User talk:RoyDaleOne

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Contents 1 Profile 2 ATNOL worksheet 3 Construction Loan Points 4 Loan Points 5 Insurance question 6 Thanks 7 Advice with client 8 Profile Updated! 9 Hello, Roy 10 Hey Roy.. 11 1250 Gain 12 Schedule A 1045 13 NOL Calculations 14 NOL Calculations 15 Audit help 16 Firm doing taxes? 17 Audit 18 Audit 19 Firm doing tax returns 20 529 Question 21 audit 22 Tax Court Exam 23 Fired the client 24 Fired the client 25 I agree 26 Prepaid Patent Costs 27 Mbaqb 28 I agree 29 Sec 179 Discussion 30 Thank You! 31 CONDO 32 form 1045 schedule A 33 Rev Proc 2002-18 34 NOL 35 discussion irs 183 code 36 Negative Checking Balance on BS 37 1913

Profile

Roy,

Thanks for filling out your profile and welcome to the board. I look forward to your contributions based on your many years of experience.

Tom Taocpa 14:36, 3 February 2008 (CST)

Roy, Thanks for inviting me to contact you. My name is Dan and I am a EA out of Colorado and have several S Corporation clients. I have usually dealt with stock transactions where shareholders are buying stock directly from the corporation and/or making capital contributions and therefore gain basis in the S Corp for loss pass through and non-taxable distribution purposes. Now I have a new situation wheere and existing shareholder purchased shares directly from another shareholder. I am trying to determine what the changes are for each shareholders S Corp Basis for tax purposes and what the accounting entries in the corporate books are for this transaction. Any insight you could provide would be extremely helpful. If you would like an outline of the facts in the case I would be happy to provide those as well. Thanks, Dan

Okay Dan, first, in situation where one shareholder sells to another shareholder it just like IBM, no entries are made on the books of the corporation.

Second, on the shareholder basis worksheet included in most tax preparation program you would increase the buying shareholder's basis by the amount paid to the other shareholder for the stock. This increases his basis in the S Corporate Stock he now owns, his he had previously and the new shares he purchased.

The selling shareholder's basis is what was paid for the stock originally, plus and minus the income, gains and losses, (plus or minus other adjustments such as non taxable income and expenses) during the perios(s) he own the shares.

The buying share's basis is the computed the same way, except you add the amount he paid for the seller's shares.

If, you don't have a basis worksheet, let me know and give me an email address and I will sent you one.

If you have more questions about this let me.

Ray, Thanks so much. Exactly what I was looking for. I am sure I will have more questions but that is it for now. Dan

ATNOL worksheet

did you get the links that I provided? Kevinh5

Construction Loan Points

Thanks a lot for your response. Just wonder, in this case, do you think if I could expense the 1st year's amortization as that's the pre-construction period? Or do I need to capitlize that as well?Kerrypoon 18:56, 25 March 2008 (CDT)

Loan Points

Received your advice, thanks. Really appreciate your efforts in answering questions.Kerrypoon 00:24, 26 March 2008 (CDT)

Insurance question

Roy - I realize Kenk has posted before, but we don't have profiles on Kenk or Puru. And I don't know about you, but Puru seems to be dispensing some advice that leaves something to be desired. At least you are posting with authority and I have been trying to as well. Puru doesn't and I am very suspicious of his background based on some of his more recent posts. TomTaocpa 10:58, 2 April 2008 (CDT)

Thanks

Roy - Thank you. I've contacted Tim Doyle the moderator about him and so has Belle. I think he needs to go. TomTaocpa 18:34, 2 April 2008 (CDT)

Roy,

I want to thank you for your comment earlier today.

"RoyDaleOne (talk|edits) said:

3 April 2008

In my way of thinking; 1. In 2008, redo loans to personal name(s), (Note the S Corp can guarantee the loans and pledge the equipment as collateral.)

2. Suspended losses are freed up and may create an NOL 2008, or reduce income taxes in 2008."

I was thinking that is what they need to do for 2008. Is it just me...isn't this stupid? They can put the loans in their name and then turn around and make the loan to the corporation. We end up in basically the same place. Of course they need to show the interest income, but then they have the expense to offset it. It seems like you are just moving things from one pocket to another.

What are your thoughts on this?

regards,

Cindylee 20:33, 3 April 2008 (CDT)cindylee

Advice with client

Roy,

My client can't understand how he would have a disposition in 2006, and have debt relief income, if the loan stayed in his name, the title stayed in his name, and in 2007, my client pays the loan off on the truck himself. He makes some valid points to consider, but the transaction still "tastes" like a disposition in 2006 to me. When I try to explain how the 179 recapture would be taxed at regular income tax rates as well as SE tax on the other income line of the Schedule C, he doesn't think I know what I'm talking about.

This guy has two separate Schedule C's and was referred to me late last year. He got me his 2006 information with less than a week to go before the extension deadline (Oct. 15th). We barely made the filing deadline. When I asked him about the decrease in income in the trucking business, he mentioned that he had basically stopped his trucking business in the middle of the year, and that he had deeded his truck to his son and that his son had assumed the loan on his truck. I informed the client that we would have to amend his return to show the disposition of the asset (to get his books closed). At the time he said fine. After lots of research to make sure that the transaction was being treated correctly, I informed him on what it was going to cost him (the taxes on the disposition). This week I get the "real facts", (after the client visits the bank)that the loan was always in his name, he paid it off himself in 2007, and the title to the asset always remained with him.

Basically I'm not comfortable with the fact that I was given one set of facts a few months ago and new facts this week. I have told the client that if indeed there is a 2006 disposition (which I'm honestly not sure of after the new information I've been given by him), then I will have to prepare a 2006 amended return. I also advised him that I would not, and could not prepare a 2007 tax return for him if he did not sign the 2006 amended return. The client owes big bucks on his 07 taxes, but doesn't have the money to pay them anyway, so I've told him that the best I can do is file an extension for him for 2007, resolve the issue on his truck transaction and determine whether or not the 06 return needs to be amended, and that I really feel that he needs to find someone else who can take care of him better, or in other words, find someone else to prepare the 07 return later this year. I don't believe that the client will sign an 06 amended return, if indeed one is needed, anyway. What do you think Roy? I appreciate your insights. They are thoughtful and reflective, and I need another CPA's outside view on the situation. How would you handle this? Thanks.

Profile Updated!

Sorry for the inconvenience.

Roy,

My name is Mary and I have updated my profile. Can you give me any guidance on my posting? I spoke with a CPA friend of mine last night, and we are both stumped. This is in reference to my posting yesterday about the liabilities section of a K-1 on a Form 1065. Any help you can give me will be greatly appreciated. Thanks Mary

Hello, Roy

Roy, shoot me an email if you want to grab lunch sometime. My office is in Longwood.

Hey Roy..

Hey there Roy, still got me curious about a schedule T.... You are right this is a state requirement in MN for CPAs to hold records of returns for 7 years. My understanding is I must go by the "stricter" guidelines in compliance. Nancy Shoemake

1250 Gain

THANKS so much.

I have had it on Part III of the 4797 for the entire time, but having received some confusing information from the temp prof, I've asked the question of others and have been unable to get any kind of agreement on the answer!

MUCH appreciated. Really.

michelle

Schedule A 1045

Roy,

First, thank you for the disussion this past week on Sch A Form 1045.

I would appreciate your opinion on the original issue I raised. That is, does one include nonbusiness capital loss carryovers from previous years in Line 2 of Schedule A (which is nonbusiness capital losses), or only include the current year nonbusiness capital loss amounts.

Thank you. Dave

NOL Calculations

Roy,

I find this very interesting that you do not use Schedule A. Don't you have to use it when filing for clients?

Regardless, I took all your numbers and populated them into my own software for Schedule A, and sure enough it results in the same NOL of $-22,000.

Let's assume that instead of $1000 of nonbusiness capital loss, there was $100,000 of nonbusiness capital loss (and all of it was from carryover from previous years, due to prior years $3000 capital loss limitations.) Whould you include that $100,000 in your calculations? And what would be the NOL in this situation?

Thanks.

NOL Calculations

Roy,

Using all other numbers in your example, what is the NOL calculation if the client had $100,000 in nonbusiness capital gain losses (instead of $1000)? My software brings the NOL down to $77,000. Is that correct? And the final question: is it correct to reduce the NOL down to this level, if these nonbusiness capital losses were from other years? It just does not seem right to me, since these previous years losses did not contribute to the AGI loss from which the NOL is calculated.

Thanks.

Dave

Audit help

Hi RoyDaleOne,

Thank you for posting to my thread Discussion:Audit_help_-_Accrual_vs_Completed_Contract. Your reply recommended that I contact you directly. So here I am. Do you need any further information regarding my matter?

--Incognito 13:03, 28 April 2008 (CDT)

---

Thank you for posting to my Discussion page. Your 1st suggestion was comforting because that is exactly what I did when the auditor first brought it up.

As part of the IDR they had asked for the accrual-to-cash conversion workpapers. I pointed out to the auditor that there was only an immaterial difference between the two methods of accounting because the net changes in A/R & A/P essentially offset. (I was also hoping to throw her off the path of the 481(a) adjustment--that is where my client will feel the pain).

---

No, I have not provided the cash-to-accrual change in actg method workpapers.

Firm doing taxes?

Doing taxes is just part of our business. I'm not sure I completely understand the question?

-OmahaGold01

Audit

Hello Roy!!

I tried to respond to your email and it bounced back. I am working with the client in need of audited financials and hope to have you some information. I emailed him in Jax. Do you travel to Jax for audits?

Thank you again and as soon as I hear back from him I will let you know :)

Sandysea

Audit

Hi Roy;

I wondered if you would please send me another email or respond if you are interested in talking with my client about his audit needs.

Thanks again and hope everything is great with you and yours!

SandySea

Firm doing tax returns

Thank you for the response.

In reading several of the questions posted on the different forums, I have seen multiple questions which I would consider "elementary" (some by EAs). Obviously those asking the questions do not consider the question elementary. Are you letting them know the same things you are telling me?

If this is a forum designed for tax pros, would it make a difference as to how much of a "pro" you consider yourself? I can readily admit there are things I do not know when it comes to tax prep. and that is why I am asking the question. Questions you ask I may have dealt with in the past and already know the answer so would I tell you that you should not be preparing tax returns even though you consider yourself a "pro"?

I am not trying to downplay your credibility whatsoever because I understand that you have done this all your life and it is how you make a living. If individuals are going to demean those who ask questions they believe are "elementary" then what good is the forum? I posted a question several weeks ago re: 529 plans and nobody was able to give me an answer. Obviously, this question wasn't "elementary" or I would have been chastised by you already I would think?

-OmahaGold01

529 Question

Thanks for the help on the 529 question, but I needed the information before 12/31/07. I was able to get in touch with some of the foremost 529 experts and received the answer I was looking for.

Thank you again though.

-OmahaGold01

audit

Roy;

You can call me or you can email the client directly. Sent an email to the cfl.rr.com account.

His name is Daryl Burrows and needs the audit asap.

You can call me at my office if you like

772-770-2148

Sandysea

Tax Court Exam

Well, I was thinking of using the tax almanac forums if it was okay with T Doyle and the community at large. That way we could get the most input. And quite frankly, I need the networking. I don't know anyone personally that has practiced or has any interest in practicing before the tax court.

TheTinCook 05:59, 1 May 2008 (CDT)

Hey, I just wanted to thank you again for helping me with my question. I just happen to learn about Tax Almanac recently this year. I Have been preparing tax return since i was 19 years old. My father was an EA, My mother was an EA. And i have been EA for 10 years. My father and mother retired in 1993. Well, i am still learning. thanks alot.

Fired the client

Roy, I wanted to make sure you saw this and see what you thought. Thanks.

I fired the client.

I filed an extension for him for 2007, but will not be preparing his 2007 tax return. I've been unable to obtain clear facts with numerous issues regarding his business, specifically, who the truck was actually sold to in 2007 (was it the son who started to make the payments in 2006, or an unrelated third party buyer). I was given a different set of "facts" this spring than what I was given last fall when the 2006 return was prepared. I'm debating whether to prepare an amended 2006 return to give to the taxpayer, and if so, how to show what transpired. If the son is the one who actually bought the truck in 2007 (which again I haven't been able to ascertain), then I think that there was definitely a disposition in 2006, and that I need to prepare an amended return showing the disposition on the 4797. If the truck was actually sold in 2007 to an unrelated third party, then the question becomes should I still prepare a 2006 amended return, but instead of showing a disposition, show the business use falling below 50% on part IV of the 4797? The taxpayer has told me that the truck sat in lot with a for sale sign on it, but he has also said that the truck was being used by the son in a separate business (and the son was making the payments on the truck). I am fairly certain that the taxpayer will NOT sign and mail a 2006 amended return, regardless of what's on it. The taxpayer appears to be set on reporting the sale in 2007. At this point, I'm simply protecting myself against any future liablilty and trying to accurately report what's happened on the return, but with the different facts given, this is proving difficult. Any thoughts or suggestions?

Fired the client

Yeah, once 80% of my aggravation is gone, I'll have to get a new hobby I guess. Would you still show an 06 disposition on an amended (if this were you)? Thanks Roy

I agree

Roy,

I absolutely agree with your line of thinking regarding the ownership issues and the vehicle. I'm worried/wondering about whether or not I would have a BU% less than 50% issue in 2006, since one would basically be taking the stance that the asset was not actually "sold" until 2007 (and again I don't know who did end up with it in all actuality)? Would one want to give the client an amended return for 06 using Part IV of the 4797? I know the son supposedly started making the payments at the end of April 06 and the taxpayer has said that a portion of the time, the truck sat in a lot with a for sale sign in it, but the son also started using the truck in a separate business operation, hence my question.

Prepaid Patent Costs

Roy, Can you please elaborate on your post? Discussion:Deducting_prepaid_expenses

--PVVCPA 18:23, 19 May 2008 (CDT)

Mbaqb

Thanks for responding Roy, I wasn't around for a few days. It's a semi-truck that we're talking about, but I agree with your thinking.

I agree

Roy, I agree not enough facts were really given by the doctor. He may have ultimately got his answer, I don't know. But, I hope that he learned overall that the tax area is not one to dabble in! He did seem to put in more effort that some non-pros that come on here. CrowJD 13:00, 27 May 2008 (CDT)

Sec 179 Discussion

Where am I going wrong on this one? My client purchases equipment solely for the purpose of leasing it out. No maintenance to speak of on the equipment based upon their P&L. How could this qualify for 179 treatment? If you disagree with me as to the treatment of these expenses on PY returns, please advise why instead of giving a general response.I would truly appreciate it.

Regards,

Chase

Thank You!

You are right I totally misunderstood.

CONDO

Roy, I am looking for an ocean front condo on Anna Maria. Do you know of any bankers or repos in that area that may have some inventory?

Thanks for any help you may give.

Phil.

form 1045 schedule A

Roy:

I read some posts from your regarding this schedule. I have a quick question. Line 6 "nonbusiness deductions", I am confused if I should include state taxes. $53K out of $87K of itemized deduction is related to state taxes paid due mostly due to K-1 received for business profits. page 6 of instructions clearly says include itemized deductions but in () except state income taxes on business profits. The $53K was an estimated payment and also includes some amount for interest and dividends.

So how do I figure amount to inclulde on line 6? If I include my full amount on schedule A than line 1 and ultimately (NOL) is severly reduced eventhough I do have some nonbusiness income (dividends, interest) and capital gains to offset.

thanks!

Rev Proc 2002-18

Per the Rev Proc, the agent gets to pick the method. Percentage of Completion and Completed Contracts are both permissible methods. Are these their only choices? I wonder which they would choose?

The books were kept on a straight accrual basis...all WIP booked to COGS and all Billings booked to Sales. They wouldn't select this method, would they?

NOL

Hello RoyDaleOne,

    After ready all of the sections on NOL I find your answer to be the closest to answering my question. To sum it up, do I assume after filling out Sch A of the 1045 is that you can not deduct Nonbusiness capital gains in excess of your net Nonbusiness items (nonbusiness income less nonbusiness deductions).  Lert me explain.
    I have -2408 in Capital losses ( no gains, but I have 12,121 nonbusiness deductions and 18,316 nonbusiness income.)  In the end I have more nonbusiness income than I do the combined amount of nonbusiness deductions and capital losses, therefore my orignial NOL from Schedule C should not be offset. Is my assumption correct.  After filling out the form Line 1 remains unchanged.
    I'm new at this site so if possible would you please emal me at Laureen@LaureenOliver.com.  Thank you for your help.

discussion irs 183 code

Thank you for your reply. When I file an appeal with the Appeals Office, can I represent myself at the meeting with the Appeals Office Personnel, and then they would agrue my case with the IRS?

Thank you again for any adviseSebrofs 15:52, 11 July 2008 (CDT)

Negative Checking Balance on BS

Hi RoyDaleOne, My name is Nathalie Tran, a new member today. I'm a rookie (1st month) CPA in Orange County California.

Pls help: I have a Bal Sheet (accrual) with a checking account that has negative balance ($1,800). Can I present on 1120S Sch L the negative bank balance? If not, please advise.

Thank you much for your time.

Nathalie

1913

So, do you have one of those framed and hanging in your office? Natalie 18:34, 29 August 2008 (CDT)Natalie

Hi Roy,

Thanks for responding and providing me with the LTR Ruling 200646014. In this instance the ex wife did not claim the exemptions and the IRS agent is disallowing them to the husband because the form was not recieved and is now considered not timely. I still cant find anything that says the form does need to be timely filed? Any other thoughts?

Aprreciate it.

Gordon cpagp1040@aol.com

You mentioned you were sent a worksheet for to calculate an NOL for AMT purposes. Is it available for another person. Thanks much. Ted L 14:19, 29 September 2008 (CDT)