Tax Roundtable questions:

1) Harvey asks:

If one owns $250k of ivory figurines that is now basically worthless because of new laws regarding ivory and its provable 100 year age, can it be deducted as a casualty loss on one’s income tax. If not, can it be deducted in any other category . thank you

If you have ivory that you can prove you owned/imported prior to the law, you are allowed to sell it – so there is no loss. In fact, it might become even more valuable.

The US Fish and Wildlife Service has a table that outlines what is allowed and what is not – on a federal level overall, in interstate sales, and intrastate sales.

However you will need to look up the laws in your own state to see if they have specific restrictions.

2) Sulikey asks:

  1. What is going on with processing of amended returns? What should client do if they have not received refund and it’s been over 17 Weeks?

The IRS is short-staffed. So they might be behind on processing. Generally, if they get ALL the information they need to understand the amended return, it gets processed fairly quickly. If not, it takes longer. (they say it should take about 16 weeks.) I would call the IRS Practitioner Priority Service and ask them to track down this taxpayer’s file if you don’t get a good answer on the Where is my Amended Return page

  1. Is there training and software to assist in Tax Planning?

Absolutely yes – go to TaxCoach. We just had the session with Ed Lyon last week.

– tell them TaxMama sent you and you will get a 30-day trial instead of 15 days.

Training and tools for tax resolution? You can find that in these places, all excellent:

  • if you need more guidance:My CPE Link series – which is on sale for $100 off right now.
  • ASTPS and their boot camps around the country – – tell them TaxMama sent you to get a discount or use discount code “taxmama”
  • NAEA’s NTPI series – which takes 2-3 years to go through. – they just finished the most recent series of classes last week, I believe. (Tony McIntyre can tell you about that. I think she was just there.)

How do you price your tax resolution services?

The best source for learning how to sell and price your tax resolution services is Michael Rozbruch’s coaching program -

Note: Some of these places pay me commissions – but I would refer them (and use them) without payment.

3) Jim asks:

  • I am interested in what can be included in cost of goods sold for marijuana dispensaries.

If the only thing being sold is marijuana and related products, you may ONLY deduct the direct costs of the product, including shipping in. Not much else.

  • How can we maximize the inclusion of payroll and facility charges(ie rent, utilities) and other costs into cost of goods sold.

You cannot really, if you only sell pot. If you have non-pot-related products and services, you must set up the accounting system to track the staff and overhead and operating expenses separately for each function. It’s a good idea to have certain staff fully allocated to NON-pot-related sales and activities. Read the case on Californians Helping To Alleviate Medical Problems, Inc. (CHAMP) v Commissioner –

  • How do preparers avoid an IRS penalty.

Do an ethical job. For more detail, take this course (if you haven’t already)
Marijuana's Tax Paradox (or the Uncanny Cannabis Controversy

4) Terry asks:

  • My request is that you touch on Sch H / household employees. The form is pretty straight forward, but what tax strategies, if any, one take who will be employing such people?

Basically, if they want to hire you to handle their taxes, help your clients put the staff on payroll. Remember, the state may require full employer registration. Get all the requisite paperwork filled out – I-9, W-4, etc. AND do a thorough background check – criminal and credit. You don’t want someone in your home or your client’s home is likely to steal from or to harm them.
Note: It may be easier to pay them through an agency.

Another note: If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant.

  • Also, any tax strategies for the elderly who find themselves in assisted living / skilled care?

Good question. To claim deductions, make sure they cannot perform more than 2 of the functions that the IRS looks at:

Activities of daily living are eating, toileting, transferring, bathing, dressing, medication management and continence.

5) Wally asks:

Is it possible to obtain a copy of a 1970 Form 1040 from the IRS archives?My limited research indicates only the current and past 6 years are available.

Probably not. I don’t believe the IRS still has this data. If they do, you can get it by using Form 4506 and paying the $50 fee for a copy.

Form 4506T could get you a transcript for free – if they IRS has the data on file.

Don’t hold your breath.

Why do you need it?

6) Linda C asks:

I would like to know what is now available for a Sub S owner & their employees for health insurance & their medical expenses being reimbursed using a 105 plan.

When it comes to Sec 105 plans, THE experts in the industry are the Agri-Biz Plan folks at TASC . If they say they can do this – they can. However, I don’t believe that you can use a Sec 105 plan with an S Corp. I think this is the only entity where the owners cannot use the Sec 105 reimbursements.

7) Lyla asks:

  • Please clarify the ACA requirements for S-Corporation 2% shareholders for medical insurance reporting. For 1 sole shareholder and no employees. For 2 shareholders and no employees.

The rules for shareholders of S Corporations with no employees have not changed with ACA. Basically, you add the cost of the insurance to the wages, do not assess SS/FICA taxes, and show the amount on the W-2.

Then, they may claim the self-employed health insurance deduction on their personal tax return up to the amount of their total wages – which would already include this benefit.

You can find more details here

  • For shareholders and employees – this is a BIG question and probably requires and entire workshop. If you have clients with these issues, you should be taking some detailed, hands-on courses.

Did you notice I don’t teach any of them. Why? Becaise - I haven’t a clue – and the rules depend on whether they have 50 employees or more.

  • Here are the rules for smaller employers with 50 or fewer employees -
  • Here are the rules for Applicable Large Employers (ALEs) -

8) Donna asks

Last tax season I did a few returns for pay. Clients were referred to me. I plan to do this again and expand the number of clients I will take---only by referral. I knew the clients from last year and so did not ask for a signed agreement or to see their social security cards. I will for any new clients.

  • What else? Can you give me a quick checklist?

Use the organizer that Intuit provides.

You have my short client questionnaire in the Board as well as other checklists and things -

IF only a few clients, should I get E&O insurance.

  • That’s up to you, your confidence and your trust level.

I used last year Intuit's Tax Online software and was fairly pleased. The customer service was good.

9) Christopher asks:

First, I have passed parts 1 and 2 so far and plan on taking part 3 in 2 weeks. If I plan on doing returns this coming year, should I officially “start” my business this year or wait until Jan 1?

  • If you are going to prepare tax returns next year, you must be set up for efiling. So get set up now. You need an EFIN -

  • It’s also a good idea to get an EIN so you don’t put your Social Security out there.
  • You already have your PTIN if you have passed 2 parts of the EA exam. Just remember to renew it before 12/31
  • And last, since you have already passed Part 1, see if you have enough CE credits to get your AFSP. If you have attended my live classes for Part 3, you should have all the credits you need for Ethics and Federal tax. You only need the 3 tax update hours.

Second, I plan on preparing approx. 10-30 returns my first year, what is the best software you would recommend?

If you have never used tax software before and have no preconceived notions and habits…start with Drake. You can start with their pay per return package for $300 which includes 15 tax returns – that includes states - $20 per return afterwards

Or…consider Intuit’s ProSeries – Basic 50 gives you 50 IRS/State returns for about $630

We use the Basic + Business because it gives us unlimited individual returns in up to 4 states + 15 business returns.