OldJack

before sitting down I would insist that my client sign a POA if you can't get it before. Otherwise, I would leave.

>>Do not let the auditor anywhere near records other than those specifically identified as needed for the examination.<< I could not agree more with Jainen on this, however, I would spend advance time preparing detail information on what I thought might be the problem and have that document ready to present at the meeting if it would solve the problem. Separate documents for separate subjects. I expect to spend much more time preparing for an audit than I spent preparing the tax return in question (usually no cost to the client). By having a document/analysis/statement with the information prepared before the meeting you can give the auditor a copy and get the auditor out of your meeting in fast time. Only provide proof documents for what he asks for.

Well, I plan to retire when there is any such requirement. I don't efile and I don't have any clients that want to efile although most would probably not care if it was efiled. I have never understood why a tax preparer wants the responsibility of filing someone else's tax return. Yes, I know all the advantages such as saving paper, but you have to admit you have to spend time checking to see if it was accepted and correcting any typo's or checkbox errors that I don't have to deal with. Thank God it is 2010 and in spite of many in our government we are still a free country. I drive faster than the speed limit and enjoy the privilege of paying for it.

I agree with Jainen. Generally a 1040 reported NOL (after 2002 NOL) after current year allowed offset is carried back 2 years and then forward 20 years. edit: I read on another forum that the new law Obama just signed changes it to a 5 year carryback.

>>cientax's original post he asked for a website and I provided one.<< >>Never mind I found what I was looking for. << Taxbilly: In his/her second post s(he) said never mind, yet you provided a second link, 23 minutes after his/her post, which s(he) did not ask for. However, that was good as it might have provided more material on the subject since you offered no comment. None of us are here to teach, but most are here to learn and help others. I for one am certainly not here to provide research for others by way of finding links to post. Of course, in the past I have provided links to support my comments [As member #91, I have been posting on this board since it started].

I don't basically disagree with your comments KC. But in this case a link without a single comment from only one member is not very friendly and this board is known for being friendly. Although most members are very knowledgeable on all subjects we can all learn by the post of others. I learn something new every day in this business and I have been at it a long time. A link doesn't tell me anything unless I take the time to log on to the link website and read all the *unrelated* discussions to find the answer. I am sure Taxbilly knew the answer and/or could have at least made some comment. What say you Taxbilly?

Only posting links is not a very good way to answer someones post. And why should other members have to link to other websites just to see the answer. Are members here just to provide links or to discuss and learn tax subjects?

I don't know what state you are in but most states allow you to deal directly with the state to reinstate and solve the LLC problem. Maybe give the state office a call on the phone to check. It sounds like the 2k you quote is with an attorney.

>>Sec. 454. Obligations issued at discount -STATUTE- (a) Non-interest-bearing obligations issued at a discount If, in the case of a taxpayer owning any non-interest-bearing obligation issued at a discount and redeemable for fixed amounts...... << I thought you said the client had an interest bearing obligation when you said "Client died in 2009 and had hh bonds with deferred interest that needs to be reported ". I think the statute above is clear on non-interest bearing obligations.

>>Where do I go to find this information?<< You can't find it because it does not exist.

Congratulations Marilyn! Now maybe you should spend more time working. :)

Well... Old Supreme ATX Master, you finally gave me another thing to disagree with you! After carefully reviewing a years worth of Jainen posts, on this forum, I can clearly say Jainen knows something that will help somebody! I will add that the Small Business Quickfinder Handbook gives a very simple example and explanation of the BIG tax on page D-6 and D-7. Another example of how the Quickfinder tax books are so much better than all the other so called tax books. No I have no connection with Quickfinder.

Damn Marilyn, if I had known you were going to say I was intelligent I would have tried to think of something intelligent to say. :blush:

Read my post again. Read form instructions. The corp has to report the sale of depreciable assets on form 4797 attached to the 1120S. Such gain flowing thru 4797 reports on the 1120S and the K-1 for shareholder taxation as ordinary income. The corp pays the Big Tax on the 1120S page 1 as calculated on form 1120S, Sch-D (Sch-D gain is taxed at ordinary income tax rates). Unless you wait 10 years for the sale you get double tax on the same gain. That results in taxes as though you were still a C-corp plus the shareholder's tax. Of course since the BIG is calculated on FMV of assets at date of S-corp election, the Built-In-Gain may be a different amount than the gain calculated on the date of sale. In the old days a C-corp could avoid the double tax by simply liquidating with only the shareholder paying a tax. When they repealed the old law, they created the BIG tax as it had to be this way or every C-corp would simply elect S-corp status prior to liquidating. I am sure about this as I have years of experience doing it! The BIG tax itself has nothing to do with increasing asset basis, however, it does involve the tax calculation as basically it is a tax deduction. The k-1 pass thru gain is what increases the shareholder's tax basis. Since your client is purchasing stock, selling assets and liquidating the corp, you may have a C-corp retained earnings that may result in ordinary dividends when money is taken out. You best make sure you understand the entire detail tax situation before you advise a client.

As jainen points out it is a corporation for tax purposes. That also means the client must meet the requirements of accounting/bookkeeping of a corporation. That means you, as a professional paid tax return preparer, must have detail balance sheet amounts in addition to profit and loss amounts for proper 1120S tax return preparation.

Well attorneys can make things complicated. If the purchase papers show your client purchasing units of ownership, or equity, of an LLC from other members, the LLC for state entity purposes may still exist as owner of the real estate and your client would be stuck with termination filing of the LLC for federal tax purposes. Otherwise, unless your purchasing client is already a member of the LLC, the tax status of the LLC is irrelevant to your client and the sellers would have to deal with the LLC tax reporting.

Well Jainen, you old son of a gun, you never cease to amaze me with your brilliant answers! However, I would simply add that the preparer has to remember that a corporation tax status is a separate tax entity (or person if you wish). I would also remind the preparer that even a proprietorship or LLC electing to be taxed as a S-corp must do the required bookkeeping the same as General Motors or any corporation. That includes accounting for balance sheet items in addition to the profit and loss items.

Without looking at detail numbers at date of S-corp election and the tax deduction effect, Lets look at it this way: The 1120S for the year of sale would report a built-in gain of $50,000 and the S-corp would have to pay the C-corp tax on page 1 of the 1120S tax form AND the Shareholder 1120S-K1 would also report a $50,000 pass thru gain the shareholder who would have to report (probably on their attached form 4797) on the 1040 as ordinary income. That is the old double tax and there is no way to get around it. Therefore, the corporation paid ordinary income tax rates (since there is no Corp capital gains tax rate), and the shareholder paid ordinary income tax rate on the same gain. Any liquidating capital loss would be limited to capital gain offset (not the ordinary gains) or a max of $3,000 per year deduction. How would you think there is any tax savings for your client?

How about this one. Dear Clients: Don't let your payroll department use the new withholding tax tables to determine withholdings from your paycheck or you will owe taxes when you file at year end. Vote the other party next time unless you enjoy paying taxes when I prepare your return.

I also concur with Wayne -- Just wondering Catherine what resource you use to support that a hoity-toity faucet would not be repair or is it just that it was a high end model? :D

In all my years, I have never had a paper filed return rejected. :D

You all sounds like a convention of procrastinators, yet you bash clients that are the same. :)

There is no such "hold" form. Tell your client to go ahead and fill one out.

I laughed all the way to the bank today!! I fooled a lot of people again this year to thinking I knew what I was doing. :lol:

>>2 more days!!!!!!<< Not me! I am doing my last tax return today and taking the rest of the week off.