BulldogTom

Is Abby going to teach a class? Making the trip tax deductible business travel for education purposes? If so, I think I can make that. Need to check with my employee (spouse) to see if she can make it as well. Tom Modesto, CA

TP is starting a new job with a non-publicly traded company. He sent me the offer letter because it says check with your tax advisor. The offer contains a grant of Stock Options. They also sent a copy of the plan document that governs the Stock Options. The plan document says the Options can be either ISO or NQSO per the designation of the administrator. The offer letter does not indicate if they are ISO or NQSO, but the description in the letter matches ISO's to a "t". I know the tax rules for an ISO granted to an employee (or NQSO as well), so that is not my question. The plan also places restrictions on the stock after exercise, that they can only be sold back to the company and cannot be gifted, transferred or used as collateral unless the company goes public in the future. Is this enough to consider the stock to be restricted? Thanks Tom Modesto, CA

Not trying to be combative, but who do you think is asking congress for those additional documentation requirements to be added? It surely is not the AICPA or the National EA group. Tom Modesto, CA

The IRS wants us to do their job for them. They think of us a free labor. If they want us to do this work, prices will have to rise substantially, first to cover our time, and second to cover our liability for preparing the return. I have no problem with the oversight on me via circular 230 related to my EA license. But when regulation over me becomes a revenue raiser item in the federal budget, it has gone too far. Tom Modesto, CA

I hate going to the ATX board. Have any of you been over there, and if so, are they giving any indication when IRS will be ready to release changes for extenders? I know this is not IRS or ATX fault, I am just looking for some clue as to how long I will need to hold returns. Tom Modesto, CA

I think we should have a pinned topic every week for the "Kook of the Week" where we bring our weirdest tax clients/situations. Whoever gets the most reactions to their posts in that topic gets to be "TAX STUD" or "TAX BABE" for the following week. Tom Modesto, CA

Whatever Judy says they are...... Or it depends on the quality of what you promise to bring to the Rita Cookout this summer for Abby's educational seminar..... Tom Modesto, CA

$4,333 per month in my neck of the woods would be about right in a very nice neighborhood. In the bay area, you couldn't find a decent home to live in for that amount. Rfassett has the right list. It is very generous, and a creative mind can get a large deduction using that list. Ask for the actual expenses. The minister may live in a gated community with a 4K square foot home. You never know until you ask. Tom Modesto, CA

I got my first one today, new client, had to tell them we are waiting for IRS to update the forms for the MIP. Luckily, he was understanding. Tom Modesto, CA

You will have to show up at Rita's home this summer for Abby's training seminar to find out. Stay out of the back 40 and for God's sake don't accept a hug from anyone. Tom Modesto, CA

I did not even think about States that might have their own AMT? Are there states that have AMT, or is that federal only? Tom Modesto, CA

I disagree. The first and last trip of the day are specifically referred to as commuting miles in the code. This is why we need to be so careful to document home office usage, so that the first trip of the day is from our home, to our home office, and then when we are done traveling for the day, we come back to our home office, check our email, and then go from our home office to our home on the other side of the wall from our home office. Tom Modesto, CA

Thanks Rich. I think I found that same answer, but it was on the FAQ site at IRS.gov and I don't like to rely on that. But I think you are correct, as the FAQ is pretty emphatic that you can participate in both. Tom Modesto, CA

Wow, I thought this was a "Quick Question" and one of you super duper smart people would know. It must be more complicated than I thought. Tom Modesto, CA

TP worked for company for 6 months, then went into business for himself, sole proprietor, no employees. Contributed 8K to 401K at work. SE income will be > 100K. Can he open and contribute to a SEP this year? I know he can if it was all Sch C income for the year, but not sure if contributions to 401K from W2 income plays into this at all. I don't see anything about this in the pubs. Thanks Tom Modesto, CA

Another consideration is the 20% passthrough deduction. I wonder if the states are going to allow that as a deduction? One other thing that came up in an update seminar that I was at last week was the SALT limitation for mid-sized pass through entities. When the income passes through to the state, the taxes paid will be limited to the 10K cap. If you are in CA, and you are passing 1MM onto your 540 return from your business, the tax is going to be about 139K. There is no federal deduction for that state tax hit. I did not think about that, but all these S Corps and LLC's are going to lose benefit of the state taxes paid on their corporate or partnership earnings. Tom Modesto, CA

I talked to my spouse and she is in as well, but wants to know if they have Tri-Tip way over there in the paw-paw patch? Tom Modesto, CA

This is no fun. The inside/outside basis rules drive me nuts. I have no idea how I got through the partnership portion of the EA exam. What Sara is saying is correct, from what I remember. Tom Modesto, CA

I will be in London for 10 days in the middle of May after my youngest Graduates from Berkeley with his degree in Mechanical Engineering. A long road trip after that may not be a bad thing. But I need a grill and beer when I get there. Tom Modesto, CA

For an individual, you are correct, the HELOC interest will not be deductible. I am pretty sure the rental activities will be able to deduct the HELOC Interest, provided you have good tracing of the funds to the rental activity, but read up on the new business limitations on interest. I am still working through this issue as well, so we can learn together. I think there is a 30% limitation on the amount of interest a business can deduct for interest expense. I think that if you are calling a rental a "trade or business" to be able to deduct the HELOC interest, then you have to follow this rule for the rental activity. That would suck for your client if they are not generating a profit (before the application of the interest deduction). I think you get to add back depreciation as well before applying the 30% limitation. This is new stuff, so don't take my word for it. But please keep posting what you are seeing on this issue. Tom Modesto, CA

I just read that as well. Tom Modesto, CA

The only time I could see getting a release from my customers is if I was selling my practice and I needed to release my files to the new owner. That is about the extent of where that would be useful to me. Other than that, I don't give nothing to anyone but the client. Tom Modesto, CA

Tri - Tip is my specialty, but I have to cook it on site. So that means I have to host because I need a grill. And beer. Tom Modesto, CA

IMHO, there is nothing at all political in what you just said. This is the state of our government, which affects our profession. If you blame them all, then you aren't on any side, just the right side, of the argument. I happen to agree with you. It is not gonna happen this year. But if it does, there is some money to be made on amended returns. BTW, the Senate looks like they are going to pass a 2 year budget (who knows if the house will go along or if the POTUS will sign it if they do). I don't think it includes the extenders. With all the extra $$ they put in for the Military and Social Programs, I don't think that the cost of the extenders is going to fly if they try and tack them on. But who knows, they are spending money like a drunk sailor this year, and they have not even started on infrastructure. I hope this does not sound political either. It is just what I see as the reason we will not get extenders this year. Tom Modesto, CA

I called IRS PPL this morning to work on a client representation issue. I filed the POA with the CAF unit in 2012. I have been working with this client for years, and had multiple contacts with the IRS on their account. In 2015, we got an installment agreement. This week, the IRS sent a notice that they need a new 433-F, and they need it in 10 days (of course they do!). So I call PPL to ask for an extension because my client is recovering from major surgery. They don't have my POA on file. Literally, I have had at least 15 contacts with the IRS on this client and they all could see my POA when I called. Until today. So I send an e-fax with the POA's, and of course, e-fax comes back with an unsuccessful transmission due to line busy after 15 minutes on the line. IRS said call back when your fax machine works. Sucks to be me today. This is the third client that I have had to re-send my POA over for, and all of them are clients that I sent in the forms to the CAF unit. I don't understand why my POA's are disappearing from the database. This happening to anyone else? Tom Modesto, CA