JohnH

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.

First time I've seen this and just wondering if I'm missing something. The IRS has extended the due date for returns on extension which have due dates in Sept & Oct in FL, GA, SC, and NC due to a disaster declaration after Hurricane Debby this month. In some states it allies state-wide, while in other states it is by county. When I look at IR-2024-205, Aug 9, 20204, the notice lists 66 of the 100 counties in NC. But when I click "Tax Relief in Disaster Situations" on the left column of the same page, then choose "Get Information for Your State" and choose North Carolina, I find a link to NC-2024-207, Aug 9, 2024 which relates to the exact same disaster, and this list contains 74 counties. Of course, I'm in one of the additional 8 counties in that second list. So while I suppose I could just "assume" they omitted the other 8 counties in IR-2024-205, it could be rather problematic if there's a subtle difference between the two notices and I choose to follow the more generous one. Has anyone ever experienced a situation of this type or have any thoughts on which would take priority?

I have two filing requirements. Filed the first one last week. It took about 15 minutes because I took the time to look up a couple of things that weren't immediately obvious. I expect the second one to take 5 minutes or so. An entity with a single Beneficial Owner isn't very complicated. But if there are multiple owners, or non-owners who nevertheless must be listed, I think it could get more complicated. One suggestion - be sure to have an electronic copy of your drivers license handy. An upload of the D/L or another acceptable form of ID is required to complete the listing.

I second Splashtop. It's inexpensive, secure, and easy to set up.

I just had an unsettling conversation with a smart, energetic young guy today. He was giving me a quote for a home repair company whom he represents. He mentioned he's an Independent Contractor, so I casually asked him how he is organized and he replied that he is a single-member LLC. My alarm bells went off, of course. As it turns out he filed Articles of Organization with the Sec of State on May 2 of this year. (no lawyer involved). When I asked him if he knew about the CTA and BOI he was clueless. So I gave him some information & links, urging him to take action. As I see it, as of today he has a potential $5,000 penalty hanging over his head which is running him $500/day until he complies. Sure wish we'd had this conversation a week ago. Does anyone have an opinion on how FinCen is liable to respond to situations like this? Seems like there should eventually be some manner of relief for inadvertent failures, but haven't read anything to this effect. By comparison, in some respects they're been fairly lenient with Foreign Accounts reporting, even granting automatic extensions to October of each year. And I seem to recall they had a program several years ago to allow people to come into compliance if the failures were inadvertent. But so far this BOI reporting is one of the most draconian things I've ever witnessed.

I think the main issue is smaller HOA's, especially those who don't use a management company. The cost of the bill for preparation of the form is insignificant, provided they can find someone willing to do the work. My concern is the damage if a HOA board fails to file properly and then has to assess the homeowners for the penalties.

I also learned this evening that most Homeowners Associations must file the BOI report. That’s going to be a real pain because their boards typically rotate some members annually. So that means the BOI report becomes an annual report with huge potential penalties, because all board members probably meet the “substantial control” criteria.

He can’t be treated as an ordinarily employee - he has a hybrid status, which means he must pay self-employment tax on his earnings and H&U allowance. but he can have his estimates of those taxes withheld and reported on a W-2. His gross wages can be reported on Form 941 and omitted from the Medicare & SosSec wages lines. His withholding tax is reported on the 941 on the appropriate line. For most clergy this figure is very high relative to the wages figure because it includes both withholding tax and self-employment tax on both the wages and also the H&U allowance. (This withholding is typically not a calculated figure - the church withholds whatever amount the minister requests based on his estimated tax calculations). At year-end the minister receives a W-2 showing only entries for wages and withholding, Thus, the W2 will agree with the sum of the 941’s and all is well. It’s also a good idea to enter the H&U allowance as a memo entry in Box 14. Some bookkeepers feel wierd preparing the 941s and w2 forms in this manner, but it’s really the only way to do it properly and get the withholding reported & paid.

It's my understanding that any entity which is registered with their state is a reporting entity which must file the BOI. This would include Corporations, LLC's, SMLLC's, PLLC's, Limited Partnerships/FLP's, and so on. Even some trusts, particularly those which must register with their state, are reporting entities.

I remembered this conversation from a few years ago, and glad I was able to bring it back up. I have a question similar to the topic heading, but facts & circumstances are different. What about a church which acquires a recreational facility such as a tennis court, pickleball court, basketball court, etc and rents it out on an hourly basis. Would that type of rental still fall under the exceptions to the UBIT, or is this a different situation? (Let's assume the property is not financed due to it being gifted or acquired through a will or a cash purchase).

I was wondering where I misplaced that $1.8 billion - been looking all over for it. Looks like it turned up just down the road a ways.

This is the focus of my question. We all know that a properly worded receipt is required for Schedule A documentation for any contribution $250 or over. But my question is related to whether a receipt is needed if the amount of each QCD contribution is less than $250. If deducted on Schedule A, the canceled check is sufficient documentation for the deduction(s), even if there are multiple contributions under $250 to the same charity. Is that the same case with QCD's, or is there a different standard?

If a Qualified Charitable Distribution in an amount less than $250 is made to a legitimate charitable organization, but the organization fails to provide a written acknowledgement, is the distribution still excludable from the taxpayer's gross income? I know it would ordinarily be deductible as an itemized deduction even in the absence of an acknowledgement from the charity, but do the rules change any manner with QCD's?

Catherine: If you don’t mind following a link, and if you haven’t seen it already, this discussion might be helpful: https://www.churchlawandtax.com/understand-taxes/clergy/six-questions-to-ask-when-exempting-a-minister-from-social-security/#:~:text=A minister’s earnings from performing ministerial duties are,law employees for all other employment tax purposes.

Thank you for the links. This is a great resource.

I agree with virtually everything stated so far in this thread. I too switched to Drake in 2012 and never looked back. It takes a little getting used to because it isn’t forms-based, but forms based software is way over-rated (especially since forms-based software still relies upon worksheets to a significant degree). Drake is great software and it still amazes me how stingy Drake is with memory. Startup is rapid, operationally it’s nimble, and backups are lighting fast. One hint if you switch to Drake. As soon as you get comfortable using it, spend some time learning how to construct “macros”. You can use them to design a lot of customization to automate numerous repetitive and routine tasks.

A slight variation, but the same basic thought: “Experience - that most brutal of teachers. But you learn, my God do you learn.” - Anthony Hopkins as CS Lewis in “Shadowlands”

It could be that the number is correct, but it is not passing the eVerify because of a small anomaly in the formatting of the name. Some variations don’t matter, but others won’t pass the “Name Control” requirements. For example, C.J. Smith Company becomes CJ Smith Company because it looks better on the letterhead. (or Smith and Jones Company becomes Smith & Jones Company over time). The possibilities for a problem with the Name Control are numerous. Some don’t matter while other seemingly innocuous ones will produce a reject.

I did see that happen one time (over 20 years ago). I hadn’t prepared the extension or the return, but was asked to look over an audit report. The original extension request showed zeros on all lines. The actual tax liability was significant - $15 k or so. The taxpayer was self-employed and clearly should have know there would be tax due. The audit only turned up a nominal amount of additional tax - maybe $1k or so. But the auditor added full FTF penalties, stating that a reasonable estimate of the tax liability was absent from the 4868 and thus it was invalid. That’s the only time I’ve ever seen that happen, so I conclude there’s no attention paid to the numbers in the 4868 unless there’s an audit. But then they have a slam-dunk case for invalidating the extension retroactively if the extension shows all zeros. That’s why I agree with the approach to estimate the projected tax liability high, even if there’s only a token payment (or no payment) submitted with the 4868. It’s perfectly fine to lowball the payment (or even not submit a payment), but don’t lowball the expected liability.

So many transactions on brokerage statements are clearly motivated by the commissions or bonuses the financial advisor receives. The transactions are relatively small in comparison to the size of the portfolio, so even large gains on a few trades would not move the needle significantly on the whole portfolio. Plus, a disproportionate number of the trades either lose money or eke out tiny gains at best, especially after transaction costs. I’ve always suspected that numerous transactions in a managed account when the client isn’t an active investor are often simply to confuse the client regarding actual performance. It’s pitched as maintaining a “diversified portfolio”, but in fact the best method of diversification is buying and holding the broadest index available with low transaction costs. Rather than looking for needles in a haystack, just buy the haystack.

I don’t have a definite answer for your question, but I’ve usually followed the “when doubt, file” rule, even if there’s no tax due. At least that starts the SOL clock running.

This type of client doesn’t bother me. It’s those who was to bring it in an expect to have it completed bly Apr 15! who would irritate me. That’s why I set a cutoff date (usually somewhere around March 15-20). Anything coming in after that date automatically get an extension. Some of those returns still get finished, but there are no guarantees. Strict adherence to that type of policy turns April 15 into just another ordinary day.

I always liked the ones who said they’re too busy to keep a log and “if I’m audited I’ll just give the auditor my box full of gas & repair receipts and let them figure it out.” I’d always tell them “The auditor will just hand the box right back to you and inform you that you don’t have a deduction.”

Actually winning anything at gambling would also be fictitious if JohnH is involved. Don’t ask me how I know…

It's a quote I've used many times when discussing total market indexing with financial advisors.