JohnH

Now that's truly a once-in-a-lifetime opportunity.

Could be bad advice from the preparer; could be bad listening by the taxpayer. Just recently I had a client call me about a transaction which we had discussed 3-4 months ago. At that time she told me what a friend had told her about the taxation of the capital gains. I explained to her why that advice from her friend was dead wrong and I then gave her the correct information. On this subsequent conversation she repeated the bad advice to me, and when I corrected her she said "But I remember you telling me that on our last conversation." Fortunately I had made notes and more-or-less read them back to her. Either I'm a very bad communicator, she's a very bad listener, or (most likely) she only remembers what she wanted to hear rather than what was said.

Taxpayer has been receiving an IP PIN for many years. We are amending their 2021 return this week. Should we use the IP PIN which was used on the 2021 return, or the IP PIN for the current year? (Don't want to get this wrong since we may not have a chance for a do-over if we miss a technicality).

Good time for the client to set up online access to the SocSec account so they can review history at will.

Mine has been on autopilot for years. Every time the transaction shows up, it brings a smile to my face.

You're right. And I think this was always the actual goal. It wasn't necessarily to chase down people who make minor mistakes in their listing (or even didn't list at all), but rather to create a trap for those who were laundering money IF they were caught by other means. Regardless of whether they had lied on the BOI form or had never filed, the draconian penalties would serve as a wedge to force them to give up info on the major culprits in exchange for penalty forgiveness. Failing to cooperate would be financially devastating. (Of course, cooperating might be even worse in the real world ). Anyhow, we couldn't say any of this to our clients because there remained a real risk of huge penalties for even simple clerical errors, much less not filing, for which they might try to hold us accountable. So we were intimidated into giving them just enough information to scare the hell out of them without being able to offer them any real help - on a simple clerical task that would only take about 15 minutes on average. Makes us all look sort of silly in the eyes of many clients, IMO.

So THAT’s really what it’s all about!

So when the interim final rule is finalized, will it finally be the final rule? Or the interim/interim final rule? Or just "the rule"? Or something else?

Years ago I intentionally began using mail and night drop to encourage my clients to leave their info during off-hours. Eventually email and text accelerated that process. The intent was always to keep my clients out of my office so I could get some work done. But I do miss one aspect of the personal interaction. As we sat there talking about kids, church, politics, etc, I’d be casually pulling all the boilerplate, empty envelopes, and pages “intentionally left blank” out of their stack and shoving it into the shredder. Watching the expression on their faces while that shredder ground away was always priceless.

The custodian also doesn't know if the recipient is a qualified charity. They ask the question, but they depend upon the taxpayer to do their own homework in this regard. I'm sure the custodians don't want to accept that responsibility. Also, many custodians will send the check directly to the charity if the customer requests.

It's up to the taxpayer to determine the amount of QCD to be deducted from the 4a entry in arriving at the 4b entry. Neither the charity nor the IRA trustee will accept responsibility for this adjustment. Thus, the 1099R will always be marked as "Taxable Amount Not Determined." Likewise, the charitable organization will not indicate which contributions are QCD's (although some will provide a footnote the the effect that all or part of the contributions may be, but consult your tax advisor regarding the actual amount). QCD's are simple to do and valuable to borderline non-itemizers, but there is some responsibility to keep track of the amounts.

Sounds like the attorney's advice was worth what the client paid for it (or maybe less).

Following up on the matter of choosing an authenticator. I was on the verge of paying for an authenticator when I ran across a comment about Google offering a free one -(by Lee or Judy, can't recall which). I think something was also mentioned about Google tracking our activity, but I don't see that as a problem since they already track much (or most) of what I do online anyhow. Maybe I'm being naieve. My question is, what benefit might there be in using an authenticator that charges a fee?

Like Tom, I wonder how FinCEN is going to handle this. If you're on their notification list you know that they did send an email this afternoon, but it was a puff piece about nominations to the Bank Secrecy Act Advisory Group. Not that this wasn't important, but the communication failed to address the main thing that's on everyone's mind. I took a peek at their news site and there was no mention of this court case there either.

I don’t see anything unethical about using AI in these situations, provided: 1) the response is reviewed for accuracy; 2) any anomaly or questionable info in the response is researched, 3) full disclosure is provided. (Maybe a standard shorthand will evolve. i.e. **Chat Ai**, <Chat Ai>, or something of that sort)

AI has the potential to be either a curse or a companion. No doubt it will get out of hand, but that's true of all technology. I've been using AI Chat in a very elementary way for some time, and in many cases it replaces Google searches when I'm trying to get insight into everything from medical questions to BOI inquiries. Elon Musk also promises that GROK is going to be even more useful - time will tell. Just today I had someone ask me for a quick over view of Deferred Comp, which I don't have much experience with. So I wrote a simple query asking for the benefits and disadvantages of enrolling in a deferred comp plan offered by an employer. I just copied & pasted the response in an email with a note that I had obtained this from AI Chat (for full disclosure), along with a couple of summary comments. I thought it was quite good and saved me a lot of typing. Here's the response: Enrolling in a deferred compensation plan (DCP) offered by your employer can have both benefits and disadvantages. Here’s a breakdown to help you understand: ### Benefits: 1. **Tax Deferral**: Contributions to a DCP are typically made before taxes are deducted, reducing your taxable income for the current year. You pay taxes on the money only when you withdraw it, usually during retirement when you might be in a lower tax bracket. 2. **Increased Savings**: DCPs allow you to save additional funds for retirement beyond what standard retirement accounts permit, thus enhancing your retirement nest egg. 3. **Employer Matching**: Some employers may offer matching contributions to your deferred compensation plan, providing you with "free money" towards your retirement savings. 4. **Investment Options**: Depending on the plan, you may have access to a range of investment options, which can allow for potential growth of your saved funds. 5. **Flexibility in Withdrawals**: Many deferred compensation plans allow some flexibility in determining when you withdraw your funds, which can help with financial planning. ### Disadvantages: 1. **Risk of Employer Default**: Since DCPs are typically unfunded promises by your employer, there is a risk that if the company faces financial difficulties or bankruptcy, you may lose some or all of your deferred compensation. 2. **Limited Access to Funds**: DCPs often have strict rules regarding when and how you can access your funds. This limitation can be a disadvantage if you encounter unexpected financial needs. 3. **Complexity**: The rules governing deferred compensation plans can be complicated, and understanding the tax implications or potential penalties for early withdrawal can be challenging. 4. **Impact on Social Security and Other Benefits**: Deferred compensation may affect your eligibility for certain benefits, such as Social Security or disability benefits, as it could be considered income when calculating your benefits. 5. **Lack of Protection**: Unlike qualified retirement accounts (like 401(k)s), DCPs may not have the same level of protection from creditors. Before enrolling in a deferred compensation plan, it is advisable to consult with a financial advisor or tax professional to assess how it fits into your overall financial strategy and retirement planning.

One other interesting (and scary) part of the discussion was third-party filing services. Some of course are reliable, well-known online companies with long histories in the online space. But there are also some shady players out there who are using the filing requirement to simply compile the information and then not even bother to complete the filing. The client winds up with stolen data and also being in non-compliance. And be careful about recommending that the client use a third party online service. Especially if their fee seems unusually low when compared to industry standard.

This is an interesting idea. Thanks for sharing it. But I’m not inclined to advise the HOA on something not clearly stated by FinCEN in their FAQ’s as acceptable. Too many risks if the advice is later found to be wrong, and not enough time before Dec 31, 2024 to thoroughly consider it. Incidentally, the presenter said current estimated compliance by state ranges between 6% and 24%, as I recall. That could mean the system is going to get overloaded and slow down to a crawl or even seize up in the coming weeks. He also raised some troubling scenarios if IRS puts a question on the tax return 2-3 years from now (similar to the Foreign Accounts question on Schedule B. Might create some problems for tax preparers who had not documented that they advised their clients of the requirement this year.

With respect to HOA’s, the issue isn’t ownership. The issue is whether the HOA is registered with the Secretary of State. If so, then the HOA must file.

Unless FinCEN issue clarifications, I'm inclined to think that all board members meet the definition of someone being a pivotal decision-maker having substantial control. The definition of the position is in relation to the entire HOA, not simply the individual's role within the governing board. There's another reason the BOI filing is going to be a big problem for HOA's and small businesses with multiple Beneficial Owners, because the filing needs to be updated within 30 days when any information changes (including the expiration and renewal of the form of iD used in the most recent filing). I also read in one HOA-focused article that HOA's should consider amending their by-laws to make "willingness to provide the information for the BOI filing" a requirement for serving on the board. (Otherwise, what happens if someone is elected to the board and they refuse to furnish a drivers license or passport for the update to the BOI filing?). It's difficult enough to get qualified people to serve on HOA boards to begin with - the BOI filing requirement only complicates matters even more. I don't think this was the intent of the original legislation, and I'm hoping ithe effect on HOA's will be changed or clarified. But until that happens, HOA's are stuck with the requirements in place. .

It also applies to most Homeowners Associations. That’s a real problem since many small HOA’s have no idea unless they use an outside professional management company or subscribe to HOA-focused publications.

Sometimes I think I need to consider it a medical expense due to the therapeutic benefits provided by this group.

Interesting discussion about ride-share and delivery services providers. I've always assumed that from a financial standpoint, choosing to engage in it is just trading eventual long-term wear and tear on their vehicle for some cash in the present (minus the current cost for gas). That's probably an over-simplification but it's based on my experience preparing Schedule C over the years, Apparently some people seem to make it work, and in fact a couple of my Uber rides in recent weeks were in Teslas. On the other hand, I'd think many net fuel savings calculations with EV's generally under-estimate the true amortized cost of eventual battery replacements either through repairs or purchase of a replacement vehicle. (I'm certainly taking that into account when thinking about perceived fuel savings on my wife's hybrid)

It was nice to wake up this morning to find that the BOI filing deadline has been extended in areas affected by the recent hurricane disasters. FINCEN finally conformed to the IRS extended deadlines, as had been requested weeks ago.

Thank you very much for that detailed explanation. I need to focus on reading more carefully rather than just scanning for isolated facts, even when those facts are my end goal.