. The rules state that the dependent cannot provide more than half of their own support. SSI is not considered provided by the dependent. Welfare (ie medicaid) is not support provided by the dependent. Both are provided by the government. So I think the TP is OK there as they pay all of the cost of keeping up the principal home that the child would be temporarily away from for medical care. The problem is - what is a temporary absence for medical care? I looked up a couple of cases and the IRS standard is "is it reasonable that the person will return to the parent's home after treatment"? The court seems to agree with the IRS standard, but gives wide latitude to the taxpayer and is careful not to make the IRS or the tax court the decider of the facts and circumstances that would determine when or if the dependent will return. The court seems to say that if there is a chance that the treatments at the facility could lead to the child returning to the parent's home, then the absence is temporary. My aggressive take - if the facility were to close down, the child would return to the parent's home (having no where else to go), therefore that is the child's principal place of abode. Therefore dependent. My conservative take - the child will never recover from the medical conditions and will always need care that the parents can no longer provide in their home. Therefore not a dependent. My practical take - we are only talking about a small amount of credit for the parents every year. As long as the parents are alive and together, filing status is not an issue. But what if one of them passes, the other might benefit greatly from HOH status. Thanks for letting me barf out my thought process. Feel free to criticize if it is warranted. Tom Longview, TX

Taxpayers adult child is severely disabled and requires round the clock supervision. Taxpayers are retired and will be unable to continue to care for child in their home. Will be moving the child to care facility. SSI and Medicare will be footing the bill for the facility. Is the child still a dependent of the taxpayers? Thinking that moving into a care facility is a temporary medical absence...but I am second guessing myself. Thanks Tom Longview, TX

@Terry D EA You are trying to change the circumstances to enable the client to continue behaviors that they should not be continuing. It is the behavior of the client that needs to change, and their unwillingness to do so results in penalties and interest. It is the behavior that is causing the issue, not the circumstances. Good choice to leave it alone. It would have made a more complicated situation that you would be blamed for when their behavior continued to cause penalties and interest. Some clients are just the way they are and our best efforts to help save them from themselves are futile. Tom Longview, TX

I almost always feel like a roof is an improvement if you did the whole thing. Replacing a few shingles is a repair, but what you describe is a brand new roof that needs to be capitalized. Tom Longview, TX

Your client is not the spouse's lawyer, your client is the corporation that you prepare the tax return for. If the lawyer is alleging that his client is not an officer of the corporation, then she is not entitled to provide authorization for you to talk to a lawyer outside of the corp, nor divulge anything about the corp to him. Thank him for informing you that his client has committed tax fraud by knowingly signing a tax return that has a material misstatement made by her, and that you will be informing the IRS of his communication to you...(maybe that is going a little too far to call the IRS on her - your call). Tell him to get a subpoena if he wants to depose you. Tom Longview, TX