Your Personal Accountants

Employee Stock Options

2011-04-13T10:15:00.002-04:00

I held options (granted several years back through an incentive plan, all vested) with a private company of which I was an employee. We were bought by another company in 2010; I was let go and my options were converted into stock certificates for the acquiring company. I sold some of this stock in 2010 and kept the rest. I have 1099B forms for the stocks I sold.

I'm confused on how to declare this for 2010 federal taxes. Do the certificates count as income worth the stock price on the day the certificates were issued, and then I declare a short term capital gain on the part that I sold? Does the fact that the options were granted several years ago make this a long term gain somehow? Thanks!

American Opportunity Credit

2011-03-29T21:56:00.001-04:00

shawn said...

Question on American Opportunities tax credit. I learned from a friend a means of taking the credit even though my sons scholarship was roughly equal to the qualified expenses on his 1098T. It seems if the scholarships are unrestricted that you can "designate" that they be used for unqualified - and thus taxable school expenses. While this increases the dependant childs taxable income, it reduces the scholarship monies that must be subtracted off the qualified amount and may allow the parent to take the AO college expense credit up to $2500 for 2009 and 2010. It almost seems to good to be true but there is an example on IRS publication 970 which shows exactly such a case on page 11.

While I am fairly certain I can claim the credit in this manner for 2010, my question is can I go back and get the credit for 2009 by filing an amended return for both my son and myself. While my son had earned income of $4400 in 2009 and would have to pay additional tax and penaltied on the additioanl $4000 of income, this should be more than offest by the credit I would receive at a 25% income bracket. Would love to get some feedback on this - thanks!

Film making business

2011-03-16T14:37:00.002-04:00

kimbrovideo said...

Dear Accountant,
I am a self-employed filmmaker who rents video gear to production companies. I am set up as a sole-proprietorship. I fill out time cards for the labor on set and I invoice the production company for my gear. Recently, I had a company ask for a local address so they could apply for a statewide tax-incentive program. Well, I live out of the state so I do not have a local address. My parents live in the state. Could I provide their address to this company? The production company would want me to change the address on my invoice too but since the income from the invoice is taxable, is this legal? Could I put the gear rentals on a "kit rental" form attached to my time card? I want to solve this and not lode a valued client.

Question about a new business

2011-02-21T11:48:00.002-05:00

MetalSmitten said...

Hi, I started a mainly online business selling handmade jewelry and did better than I expected. This is currently my only source of income and I have had no outside employer for this full tax year. I am registered within my state (IN), and already gave them their sales tax for my few in-state sales. But now what do I need to do for Federal taxes? Thanks!

Disclosing deceased parent income

2011-02-19T13:52:00.000-05:00

Your Personal Accountants: Ask The Accountant: "Carolee1945 said...
I am doing my parents taxes. My dad died in 2009. We have a survivor trust and a bypass trust. My dad had many small investments. Right now, I have 1099's that have the trust name with my mom's social, I have 1099's that have both my parents names with my dads social, I have 1099s with only my dad's name and his social. I understand about the bypass trust which has its own tin,and doing the K-1. What I do not know is this: do I do a 1040 return for my mom, a 1040 for my dad, and then a 1041 for the bypass trust?"

Civil Law Question

2011-02-14T08:57:00.002-05:00

Fred said...

This a question on civil law in Massachusetts. I have a court judgment against a home improvement contractor for approximately $16,000. I can recover $10,000 from the Massachusetts Guaranty Fund, can I deduct the difference ($6,000) on my tax return? He has failed to pay any monies.

Question about switching accounting software

2010-10-27T12:26:00.000-04:00

Calrageous said...

Hello,
I run my own small business and I've grown considerably this last year. I've just switched over to quick books pro and am wondering can I transfer all my bookkeeping information mid month or do I have to wait until the 1st of the month?
I'm merely switching softwares and all the information will transfer except for a few forms I can recreate. What should I do?
Thanks!

Question relating my payroll taxes

2010-09-17T08:15:00.000-04:00

Jennifer said...

Questions Regarding Payroll Taxes:

My employer refuses to be out-of- pocket his portion of payroll taxes (social, med, and modified business tax); thus, he deducts his portion of payroll taxes from my gross. Is this legal? And if so, can I 1099 him for receiving the income?

Thanks!

Does the IRS care ???

2010-08-22T10:51:00.002-04:00

JessiKo said...

I am thinking about purchasing a house and wanted to use money from a foreign account. What are the pros and cons of doing this? Do I have to disclose my foreign accounts when I do my taxes? Does the IRS care where I get the money to purchase my home?

Question relating to First Time Home Buyers Credit and Divorce

2010-08-16T12:18:00.001-04:00

A. said...
I have a pretty complicated scenario, and I'm hoping you can help!

I bought a house in Sept. 2009 and filed an amended 2008 income tax form to get the $8,000 first time home buyer tax credit.

My husband and I have since split, and we sold the house this month, August 2010. I know I'll have to pay back the tax credit, since we sold the house within 36 months of purchase. I purchased the home for $85,000 and sold it for $100,000, after closing expenses, etc. the net profit was $11,158.

My questions are....

1. Will I have to pay back the entire $8,000? I make significantly less money than my ex, (my adjusted gross last year was around $15,000). But I filed for the credit, so I know it will be my responsibility to pay back. But what if I can't afford to?

2. Is there any adjustment for pay back based on how much I made on the sale and/or my income changes? (We filed a joint 2009 return, but I'll file 2010 single return.)

3. If there is no adjustment, is there any way to pay back the credit NOW, rather than wait until next tax season?

I could really use some advice. Thank you!

Question regarding student loan

2010-08-01T00:34:00.000-04:00

Michael said...

Hi,

I have a question. I have a student loan that I took out in Jan, 2004. The total loan amt. was 16,205.00. If the monthly payment is 150.00 then what would be the payoff amt. right now? The reason I'm asking is that I took the loan out with an online student loan service and I want to make sure that their accounting is right. They don't have a brick and mortar location so I can't sit down with someone.

It seems that they may not have applied all my payments and the full payoff amt. seems too high to me.

I've used online loan calculators and I'm still confused. Could you help?

Thanks very much!

Question about withdrawl from SEP IRA

2010-07-30T16:29:00.002-04:00

M said...

I have a SEP IRA through my employer. We just transitioned to a 401K this month. Instead of rolling my SEP IRA into my 401K, I've been contemplating cashing it out (~$35K)and paying off family debt obligations (credit card, car loans). My understanding is that the withdrawal *may* only be subject to simple tax (10%) when time time comes to file my 2010 return. I haven't calculated capital gains/losses, but according to my statements over the past 3 years total income earned on this SEP IRA is less than $600. Am I overlooking something?

Question about expensing cost

2010-07-30T14:12:00.002-04:00

Diana said...

I am not sure if this is where to ask this question. In a janitorial business I have soap dispensers that I sell. I do not charge for the dispensers and the installation

when a customers purcases my soap.I take the dispensers out of inventory.My question is how to I record the cost of the dispensers on the books. Are they sales expenses or are they considered assets to be depreciated. I currently have 4000

dollars worth of despensers installed in various businesses.

Question regarding student loans vs personal loans

2010-07-24T12:09:00.000-04:00

DogsBody said...

Hi there,

I am planning to undertake Post Graduate study overseas and as such I don't qualify for a student loan. The course is run in eight modules over two years, and you can pay in two instalments every year, one in October and one in January. My question is, if I am going to take out a personal loan to cover the tuition fees, is it better to get this in one lump sum (about $NZ20 grand) or get four smaller personal loans over the two years? I just figure if I take the lump sum I'll be paying interest from day one, even though I don't actually need all the money right away. My other question is, is it sometimes better to use a low interest credit card for such things? From what I have seen, the interest rates are lower on some credit cards than for personal loans.

Much obliged,

Poor Student

Your Personal Accountants: Question regarding forensic accounting.

2010-07-05T16:37:00.000-04:00

Your Personal Accountants: Question regarding forensic accounting.

Question regarding forensic accounting.

2010-07-05T16:32:00.002-04:00

Chelseaa! said...

I have a couple of questions regarding forensic accounting that I was wondering if you could answer.
How would you describe forensic accounting?
How is it different from accounting?
What is the current job market like?
How is it changing?
What are skills required of a forensic accountant?
What environment do they work in?
What are some responsibilities they hold?
What would you qualify as special characteristics of a forensic accountant?
What is the projected salary?
What degrees are required?
Which additional ones are beneficial?
What certifications are beneficial to have?

Need advice for month closing practices.

2010-07-05T16:24:00.000-04:00

rollotom said...

Can you recommend a way to get realistic practice on the month end closing process? My lack of experience in this area is hindering my job search. Do you know of any websites, books, etc that would have such exercises?

Thanks!!

Buying a house

2010-06-28T15:59:00.000-04:00

jrhodenphotography said...

We are looking to buy a home - my grandparents are loaning us th money and both their name and ours will be on the deed. We are going to do some repair work that is needed for the home to qualify for financing then we will take out a loan to repay my grandparents. What needs to be done so that we aviod having to pay taxes on the amount loaned ($50,000)?

Paying off the credit cards

2010-06-25T12:27:00.000-04:00

Rebeca said...

Hello. I would like to know if there is a way to pay my credit cards with money I receive on stocks I sell without having to deposit the money into my checking account first. I don't know the legalities of this is, but I know there are different legal ways of managing money. I have plans to put some of it into CDs or a Roth account for my son also and I imagine this can be done through my bank with some of the money before depositing it. Thank you for your help.

Distribution from Roth IRA for first time home purchase.

2010-06-01T09:16:00.000-04:00

Jeffrey said...

Dear Mr. Asraf,

I have a super-specific tax question that I haven't been able to answer:

A first-time homebuyer can put an untaxed distribution of up to $10,000 from a Roth-IRA toward the purchase of a primary residence, within 120 days of distribution. The question I have is: Must the purchased home be in the United States of America? I have yet to see any restriction on the national location of the purchased property, but, before I go moving my savings around, I want to make sure that this isn't an unspoken restriction. Do you happen to know? Strange and precise question, I know....

grüße

Jeff

Rental Property Question:

2010-05-03T12:06:00.000-04:00

bob said...
Rental Property Question:
I have a C Corp and would like to rent out my 2nd home to my C Corp. From what I have read this seems possible. Can you tell me what I would need to do this, and is this a smart thing to do?
So far I have gathered a sample lease agreement, and all my mortgage info. Income vs. Expenses, do I fill out a 1040 (Schedule E) at the end of the year for rental income, as far as expenses can I write off (interest, depreciation, utilities, maintenance, interest on 2nd mortgage)?

Thanks.

Early withdrawl from 401(K)

2010-04-11T17:35:00.001-04:00

Jen said...

Hello,
This is a great service! I hope this is the right way to post a question. I have a question about 401(k) early withdrawals. i know that there is an exemption to the fees for extraordinary medical expenses. Well, I incurred said medical expenses (and claimed them on my taxes) in 2009. I didn't learn that there was an exemption to the penalties for medical expenses until recently. Can i take the money out without paying the penalties now, in 2010? Should I do an amended return?
Oh, and I am no longer working for that employer so that part is not a problem.
Thank you in advance!

Question about setting chart of accounts

2010-03-31T19:22:00.000-04:00

Paul said...: Good Morning Mr. Asraf. I helping my son with his books. He earns wages in one job and starting studio from 0. I use quicken 2009. He puts all his earnings from Job 1 into studion. how will set him up in quick books. it is not revenue, he is not selling anything just paying bills. How do I label him in chart of accounts.
pls help thank you. Paul

Is living with your parent Inputed income?

2010-03-31T19:08:00.001-04:00

stevea1 said...: I live rent-free in a house owned by my parents, am I subject to inputed income taxes?

In a self employment business, is it more beneficial to set up dividends or owners withdrawals

2010-03-29T12:30:00.001-04:00

ajmccrimmon said...: In a self employment business, is it more beneficial to set up dividends or owners withdrawals and how do we report these.