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There are only 15 days left until your 2010 tax return is due (you have until April 18, 2011 to file). We have opened up the phone lines on today’s show so that you can talk to our tax experts about your 2011 Tax Questions.

Please contact our today’s show tax experts from the Georgia Association of Enrolled Agents at the following emails to ask other questions. Please remember that this is tax season, so they may take 24-48 hours to get back to you.

Bill Nemeth, EA

Merry Brodie

Chet Burgess

Today’s Tax Topics

Bill Nemeth said that the best question he got this week was from someone who received a K1 from an energy limited partnership. There have been lots of questions about straddles which is the buying and selling of options.

Chet Burgess said he also has been receiving stock option questions. He said that people get confused about stock options and call options. You sell (receive money) to open the option and then buy to close the option (or the option expires). “The cases that really baffle me are brokers that include publicly-traded limited partnerships in their short-term computer trading of stocks, so that clients end up with a dozen or more K-1’s reporting just a few dollars in several boxes for partnership interests that were held a few weeks at most.”

Merry Brodie said that she’s seeing more of her clients reporting more dividends and less interest and capital gain distributions. They are using up their capital losses and she believe it is a sign that the economy is starting to turn around and her clients, who are mostly small business owners, are doing better.

2011 Tax Questions From Our WSB listeners

Here are some of the questions, topics and issues that came up on today’s show. We’ll post the whole show as soon as we get it from WSB.

Darlene – Can you take the American Opportunity credit for all 4 years of undergraduate tuition?

Rob – Person he worked for in 2002 for two months told the IRS he earned $67,000 when in fact he was paid $500 per week. How should he handle this?

Ralph – He worked for a company for 3 years and for three years was told that the employer was taking out social security taxes. Guess what? He didn’t. Is Ralph at risk? And, what happens to his social security contributions? How does he fix this?

Ellen – Her nephew won a poker tournament in 2011 and pocketed $25,000. The Casino will send him a 1099 for that amount. But he had an under-the-table deal with the #2 guy and paid him $6,000. How does he deal with this tax-wise? How does he become a professional poker player and write off some of the expenses?

Marta – She is dealing with the AMT this year because it’s the first year she received a deferred comp payment. Is there some way to account for it? And, isn’t the AMT just double tax jeopardy? (Sure is, says Chet.)

Mike – He received a 1099 A because of the bank foreclosing on investment property. How does he deal with it? Chet has some excellent advice on dealing with the listed Fair Market Value on the 1099A. CHET: “Don’t take 1099A fair market value as gospel. If you can track down what lender sold property for, you might have a bigger loss now to use against a gain going forward. It is an aggressive position…If you can’t track down what the lender sells the property for, or they haven’t sold it yet, you can file an extension until October and see if it sells by then, or file an amended return.” (Ilyce: get professional help on this.)

Bill – Borrowed money from his 401k to pay the operating expenses for a side business. But he became disabled and couldn’t repay the loan. He got a 1099R. Can he avoid paying penalties?

Jason – Another employer “scam and jam” situation: An employer said he was taking taxes out of his check, but didn’t. The IRS is already chasing the former employer. Can the IRS come back against Jason?

SCOTT – My wife bought an Apple computer to do an online graphic design class. Can I write it off? (BILL AND CHET SAY: If it is an online class, you are required to buy a computer for it. You’ll get a better deduction from the American Opportunity Credit – formerly the Hope Credit. Add the cost of the computer to the cost of the tuition.)

Comment About Today’s Foreclosure and Short Sale Segment with Guest Mark Teytel,

Every week, Mark Teytel joins us to discuss what he is seeing in his office with the foreclosures and short sales he is facilitating. This week, he discussed how one of his short sale clients received a $20,000 “relocation assistance” check from the investor, which Mark believes is a hedge fund.

In other words, Mark believes that lenders (and investors, not the mortgage servicers) are finally beginning to understand that they’ll do better by helping facilitate short sales rather than letting the property go into foreclosure.

One of our listeners was offended by the idea that someone who is doing a short sale might get a relocation assistance check. I’ve edited the comment for clarity.

COMMENT: “Let’s see, the mortgage crisis was created by giving loans to people who cant afford them… to be saved by a program that gives $20,000 to people who have managed their money and mortgages poorly enough to be forced into a short sale. When asked where the money comes from the answer is… wait for it…. I don’t know, I think a hedge fund. Followed up by theme music that proudly proclaims that “I want money…lots and lots of money”. Notice it didn’t say I want to earn money…no just that I WANT money. Let keep using these wonderful government programs to perpetuate the problem further. It’s like throwing gasoline on the fire. Very responsible radio. I would love to hear the justification for the comment how how this is such a great program.

Thanks for listening. Couple of items:

  1. We don’t change the theme music of the show just because of what we talk about. The theme music has been the theme music for nearly 10 years.

  2. What Mark Teytel was saying is that the banks or investors (not the government) are giving relocation assistance on an individual basis. He said the government’s program didn’t work – and it didn’t. Very little of that money was actually given out in relocation assistance to short sale buyers. This is private money – investors who believe they will be getting more out when they sell the property down the road. It’s completely about capitalism. Not government assistance.

  3. There are more than 20 million people who are out of a job because of how deep this recession has been. I can’t tell you how many thousands of folks I’ve heard from who bought homes with 20 percent down that they could easily afford when they were employed, only to have their companies go under and wind up without a paycheck.

It’s hard for me to understand the lack of compassion out there for people who were responsible their whole lives only to lose good jobs that they had held for decades and be wiped out financially.

Even on today’s show, we heard from several people who were victims of companies who claimed to be taking out the taxes (on a W2) but instead were spending money either on themselves or keeping their businesses afloat. The employees are worried the IRS is coming after them (they’re not).

For more information, contact Mark Teytel directly at

If you would like to add to the discussion, please leave a comment below.

Watch for information this week announcing our 2011 SMALL BIZ BOOT CAMP event on September 16, 2011. If you’re a small business owner (or want to be), you won’t want to miss it!