Video 166 11.23.21
8m 39s
Talking with TaxSpeaker Video 166
1. We are in the process of merging our firm with another firm. There are two partners in our firm. One of them will be a partner (owner) of the merged firm. The other partner will not have any ownership interest in the merged firm but will continue to work as an independent contractor with the merged firm working on the same clients as before the merger. I read your email of 9/28/21 where you discussed consent requirements when you are selling the clients to another firm, but I did not see anything about required consent if firms are merging.
When merging the presumption is, I believe, that the client consent requirements do not apply because 1 of the owners is an owner of the new firm. There is an excellent artivle in the July 2018 Journal of accountancy that helps https://www.journalofaccountancy.com/issues/2018/jul/ethics-during-cpa-firm-mergers.html
2. In the Business In Depth Seminar you addressed IRC Section 139 disaster relief payments made to employees. Can these payments also be made to the members of an LLC and owner-employees of an S-Corporation or C-Corporation?
Sec 139 does not exclude owners from participating in the disaster payments, in fact it just excludes the payments from income, thus I believe the payments can be made to owners if the rules are met.
3. Is it too late to prepare a 1139 for a 2019 carryback loss? Due date look like 12 months after end of tax year the loss was incurred but wasn’t sure if this has been extended for 2019.
Assuming the client is a calendar year client the 1139 due date ended 12/31/2020. No special rule for 2019.
4. Do we need to keep transmission reports? 2)Should submission ID be on actual e-file documents?
No need to keep transmission reports, but the submission ID must be kept (usually on the 8879) for 3 years.
5. When audited, should we have e-file papers in alphabetical order or date order?
Date Order
6. Regarding a watersports business – does the fuel used in their jet skis qualify for the federal fuel tax credit? Or does this credit only apply to fuel used by commercial fishermen?
It would qualify-but make sure that they are actually paying the Federal highway tax-they may be buying “exempt” fuel if they are in a marina.
7. I see the IRS came out with a notice stating the 100% meals deduction can be applied to per diem reimbursement. Have you seen anything that indicates the 100% of business meals would also apply to the 80% transportation per diem?
Thee is no indication of this, and I don’t know the answer. Personally I do not think a trucker can get more than the 80%
8. I received a new client recently and after reviewing their 2020 tax return I have determined we need to amend the farm schedule for a number of reasons related to the death of the taxpayer. Are there any risks associated with amending a tax return prepared by a previous CPA? I would think any liability exposure I would have would only pertains to the amended items on the amended tax return. Do I have a responsibility to review ALL other items on the tax return that we aren’t amending for since we didn’t prepare the original tax return? Is there a particular change to an engagement letter that you recommend in these situations?
I do not see any additional risks unless something is just so blatantly “off” that anyone can see it. Modify the engagement letter to state you are only preparing the form for the specific items listed, without reviewing the form prepared by prior person.
9. Client is considering remarriage and has been receiving Social Security based on her ex-husband’s Social. If she remarries and her new husband dies within the first year, she wants to know if she can step up to HIS Social Security amount or does she remain receiving the first husband’s amount. She is not a romantic!
Usually they must be married at least 9 months! Love is a wonderful thing isn’t it?
10. I have a client who withdrew $205,000 on May 15, 2019 from Schwab. He stated that he had repaid it by rolling over an IRA from another account to Schwab on July 18, 2019. First comment, the contribution/rollover is 64 days after May 15th - disqualified. Second comment - I don't believe a rollover from another IRA account counts as a repayment. Am I correct? Of course, did the client call me in 2019 to consult? Of course not!
Well the 2nd rollover is not a rollover, but rather a withdrawal-only 1 allowed per 365 days. Unless the client can meet 1 of the 11 late rollover exceptions-see the IRA chapter in 1040-they owe tax on both items.
11. As we get closer to the filing season there are several pieces of info that are proforma-ed into the next tax year. For instance the AGI for efiling. If there was a change to a tax return due to the unemployment not being taxable, which AGI figure do we use to verify for efiling purposes??
The amended amount.
12. Are Healthcare Sharing Ministry payment for health insurance premiums deductible in year 2021? thought it was proposed in 2021?
Although proposed it was never finalized, so no deduction in 2021.
13. Last week at the 1040 class in Cleveland you mentioned a hiring company that some folks have had good luck with. Would you give us that name again? I don’t believe that it’s in the manual.
Wahve.com is “Work at Home Vintage Experts”