BulldogTom

Before you all take off from the board for the rest of the year, anyone else going to the CSTC Summer Tax Symposium? If so, let me know and maybe we can get together for dinner one night? Have a few drinks and commiserate on this miserable tax season. Tom Modesto, CA

Not exactly. When a client has a loss on the schedule C, and part of that loss is derived from mileage expense, I include the home office worksheet in the return and check on the simplified method. Obviously, the simplified method will not increase the loss on the return as it is not allowed by the code to do so. My reasoning is that if the return is audited, I can show that there was a home office on the return, it just did not produce a deduction for the business. The workpapers to the return shows the square footage of the home and the square footage of the office, hence, there must be a home office. Sorry if that did not make sense. Maybe it still doesn't. Tom Modesto, CA

Since we are on this topic, even though a client cannot utilize office in the home, I still put in the return the simplified method form if they have mileage expense claimed on the Sch C. It is just my way of protecting my client on audit. I am not sure if it would stand up, since I don't think ATX sends the form to the IRS. Opinions if this is a good practice? Tom Modesto, CA

But, if you don't have a home office, you can potentially lose a big chunk of your mileage. If mileage is part of the Sch. C expenses, and they are claiming distance from home to the first work location and back from the last work location, then the loss of the home office causes the loss of the mileage. I was told one time that the only reason the IRS challenges home office is when they think they can get mileage deductions removed from the return. They don't care about a small percentage of your utilities coming through the return, they want to go after something that will have an impact on the bottom line tax. Tom Modesto, CA

Taxpayer is a family member. Not the smartest cookie in the box, but we love him just the same. Signed up for Obamacare, eligible for the APTC. All good, his income and his spouse income properly estimated. The amount of the PTC and the cost he paid is pretty much right on....EXCEPT....his wife and he got into a fight and she left him at the end of October. He cannot locate her, as she moved to another state and blocked his calls to her cell phone. He has no option but to file MFS. Guess what, that means an otherwise qualified individual who is right in the wheelhouse of who this law was supposed to help, cannot use the PTC because of the MFS status. I know, he can file as abandoned/abused and get around the penalty...But it just seems so unfair to me that when life happens, and your situation changes, here comes uncle Sam to slap you in the face again because you could not foresee that your life was going to change dramatically before the end of the year. Taxes are not fair, but this is insurance, not tax. I so wish that the testing of income for PTC was the prior year AGI. It would make things so much fairer (is that a word) if you had some certainty on what the maximum you will have to pay for the required insurance the government requires you to buy. We would never by auto insurance, homeowners insurance, or life insurance based on a cost we did not know until the year was over. Just think if you bought an auto policy in January for the year, and then in May you got into an accident and State Farm calls you up and says you have to pay another 4K on the policy because you estimated that you would not have an accident, but since you were wrong, here is the bill. This is STUPID, STUPID, STUPID. Rant over. Tom Modesto, CA

Basically, it requires that you know, in advance, what the numbers will be when you file your tax return at the end of the year. This smacks of the Obamacare requirement for APTC, know what your income is going to be at the end of the year, and if you are wrong, pay up. Tom Modesto, CA

I usually wait until after Thanksgiving to purchase. Usually early December. I got a call from my rep at the end of November and he gave me the 10% discount if I would purchase before the end of the month. My credit card was charged on November 30th. Tom Modesto, CA

@grandmabee I had this situation a couple years ago, and Judy and I had a pretty extensive conversation in the ACA forum on this board (please forgive my language in the post, I was frustrated). You can go look it up (search for the word "shit" and you will find it) and read through it for the mechanics of how to do this in ATX. It is a real hassle, and in my client's case, the only way to keep it from moving above and below the 400% threshold was to have my client make an IRA contribution. Once we got the income to come in just below 400%, then you can move through the iterations until you get within $1 of change. I still don't know what to do if you keep bouncing over and under 400%. You have to change something in the return to make the income stay above or below the amount you need. That means you are limited to things like and IRA contribution, a SEP contribution, elections on 179 and bonus depreciation, etc. Good Luck. This is not fun. Tom Modesto, CA

About 3 or 4 years ago, CA realized that people were doing exchanges, deferring taxes, moving out of state, and then selling the asset they deferred gain on without telling them and paying their tax (imagine that - sounds like good financial planning!). They now have a form 3840 that you must file every year to tell them about the asset, even if you do not have a filing requirement in CA. Fail to file the form and you get hit with a tax bill for the amount of deferred income. This is probably TMI. Tom Modesto, CA

If you were in CA, they would be tracking that exchange and be looking for the gain to be paid to CA from the original deferral. Tom Modesto, CA

So you are telling me that a retired minister can claim housing allowance after retiring? It seems like this is what you are all saying. I have never heard of this before. Does it ever expire? Does it have to come from retirement contributions while a minister? You learn something new every day. Tom Modesto, CA

This is a new one to me.... How can someone who is retired get an employment benefit (housing allowance). Is this possible? If always figured when you retired you lost the housing allowance benefit. Tom Modesto, CA

Sounds like the software is trying to correct the situation for the TP. If TP contributed 1k, and withdrew 100k, the software is treating the first 1k as the return of the unallowed contribution. Tom Modesto, CA

Done. I spoke with the client, and because of the complexity of the return this year (sold a business, sold a rental, large charitable carryforwards) we decided that I would rather not do a messy looking adjustment on the 540 CA. He completely understands and agrees with me. I think he was more impressed that I knew this was wrong in the software than he was upset that we could not file quite yet. Tom Modesto, CA

This is very important. The spouse giving the funds must not touch them. They cannot just take a distribution check, cash it and give the money to the spouse. If they do, they pay tax. They give a copy of the order from the court, the Qualified Domestic Relations Order (QDRO) to their Retirement Fiduciary along with the information on the spouses account. The trustee transfers to the spouse and it is done. Tom Modesto, CA

Update - got an answer from support today. Basically they say "Yes, there is a problem, no, we don't know how or when to fix it.". Their solution: Override the field (not possible, the field is locked), or extend and wait for a form update to come, which will not be before the end of the year. There was a time, long long ago, when ATX actually had a support department. Tom Modesto, CA

How did you override? I can't get access to the field in the form to override it. Tom Modesto, CA

Duh. I should have known that. Thanks Abby. Tom Modesto, CA

TP owed a piece of investment land jointly with another person 50/50. Bare land in the mountains. Title was held by my client. Sold this year for a small profit after taking into account the selling costs. My client paid the other party their half of the net proceeds. 1099S is in my client's name. How do I report to show the gain correctly? Option 1 - show client's share of Proceeds and Expenses on the sch D, and put a statement on the return that shows the Gross Sales Price and explains that TP is only 50% owner Option 2 - Show full Proceeds & Expenses and then adjust Profit to my client's actual amount Thanks in advance. Tom Modesto, CA

My client has a large charitable carryforward from 2017. The deduction is limited again this year. Everything on the federal schedule A is correct. But the CA 540 CA Schedule is bringing the entire prior year carryover and not limiting it to the deductible amount. Anyone else have this problem? Anyone find a solution? The software will not allow an override of that field. The CA 540 CA was revamped this year, and I am sure there are not that many early returns with a limited charitable Carryover that is limited again. These are the returns you get in late March and April. Thanks in advance. Tom Modesto, CA

I don't know the answer to your question, but I would follow Lion's advice. Whenever one of my clients tells me they want to start a partnership with family members, or a FLP, I give them this advice: What ship doesn't float? A family partner SHIP. I hate these things because it never comes down to the business. It is always about the family, and I don't get paid enough to be a therapist. Tom Modesto, CA

Don't change it. The software is working correctly. CA requires 30% in Q1, 40% in Q2, 0% in Q3 and 30% in Q4. This is how they balanced their budget in the recession and it has never been changed back. Tom Modesto, CA

I don't use ATX, I use my QB files. I created a report that shows me who has been billed and by date, compared to last year. If someone was billed last year by the date I run the report but not billed this year, I can spot it pretty quickly. I can also run a history report on a client to see every return we billed for an on which date. Gives me a pretty good idea if they are late. Tom Modesto, CA

I have not had a chance to look for missing clients yet. Probably get to that this week. We are actually ahead of last year on client count, so I have not run the reports to look for anyone who normally is in by now but has not shown. Tom Modesto, CA

All it would take is for the IRS to audit one major university, and very publicly punish them for the rest of the universities to get their act together. But like EIC fraud, it will never happen. Universities and poor people are politically untouchable. Tom Modesto.