JohnH

Thanks Catherine. Now the universe is back in balance.

I was waiting for someone to ding me for a mixed metaphor.

H-m-m. I would have thought that the use of the words "might", 'if, "could", and the general context of the conversation make it clear that this is speculative. Guess I need to hone up on my writing skills,. Or I could ignore the noise and not waste time trying to reduce all my thoughts to the lowest common denominator.

It might be easier than it first appears if they just go for the low-hanging fruit. They know when the taxpayerr reaches 70, and they have the 5498's each year. So beginnning at 71, the computer could just generate a CP notice for anyone who doesn't report a distribution, leaving it up to the taxpayer to prove there is basis or that it's a Roth. More or less how they handle 1099-B presently. There will be plenty of people who will just pay up and hope the problem goes away.

Well bless your heart.

I don't fit either the young or the gal classification, but I'm convinced that the southern accent has been very helpful at times when speaking with someone at the IRS.

All they all IRA accounts, or are there any 401(k) accounts or inherited IRA's in the mix?

Rita: I also want to give credit where credit is due. You're more tolerant than I am.

The plot thickens. A man in Montana who practices polygamy applied for a marriage license to enable him to legally marry one of his "sister wives". So if that additional bit of idiocy flies, then why not get a license for the 3rd, 4th, and so on? Eventually the "spouse" line could just say "see attached statement", with a listing of everyone who legally qualifies as a spouse. The possiblities are endless.

All true, but oddball circumstances & outliers won't matter if IRS decides to hold you responsible for verifying marital status. You'll either do the due diligence they require, or expose yourself to penalties if you don't . Exactly like they are already doing with the EIC. And you will find yourself deciding if there may be returns you simply don't want to prepare because of the additional penalty risks (exactly like I and many others are already doing with EIC). The difference will be that you could then find yourself on the wrong side of a discrimination lawsuit when it comes to marital status. So in the end, you will probably have to adopt a policy that you won't complete a return for anyone if the client can't provide acceptable proof of their maritual status, no matter whether it is opposite sex or any of the other definitions beginning to come down the pike.

Right now, the client's signature on the organizer and/or the engagament letter is sufficient. Don't count on that always being the case in the future.

Right now I take your word for it. But let's fast forward to 2016 and think about a hypthetical . ->> Sorry, I can't take your word for it any more. IRS told me that beginning this year I must verify marital status for all clients. I need to see your marriage license and you need to sign this statement for my records that you haven't divorced since that date. I can't just limit this due diligence to same sex couples, or even just new clients, because that would be discrimination. So I have to do this for every client, even though I've known you for years - maybe even attended your wedding. Otherwise I'm subject to a $500 fine for each failure. (or substitute whatever fine you think is likely. The EIC due diligence requirments might give you an idea of how far they feel they can go). <<- IRS has already done a very good job of making tax preparers unpaid data entry clerks. I see lots of preparers who ae very proud of their efficiency at this clerical task. IRS has made the preparer responsible for getting the returns filed on time - another clerical task having nothing to do with tax prpearation skills. They've begun to make preparers unpaid auditors, at least for EIC. So why woudl they not just keep tightening the noose? They have everything to gain and nothing to lose. You, on the other hand...

IRS won't need to go to those lengths. All they need to do is devise a penalty to assess against the preparer for failing to follow due diligence in verifying marital status. That solves their problem nicely.

I never say "emolument" when I can say "compensation." That's because I eschew obfuscation.

I'm getting off the bus in a couple of years, so I'm still content to be riding in the back for now. It's reassuring to know that all our data is safely in the hands of several government agencies doing their utmost to protect our privacy. Meanwhile, I'll just keep submitting those hardship exemptions so I can continue paper filing. If anyone gets my clients' data, they are just going to have to steal it from the government.

Absolutely!

I think if you can document that a hairstylist is present, you can pay for the lunch and get CE credit for the meeting.

Well, at least you can tell him he should be relieved to know we massaged the idea from every vantage point.

This is an interesting line of thought. Can one deduct a desk and chair (and possibly other admin assets) if they do not claim a home office deduction? This assumes of course that the asset is used exclusively for business.

I think tying it to some dubious medical purpose is over-thinking it, and probably would fail the laugh test in an audit. But I don't think it's necessary to go there in the first place. This is a chair, period. The fact that it has a massage feature is irrelevant, unless maybe that adds thousand of dollars to the cost. How much does the massage chair cost, anyhow? Most of us use chairs that have piston tubes that allow us to adjust height of the chair and/or spring mechanisms that allow us to adjust the resistance when we lean back. Those features aren't really "necessary", since we could just use a wooden chair with no adjustments, or maybe just a hard plastic chair that only costs $20 at K-Mart. So where exactly is the line drawn with respect to what's deductible? Besides, I'll bet the chair that the auditor sits in at his/her office to write up the audit report cost many times what the massage chair would cost, and based upon how the government throws money around, it might NOT even be any more useful than the $20 plastic version.

Well, not the way I read it. If "they paid the caryring costs" means they paid all the payments & incident of ownership, AND if they paid all or part of the down payment, then they are equitable owners. They would be eligible to deduct the property taxes & interest, and MIGHTY be able to use the Sec 121 exclusion if there were a gain large enough for it to matter. But the adiditonal info Catherine provided pretty well put that line of reasoning to bed.

I agree. If he has a desk, he needs a chair. I don't think the massage feature will qualify or disqualify it as a business deduction. Surely an auditor wouldn't compare what he paid for it against an Office Depot $59 special. Last time I visited a lawyer, I'll bet the chair he was sitting in cost more than all the furniture and desks in my office. I doubt he was worried about losing the deduction in an audit.

I got some clarification from an "Employee Benefits" forum I stumbled upon a couple of days back. I'm still digesting the info, but it seems there is a subtle difference between "one employee" and "one participant". I haven't sketched out all the code sections and such because at the moment I'm just trying to get a definitive answer for a specific situation. But I've come to the conclusion that I'm adding apples & oranges on this whole issue. There are requirements related to benefits, and then there are requirements related to ACA - some of them intersect and some of them come close to contradicting one another. One thing has become clear (I think). A Health Care Sharing ministry is not an insurance plan. So even though a participant in a qualifying HCSM can escape the ACA penalties on their personal return, the ministry they work for cannot exclude the HCSM payments from gross income on their W2, even if it's a "single participant" employer. Doing so can expose the employer to the $100 per day penalty. It would be wise for any church or non-profit to heed this warning. I've also read that there has been at least one bill introduced in Congress to provide some relief to this mess. Nothing has been voted on and who knows what the final outcome will be once the sausage is made. But in any event this may not be over.

Joan: Yes, claiming the Sec 121 exclusion would be the ideal outcome. I didn't go there because Catherine called it a small gain, coupled with the fact that the whole situation might be shaky anyhow. I think even the "beneficial owner" matter might be in jeopardy if the kids didn't pay all or part of the down payment, even if they made all the loan payments & upkeep of the residence. So depending upon how that played out, it might be worth foregoing the Sec 121 exclusion in order to hopefully avoid IRS deciding to take a closer look and potentially invalidating 3 years' worth of interest & property tax deductions on the kids' returns. Of course, the decision depends on how much the "small" gain really is and thus how much tax is at stake in total. Catherine clarified things when she said mom is OK paying the tax. In this case I think I'd just treat it as a second residence, report the gain on Schedule D/8949, and call it a day.

How about this? Report the sale on the 8949, then zero out the gain in the adjustments column with a code "N". The kids can then use the same purch date and sale date as mom on their Schedule D + 8949, reporting the gain as the selling price with zero basis. This means no one gets the benefit of the principal residence exclusion, but at least the ones who benefitted the most pay the taxes. It's a bit of a stretch, but might be OK. If an audit ever occurred, everybody could settle up with one another if IRS takes a different position on who should report the gain. I'd probably do it this way only if the kids do meet the "beneficial & equitable owner" test.