User talk:KathiJud

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Just kidding

Kathi, you know I'm just kidding with my comments! Welcome to the board. Gazoo 07:59, 24 September 2009 (CDT)


Gazoo speaks for me as well. Welcome!CrowJD 08:00, 24 September 2009 (CDT)


Welcome !

And if you want to experience TA humor over the years - read this thread when you have some extra time on your hands. It's one of the classics. Discussion:Voiding stale dated payroll checks, punch, cookies, Jim Jones, china, coffee, cat food and unclaimed property

Belle 18:48, 24 September 2009 (CDT)

Tilde thingy

If you look at my discussion page (unless I deleted it when I cleaned it up a bit), that was one of my first questions for Tim. Now I know all I have to do is look at the history to see who wanted to talk to me. And many times when I leave someone a message, I have to edit (which I think you've figured out how to do, based on a post in another thread) to add the tildes as I often forget.

Hope your husband was able to enjoy the humor - sometimes the spouses just don't quite get it....

Hope you have a smooth tax season - it's right around the corner. Belle 22:13, 26 September 2009 (CDT)

Copyright issue?

Hi, and a belated welcome to TaxAlmanac - you've been a great addition to the site!

Sorry to have to bring this up, as I have to admit I am no copyright expert, but:

In your Sep 30 post in Discussion:Co-Owners of Rental property One works on it, the post that starts out "Availability of Section 761(a) Election" - are you quoting from material that is potentially under copyright elsewhere, e.g., from BNA/RIA/et al, or from an article that may have been published someplace else in hardcopy or on the web? Because if so, the TaxAlmanac policies on using information that may be under copyright elsewhere may force us (well, you, or you and me) to edit that info...

TaxAlmanac's policies were developed to keep the site (and Intuit) from getting in trouble when a copyright holder notices something published here that they didn't actually give specific permission to have republished. So the policies err on the side of being overly careful, like advising that you should not copy more than a few lines (fair use) and that you always attribute the source, etc. (That's probably why D&T questioned the article that SandyL copied in its entirety from somewhere else the other day, but that article included specific permission to republish as long as it was attributed as requested, which it was, so I guess that falls within the TA policies.) Here are the various places TA's policies are mentioned:

It's not always easy to tell whether a couple of paragraphs are original material or a quote, especially when the person posting clearly knows the stuff well enough to have written articles themselves - it was actually the dots dividing those paragraphs from the rest of your post, and the change of tone, that made me wonder in this case.

If that is material that maybe shouldn't be on the site, is it possible that you could paraphrase it to retain the gist of your point in that post, maybe also adding a sourcing note? If not, then it'd be best to remove the material altogether, and then replace it with a reference and/or link to the actual article so that people can go to the source if they're interested.

If you have any questions about this, or want to comment or whatever, you can put a message on my talk page by clicking my name below and following the links to leave me a message. Thanks,

Trillium 11:54, 6 October 2009 (CDT)


Thanks for your reponse. What about using the new court case re LLCs that allow material participation for the LLC members There are no other managers here and they are at the building taking care of both businesses on a daily basis-

Sure - you don't even need to attribute IRS quotes

The weird thing is that those two paragraphs exactly match two paragraphs from this article: The consequences of electing out of Subchapter K, published in the Tax Executive, July/August 1992 - even to the extent of having the same footnotes! So I guess the authors of that article must have just copied TAM 9214011, or some rev rulings, etc., wholesale right into their article, but that doesn't make IRS documents copyrightable by them, so like you say, no problem. Or, if they've given the IRS permission to publish their article, I'd think that makes it fair game to use.

By the way, you can underline text by putting <u> at the start and </u> at the end. When you use the double brackets (which both underlines and turns the text red), you're actually creating a broken link, which turns up eventually on an error report as something needing to be fixed later. If you actually want not only underline but also a specific color, there's a way to make that happen, too, without it showing up as a broken link, but I don't remember it right off the top of my head. I'll add that to this post later when I come across it - I'm sure I made a note of how to do it somewhere, as I thought using various colors could be cool.

Thanks for the info; glad to know there's no copyright violation that Intuit would have to sort out later!

Trillium 10:36, 7 October 2009 (CDT) - edited para 1 a bit Trillium 11:52, 7 October 2009 (CDT)

Changing the font color

To change the font color, you use the code <font color="xxx"> where "xxx" would be the color name, like blue, green, red, orange - probably other colors, too, not sure how many you actually have to choose from. Note that you ''do'' keep the quotes around the color. So it would look like this for green: <font color="green">. Then you put </font> when you want to go back to standard black text.

Sample: This is green text.

Trillium 11:52, 7 October 2009 (CDT)


Kathi - my reasoning basicallyis if they own this building as undivided interests they would pay no rent and they would have an owner used building in their business and write off the interest, taxes,insurance and depreciation. No rent-no passive activity

The additional cost of a lot of liability insurance on the building probably would just offset the costs of the tax return (which I do not prepare) and the 800. fee to the State of California every year

VKendrick Vkendrick 00:10, 8 October 2009 (CDT)

Advertising SPAM

Kathi, no we don't. But I don't see any advertising. (Because I had already deleted it before you got your post in.) Thanks for pointing out any spam - you can always leave a message about spam on Trillium's or my user talk page. Or you are welcome to delete spam yourself. We have a zero tolerance rule for spam. Kevinh5


Really, thank you for following up on it again and for doing the editing. To your question about whether "every 'newbie' is allowed to learn as they go" - well, in theory, yes, but we probably do come across as overprotective of the site at times.

And as you saw this morning, with Pomcor the 1031 guy, Kevin & I are both fairly quick to assume that certain users are here for self-serving reasons only, and their posts will be removed and we'll ask questions/tell them why later. But in general, we're both aware that the T&C and policies/help pages aren't on anybody's list of "the first 20 pages I visited on TaxAlmanac," and so it's best to just point them out when it seems like it might matter - especially when it's clear the person is trying to be helpful, and any conflict with the policies is likely accidental.

Hey, I like your idea for subject-matter organization for your "personal digital library" - I've got random documents floating around in the computer, often cryptically named based on the original title of the article rather than what I thought they might help me with one day. Copying and pasting by subject makes a heck of a lot of sense, and I think I'll try it. I do usually remember to grab the URL from the address line and add it to the articles once I've saved them, which might be something that would be helpful to you (although I admit that I only got into that habit because people kept asking me where I'd found something).

Trillium 11:16, 8 October 2009 (CDT)

Thank you...Partnership Contribution-Not Plain Vanilla

Thank you so much KathiJud!

Your opinion as a recent, but heavy user, please....

There is an individual who often posts incorrect information on this site, even though the person has education and a professional designation. What do you think would be the proper way to handle the situation? If I (or a handful of others) come along and correct every mistake this person makes, we look like we're singling this person out for some type of 'punishment' or at least 'censure'. But if we leave those incorrect answers out there, the quality/value of information here on the site is diminished. In the past I've asked others the same question. Thanks for your input. Kevinh5


Thanks for replying to my question.

Jim (schenckdmm)

Mechanics of amending state returns after state audit

KathiJud - I would appreciate your guidance. I apologize if this is discussed somewhere on the site, but I have tried various keywords and do not see anything. If there is a post out there, please just point me in the right direction.

I have a new client. Client (and its employees) are based in NC. Client is an S-corp with 100% shareholder. Client has done business in multiple states for a few years. Employees travled and stayed in all states. Client has not been withholding taxes for any state except NC. Client has not filed any returns except NC.

Client was recently audited by VA. VA determined some withholding taxes were due to VA. Client paid the bill to VA...with some penalties & interest. Total taxes for 2006/2007 was about $50,000. I do not disagree that those wages and applicable taxes were attributable to VA.

My question is really around how/what to amend to get taxes back from NC? My original thoughts are...1) file corrected W-2's to show the withholdings from VA and corrected NC withholdings, 2) file amended state 941's and request the refund from NC and 3) file amended returns for the employees.

Within NC, the employees with really just move the VA withholdings from what was the NC withholding amount to credits for taxes paid to other states. No refunds due.

Does that make sense? Am I making it too hard? Too easy?

Thank you.


Davidcpa 22:59, 26 October 2009 (CDT)

Thank you

Thanks for your help. Yeah, there will be lots of amending going on (W-2, state 941's, state corporate return, state shareholder return, employee returns), but it will not really be complicated and almost sounded too easy. Just one of those things that I always assumed that is the way to do it, but have never had to do one. Again, thanks and welcome to the site.

Davidcpa 08:33, 27 October 2009 (CDT)


I see you are from Texas and have experience in Real Estate. Do you have clients who develop properties using the Bramblett scenario in order to achieve a capital gain to provide legal protection for the sellers of the property? And if so, have your clients gone through an IRS audit where the agent considered collapsing the entire transaction?MWPXYZ 16:54, 4 November 2009 (CST)

Thank you

Thank you for your help regarding the Parnership/SMLLC questionPAULHA 09:09, 8 November 2009 (CST)

Getting carried away

I'm getting a little carried away tonight. I think I better start looking for my tranquilizers. They pitch them across the plate, and I feel like I've got to take a swing at them!CrowJD 19:04, 16 November 2009 (CST)


Kathi, I thought sending a message meant an email. Sorry about that, I didn't know what user talk was. I'm so new to TA, I have not navigated around all the features/tools yet. Hope you received my message. Thanks Ted

Thank You

Thank you KathiJud for your insightful comments and taking the time to respond. What you mentioned makes sense and matches my original thoughts of the situation.

Scorp sold


you've been a great resource to me regarding the sale of my client's bar. I ended the discussion, but just had one last question regarding the 1244 and the s/h basis. If you could help me finish this, I'd be extremely grateful.



RE Professional what is "participation"

Hi Kathi,

Thanks for your reply to my question.

The reason for my confusion about this is that the IRS passive activity audit guide (see URL below) states:

"Also check for large labor expense - possibly a hired contractor spent more time than taxpayer."

Thanks again for your time, I'd be happy to hear your take on the audit guide.



Hope you know I am just kidding about you and Fred. I agree that we should treat people with civility, as far as possible. CrowJD 07:51, 16 January 2010 (CST)


You really are a true asset to this board.

Thank you for so much information

Kathi Thank you for giving me so much information. I do appreciate it. Also, thank you for all your responses here. Am sure many appreciate it.

By the way, I'm an Oklahoma Sooner! Ha! Little did I know that I would spend the rest of my life defending myself between the Texans and Nebraskans. One Texan told me "I won't hold that against you." Hope you won't either.

Wish you well and thanks again.

KatyBluewater 11:44, 23 February 2010 (CST)

Thanks for sticking with me

Kathi, You are wonderful. My question about basis and casualty loss was so dumb but I just wanted to confirm it. I spent many, many hours reading everything. I really want you to give yourself a pat on the back for staying with me and answering the simple question.

You made by day! This Sooner is wishing a Texan the best of everything. Appreciate your support for this site.

KatyBluewater 09:50, 28 February 2010 (CST)

...Made My Day!!

Kathi, when you wrote "I agree that is a bit much to impose on our seller Harry" I was overjoyed to see that you said "is" and not "would be".

You made my day! My little bitchy whiny sniping day!! Thank you!!

Harry Boscoe

at risk rules

In a post from October 2009, you referred to an Audit Technique Guide for At-risk rules on the IRS website. Would you help me find it?


Trade In

Kathi, I have read several posts you made regarding the trade in of an auto on a new lease. I cannot come to a final conclusion. I have a client who traded in a car with a NBV (tax and book) of $16,000 and received a trade in value of $2,500 on a new leased auto.

My conclusion is this, there is a sale of the first auto with a loss of $13,500. Is that all recognized currently?

Is there any new 'asset' or 'prepaid"? I think not because you have accounted for the trade in value already as the "cash" received in the first transaction/sale of the auto.

Can you even take standard mileage rate for one car

and actual expenses for another car both used the same year/same times for business? Kevinh5

Kathi, may I have your offsite email address

Thank you Kevinh5 03:13, 24 February 2011 (UTC)

S Corp SEHI Deductions

Hi Kathi,

I started a discussion on SEHI deductions for 2% shareholders in an S Corp. I found some comments you made on another post, and would be interested in your insight if you have the time. Thanks!!

Hi, KathiJud

I am new in this tax almanac and a rookie (new grad) in the tax business working for a cpa here in FL.

CPA gave me this client being audited in 2008 rental properties. The wife owned most of the rentals before they got married then formed an LLC and deeded properties to the LLC. I have to input transactions in QB since she only uses excel s/s (5 properties) income is less than 100K.

Client says depreciation starts when LLC took over but CPA says should be when it is available for service. Just needs clarification.

Your feedback will be appreciated.



Hi KathiJud;

Thanks for the response. There was no 338 agreement as the sale price was only $55,000. I calculated a capital gain as follows: Sale Price = 55,000 Selling Exp -7,400 Lawyer fee Adj basis -7,500 Capital Gain $40,100 Not sure why the "Employee's accountant" attached the supplementaL 4797 Part I to the Final K-1? It appears she assumed the sale price was equal to the book value and resulted in no gain or loss on the Sch 4797. Does this affect my client's tax return? I reported the capital gain on form 6252 installment sale.

I welcome any feedback. Thanks...Bob

Taxman75 22:00, 10 June 2011 (UTC)

Hi Kathi,

Just to clarify, the new owner set up a sole proprietorship business using a DBA/Fictitious Name to continue the original/active business operations. Additionally, they left the Sub S Corp inactive other than the depreciation of the original equipment items. Thats why the Corp Rteurn shows no income and the only expense was depreciation. I assume the original equipment items from the Sub S will continue to be depreciated by the new owner as the Corporation is in-active but not dissolved. Not sure why they prepared a 4797 showing no gain on sale of equipment. There was no allocation of total sale price to specific assets (equipment), and also, the equipment was not sold...the stock was sold. Wouldn't the new owner continue depreciating the equipment on the 1120S? Why the 4797? Again..thanks for feedback....Bob

Hi KathiJud;

I wonder if you could address a couple of remaining questions in regards to the Stock Sale Disscussion I started the other day. Appreciate the help.

Open questions??? Should I insist on getting a copy of the 1120S Return for CY 2010 or is it sufficient to have only the Final K-1 and Sch 4797. Remember, the new owner has refused to provide me with a copy of the full return even though my client was 100% owner as well as President Sec Treasure for half the year at which time the Corp stock was sold to the former employee.

Are legal fees paid to draft the "Stock Purchase Agreement" considered a "selling expense" which would offset/reduce the Capital Gain?

Does the basis of any 'loans from officer' enter into Capital Gain Calculation or only the adjusted basis of the stock? What are the tax consequences of any remaining loan basis after a 100% shareholder sells the stock?

Thanks again.

Hi KathiJud;

I wonder if you could address a couple of remaining questions in regards to the Stock Sale Disscussion I started the other day. Appreciate the help.

Open questions??? Should I insist on getting a copy of the 1120S Return for CY 2010 or is it sufficient to have only the Final K-1 and Sch 4797. Remember, the new owner has refused to provide me with a copy of the full return even though my client was 100% owner as well as President Sec Treasure for half the year at which time the Corp stock was sold to the former employee.

Are legal fees paid to draft the "Stock Purchase Agreement" considered a "selling expense" which would offset/reduce the Capital Gain?

Does the basis of any 'loans from officer' enter into Capital Gain Calculation or only the adjusted basis of the stock? What are the tax consequences of any remaining loan basis after a 100% shareholder sells the stock?

Thanks again. ````

Best wishes


Keep fighting. I realize some days it is really hard when battling illness, but persevere knowing that many of us are praying for you.


Per Diem Independent Contractor

Hi Kathi, I am an EA in Oregon. My client is an independent cpontractor & she is assigned to various cities, usually 4 months at a time. She is paid a per diem for meals that matches the fed rate for that area. The per diem was included in her Form 1099 misc Box 7. When I prepared her Schedule C, I put them under the Meals subject to 50%. A co-worker of hers(also contractor) has his tax return prepared by an ex-IRS guy who is now an EA. This guy says that rather than subject to 50%, they should be a misc exp "erroneous per diem reported on Form 1099 misc" and therefore 100% deductible.

He says that when working for IRS, he was paid a per diem for meals and it was excluded from his wages. Funny how when something applies to you, pick up on it! Anyhow he has amended this guy's returns and had no problem quoting IRC 62(a)(2)(A)- basically syas that in arriving at AGI, substanciated bus expenses are allowed. I want to believe this guy, but it makes me nervouse since I can find no specifics on this.

Let me know what you think! Thanks, Ann B

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