California Chapter


Chapter President

Richard Moring III, EA
RM3 Tax Services
PO Box 22412
Bakersfield, CA 93390-0412

Phone: 661.327.4814

Board of Directors NominationsNo
Picture Placeholder: Romulo L Luber
  • Romulo L Luber
03/18/2015 2:53 PM

​Have anyone as Tax Preparer faced the following scenario:

1) 2012 tax clients transmitted to the IRS claimed a refund of $6K. The return was audited in 2014 and resulted that the taxpayer owes $4K.

2) 2013 tax clients transmitted to the IRS. Taxpayer owed $1300.00.

The return was audited in 2014 and resulted in a $3567.00 tax liability.

On those two scenarios, the result of IRS adjustment revealed no penalties  assesed such as inaccuracy, misstatements, etc. however taxpayer was assesed with interest.

On those scenarios, what are the Tax Preparer's liabilities in terms of monetary to the taxpayer? 

Any feedback from the group is greatly appreciated.


3/18/2015 2:53 PMNo
Picture Placeholder: Gary Plumtree, CPA EA
  • Gary Plumtree, CPA EA
03/3/2015 2:57 PM

​In 2013 California taxpayer got 1 year contract to work 1 year in TN.  Worked 4 months in 2014 in TN and completed the remaining 8 months in TN at the start of 2014 and returned to CA and was not employed until early 2015.  Anyway around the 1.5 year requirement so that nothing is taxed in CA?


3/3/2015 2:57 PMNo
Picture Placeholder: Letty A Marquez, CRTP RTRP
  • Letty A Marquez, CRTP RTRP
02/23/2015 1:36 PM

How to propertly allocated income in a Federal return?

IRS is of not much help, Publication 555 said to split income and expenses evenly (unless otherwise told). A tax software company said it should be

full amount of person A plus half amount of person B

Full amount of person B plus half amount of person A

which doing this will only cause them to have more income.

In previous years I was able to do an adjustment in line 21 for both but now tax software company said I shouldn't.

any help will be appreciated.


thank you,


2/23/2015 1:36 PMNo
Picture Placeholder: Grace Fortaleza, EA
  • Grace Fortaleza, EA
15/2/2014 1:19 AM

​TP was a resident of Calfiornia from 2006 up to Oct. 1, 2013 when she moved to Texas. TP has a rental property in Texas since 2006 and was including rental income while a resident of Calfiornia. TP accumulated $37000. of passive losses from this rental property.

TP now sold the rental in Decembr 2013. Can she use the accumulated losses? Is the gain from the rental property taxable in california now that she is a nonresident?

Jen Horton, EA6/24/2014 1:15 PMNo
Picture Placeholder: Marion Loiola,  CPA EA
  • Marion Loiola, CPA EA
13/17/2014 7:02 PM
I have a Corporation that was suspended in CA. Taxpayer moved Corp to NY in 2009 from CA. Tax preparer did not file in CA and corp was suspended. I am in the process of trying to get him re-instated as he wants to move back to CA and do business there again.
I have spoken to the FTB, filed 3557 and I am trying to settle.
My question is, does anyone know of anyway to get the fees and penalties reduced as it will cost txp a lot of money?
Everytime I call, I am told to call back by recording as they are busy.

Jen Horton, EA4/23/2014 8:18 PMNo
Picture Placeholder: Genaro Salvatore Cardaropoli, CPA
  • Genaro Salvatore Cardaropoli, CPA
03/13/2014 10:28 AM

When a short-sale occurs, and a 1099-C is received, is it taxable?

This is a question we sometimes receive. Whether the 1099-C is taxable (or even correct), is a matter of fact and law. California tends to treat mortgages secured by "dwellings", as defined in CA law as nonrecourse debt.

Late 2013, the IRS sent a letter to CA indicating how they will treat cancelled debt resulting from short-sales in CA. Because of anti-deficiency statutes, the debt is nonrecourse meaning the sales price is equal to the debt outstanding, which §121 can apply rendering the occurrence non-taxable. You can see the letter below.

This leaves a few questions, is "bad money" taxable? Is second mortgage debt or refinanced debt taxable?

This depends on CA law on whether it meets the civil procedures to be nonrecourse which is based on real estate law.

This letter is not a formal ruling, however, it does give you indication on how the IRS will treat the sale of the home and the resulting canceled debt. When receiving Form 1099-C for a principal residence, further inquiries may be needed. Sometimes the lender changes and information is missed on the bank's side, which can impact the accuracy of the information on Form 1099-C.

UPDATE 6/9/14:

There has been an updated letter from the IRS clarifying and narrowing the scope of how the civil procedures in CA works. The IRS, while not reversing their position, has distinguished between loans that meet the anti-deficiency statutes and those that do not.

They separate it into two categories, those that are nonrecourse from inception of the loan and those that are nonrecourse due to non-judicial proceedings. They stand by their interpretation that if the loan is nonrecourse from inception to purchase a residence, there is no cancelled debt.

However, they clarify that not all loans meet this criteria. Professional judgment is required in determining if your taxpayer has cancelled debt income.

IRS letter to Senator Boxer

Senator Boxer's letter to the IRS


3/13/2014 10:28 AMNo
Picture Placeholder: Roger F Lickteig, CFP EA
  • Roger F Lickteig, CFP EA
11/6/2014 3:51 PM

I an NATP member in Arizona with a client the move to Arizona from California.

Part of his income on a K1 is from a rental building in New York city for which he filed a NY income tax form and paid the NY tax.

California is now asking that he pay tax in California.

Should I exclude it from CA income?

Roger Lickteig EA​

Richard Moring III, EA1/7/2014 3:07 PMNo
Picture: Megan Sonicksen
  • Megan Sonicksen
012/6/2013 10:18 AM

​With tax season fast approaching, remember your Chapter discussion board can be a great resource for state and local tax issues as well as utilizing the state tax volunteers.

Megan Sonicksen, NATP Tax Communications

12/6/2013 10:18 AMNo
Picture Placeholder: Megan Sonicksen
  • Megan Sonicksen
09/27/2013 11:24 AM

​Please use this discussion board for discussions specifically relating to the California Chapter, state or local tax discussions.

For general discussion items relating to business management, federal tax or education, please use the discussion board located under Member Center>Community.

9/27/2013 11:24 AMNo

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