OldJack

I am a little late in posting to this subject. Since this is really a right to the use of a website rather than owning much of anything, I would go with either the 3 year write-off or just expense the whole thing as a ordinary business expense since the purchaser is in the same business before. I would take that position inasmuch as the IRS really has no idea what their position is on this situation. In other words if in doubt.. deduct (assuming client agrees).

Well... I have C-corps and S-corps that have for years made deductible contributions for employees under an adopted SEP plan. I don't know where you got the idea that a corporation can't have a SEP plan. You have to understand that a SEP plan is adopted only by an employer (self-employed employer) and that is not the same status/hat as the indivdual person filing a 1040 tax return.

A SEP is a qualified defined contribution plan under code §408k and for Self-employed/employer tax deduction purposes is *not* an IRA (note the separate line 28 v. line 32 for an IRA on the 1040). For tax purposes the "beneficiary" of distributions from a SEP-IRA account is treated under "traditional IRA" rules, thus the penalty on form 5329 for early distribution. The beneficiary is not the one that determines the tax deduction calculation. When you amend a corporate employer 1120 (such as a NOL carryback), you don't go back and recalculate employee SEP contributions.

SEP-IRA tax deduction for a self-employed person is based upon calculation and timely payment made not later than the due date of the properly prepared tax return including extensions. Therefore, (IMHO without research) calculation of SE person's maximum allowed or SEP deduction is not changed/amended when you file an amended 1040 tax return after the deductible/calculation payment period. Obviously this would not be the case if this was intentionally done as a plan to avoid taxes.

>>Isn't customer service the name of the game? << Nope!! Bottom line is the name of the game to these idiots. They can't realize that good service will increase the bottom line. They are probably the same folks that can't realize that a lower tax rate will increase government revenue.

>>Sounds like the old ATX cd price with the new CCH shipping price.<< I believe $100 for prior year CD's has been a policy of ATX as long as I can remember! This is not a CCH thing. $20 may have been a "XP compatible" CD or a special price for a package of CD's, but I think $100 has always been the normal price. Personally I think it is a reasonable charge for those customers that do not think it important to keep the CD's that they purchased. Its not ATX's fault that their customer is disorganized or the type that fails to keep important things. Everyone knows I am not one to favor ATX policies but this one is fair.

>>2) If it were the IRS, wouldn't they at least know your name?<< I would just as soon they not know my name. I don't want any trouble! :dunno:

Yes... my client's name is "Pro Bono" and he said the check was in the mail. He calls me only when it is a *rush job* and doesn't have time to talk. His bill for other works are getting way past due! Does anyone know his correct address or phone number? :blush:

Update: I telephoned the IRS again and this time I got a nice lady that took the information on the phone and said that I will be able to epostcard file on the website as soon as processed in 6-8 weeks. That means my client does not have to pay the $300 fee.

Well, maybe I am quoting the wrong code section. Anyway it should be deductible, look at the IRS pub: IRS Publication 526, "Charitable Contributions", page 2 & 3: Types of Qualified Organizations Generally, only the five following types of organizations can be qualified organizations. 1. ...... 2. ...... 3. ..... 4. Certain nonprofit cemetery companies or corporations. Note. Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt.

Thanks for the phone number gailtaxed. I had called the number you mention as was listed on the website and I don't think the IRS person knew what I was talking about as he just wanted me to get a new EIN. Which I did but now realize that still doesn't get me on the website to file the epostcard. My not-for-profit corporation client falls under code sec. 501-c-13. That is the cemetery companies code. As I read this includes corporations as well as trust funds that have been established for such cemetery purposes. The issue is not really if the corporation is exempt from income tax as it clearly comes under the code. The issue is that Code §6033, [subject: Returns by exempt organizations] (a)(1) requires that all tax exempt "organizations" file an annual tax return (form 990 series). Of course the IRS has exempted in the past those with gross receipts under $25,000. Now that exemption is *ZERO* as those under $25,000 are required to file the epostcard. Yet, the IRS website will not allow those to file the epostcard unless they are registered which now cost $300.

I agree that you have the right idea! Capitalize those expenses you would ordinarily capitalize and expense all other. Storage of business materials is a business expense.

The particular Cemetery Fund that I have to deal with is a not-for-profit corporation with interest on a bank balance of around $12,000 @ 5% = $600+ income on a 1099INT plus occasional small donations. Most of the income is spent on the cemeteries each year with $200± profit/loss. However, I know there are thousands of cemeteries in my state that are probably trust funds that may not need to file but still would be required to register for exemption if they want to accept deductible contributions. Doesn't everyone on this board have the same problem in their community?? Are you going to recommend those cemetery organizations pay the $300 user fee to register?

In rural America there are old cemeteries in every direction within 5 miles of each other. Most of these cemeteries were once used by a church that no longer exists. Most of these cemeteries are now maintained by families of those distant relatives through small donations that mainly pay for someone to mow the grass. Therefore, these thousands of cemeteries all have a trust fund or not-for-profit corporation to deal with the banking. Most if not all have *never* filed the actual forms to register with the IRS as "tax exempt" as they didn't even know they had too. All they did was get a federal EIN for banking. Now, the IRS has declared that ALL exempt organizations (with gross receipts under $25,000) must file annually on the internet with what they call the "epostcard". If these cemetery organizations have never registered with the IRS they cannot file the annual epostcard (website will not accept the registration). To register now will cost them a $300 user fee of which is as much as their usually income for the year. What to do?

>>I'm as frustrated as everyone else with some of the changes that CCH has made. However, there are exciting things in the future coming as well<< Probably exciting TaxWise things. Hope your naive friend is not included in the next wave of layoffs.

>> I am firmly in the repair column.<< I agree that it is a repair that does not really increase or improve the life of the building as it is only maintaining the building.

Actually the question may be: What are the odds of an audit? I agree with KC's analysis and definition.

I reluctantly agree with KC. Reluctantly because this stupid guy should have to pay for his ignorance. If the IRS refuses to grant S-corp status there is no choice but to report the income as taxable in the C-corp and treat the distributions as taxable dividends (ye old double tax). A loan for this case of taking out all the profits as received is not going to fly and nether is going back and claiming payroll with payroll tax penalties. I hope you charge him a fee at your double rate.

You might try "relied on profession trustee" and "distributed immediately upon discovery of error" as the reasonable cause but I don't know if that is good enough. It would be good if you had some way of proving that she did not know. Most such trustees send annual notices of the amount required to be distributed. My last case waived was the surviving widow was moving after the death of the owner of the account but the delay in the RMD was only about 60 days. Whatever you come up with its worth a try. Good luck.

Hey Bart.. I'll bet you are in KC area. I will be moving to Lee's Summit this fall and retireing. Anyway, I would suggest that since she has been required and did take distributions in the past that you inquire as to why not taken in those years. You are going to need a good excuse in order to get a waiver of the 50% penalty. If and when you do request a waiver do it (after correction distribution) by filing the form 5329 without penalty payment and separate from any 1040 with a brief but clear reasonable cause statement attached.

As a matter of fact I do practice in the 8th federal circuit district. That is exactly the point. The tax professional must determine if the individual is by law an employee or not. I agree that with many church organizations all ministers would without doubt be employees and it would not be necessary to look further than the national organization. However, my experience has been with the type of ordained minister as mentioned in this post where they started the church themselves and/or clearly claim that they are only an employee of God. I have known of several churches (and had one such minister client) where the "church deacons" tried to fire the minister and were unsuccessful causing the deacons to leave the church and in some cases to split into two churches. I know of one such country church where there are 2 church buildings with 2 ministers on the same church lot. In many small communities the non denominational country church (or some loose church organization such as the various Baptists churches) can't afford to have employees let alone pay fringe benefits. The pastor is lucky if the plate offering is enough to buy his groceries and pay the church electric bill. These ministers mentioned in the original post would appear to be a small church where the church is in reality the ministers. I doubt if they are worried about fringe benefits being taxable. I don't think some such ministers would take it very kindly if you or the IRS told them they were employees rather than they were answering the call of God.

And I am sure that being the professional that you are, I know you would go through the IRS procedures of determining if this specific minister was or was not in fact an employee before you gave your opinion to the church. So therefore I agree that you are right. :)

There is absolutely nothing I see in this letter to indicate that this is a scam? The letter is not asking for the taxpayer to do anything or even reply. Other than a fuzzy logo what would make you think there is anything for a scam artist to benefit from such a letter? Check the envelope to see if there was postage paid by an individual (a stamp) or was prepaid by the government. It is normal for tax preparers to be suspicious people but are we all getting a little paranoid? :)

I agree with the 4/15/09 deadline for refund as the rule is 3 years from date return considered filed or two years from date the tax was paid, whichever is LATER. (2007 Quickfinder 1040, page 16-1) edit: On second thought you said the return for the year was not filed. The IRS might consider that fact if you actually were required to file and didn't. In that case it would be the 2 years from the time the tax was paid and you would be too late.

Probably not right. As indicated by the fact that this is reported on a 1099-R meaning this is a form of taxable retirement benefit. Such benefit is taxable as received by a beneficiary or the estate and such tax attributes pass or continue which means nothing has changed except the name of the person to receive future payments and tax liability.