California Chapter

 Chapter President

Jenny Shilling
983 Reserve Dr.
Roseville, CA 95678

Chapter Announcements

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Picture Placeholder: Michael Graves, MBA,CRTP
  • Michael Graves, MBA,CRTP
08/28/2019 3:47 PM
Needing to amend 2016 - 2018 for this credit on an S-Corp for a client where I did not complete the original return and the 3805Z was not submitted for the shareholders on the individual returns.  The K1's from the Corp did not reflect the credit that was useable on the CA K1's.  So this needs to be added on the amended entity return.

The flow through calculation is not clear to me when reading the 3805Z documentation from CAFTB.  Is anyone familiar with how to calculate the amount that passes through from the entity level to the shareholders given there was a carryforward amount?  If only the $800 tax is owed I understand this credit cannot be claimed.  However, if tax is owed over this amount, then the credit can be claimed.  

For example, if there is a 10,000 credit available from for the EZ credit and the entity owes 3,000, is the 3,000 divided out to the shareholders pro-rata on the K1 and would then go on the K1(100S) on line 13d?  

8/28/2019 3:47 PMNo
Picture Placeholder: Kristy Ferara
  • Kristy Ferara
46/20/2018 3:54 PM

Dear CA NATP members:

I have a client who is looking for health insurance that she can pay via her and her husband's business which is currently a partnership and on it's way to being an S-Corp. She wants to be able to benefit from the health insurance policy so that she and her husband's salaries also have health insurance in their W-2 wages, but not the related SE. Do you have an insurance broker / contact person that I could refer her to?

Thanks, Kristy at 770-271-1519​ or please respond to this thread.

Chuna Mc Duffie, RTRP4/30/2019 10:14 PMNo
Picture Placeholder: Jeannie Sonnier, EA,ATA
  • Jeannie Sonnier, EA,ATA
37/10/2018 12:48 PM

My client received a notice that he owed CA tax for work he did in 2015 for a company located in CA.  Taxpayer lives in Texas, did all work in Texas and emailed results to CA company.  There was no CA nexus.  State Franchise board says law changed in 2013 and if CA company receives the benefit of the service it is considered CA source income and CA tax is owed.  I'm looking for verification if this is true.  Many Thanks!​

Jeannie Sonnier, EA

Georgetown Tax & Bookkeeping LLC



Farid Kanji, EA7/15/2018 12:43 AMNo
Picture Placeholder: Stephen S E Savell, EA
  • Stephen S E Savell, EA
37/6/2016 2:37 PM

So I just rejoined NATP after being gone for a few years. The one reason I left was because the CA chapter seemed like it never had monthly meetings. Has this changed? Is there a monthly newsletter? Do we do regional meetings?

Any information would be great.

Steve Savell

Sacramento CA

Jen Horton, EA9/10/2017 3:45 PMNo
Picture Placeholder: Robin Johnson, EA,CRTP
  • Robin Johnson, EA,CRTP
76/24/2015 10:37 AM

​Hey all - I'm getting a little desperate. I have been struggling for three years to complete  my EA training successfully via FFA and Audo methods, etc..

After my husband died, I had to jump in and take over his practice so it's just me. I have been working as an accoiuntant/tax preparer for 17 years now. But I really need/want the ability to properly represent my clients if and when, in front of the IRS. This credability designation is vitally important to me.

Bottom line, I think I need a classroom setting, I can't seem to find one and I really want to get this done this year if possible.  

So my question is, Does anyone know anyplace that will offer this in/around the CA area. I'm in Long Beach.  If so, please contact me. 

Thank you for your assistance.

Jen Horton, EA9/10/2017 3:38 PMNo
Picture Placeholder: Jeanette Mueller, CRTP
  • Jeanette Mueller, CRTP
212/18/2016 10:39 PM

​Does anyone have recommendations for cyber insurance and a program to erase client information from a computer & laptop when no longer using them?​

How do you feel about using the cloud? Is it safe/secure for such confidential matters?  Im leary about it.  

I have protection for my pc and laptop - firewall, anit virus, etc. but still not sure if that is enough with the way todays hackers are.

Thank you

Jen Horton, EA9/10/2017 3:33 PMNo
Picture Placeholder: Thomas Christopher Basom, CRTP
  • Thomas Christopher Basom, CRTP
15/22/2017 12:28 PM

​Anybody have any ranking for best to worst banks to link to QBO? Or any specific bank input ala "SDSESRR Bank is great!" or "kjljjjr Bank sucks!"

Trying to create a list of two or three to reccommend when a new client comes on board - any help is appreciated! Thanks

Jen Horton, EA9/10/2017 3:27 PMNo
Picture Placeholder: Thomas Christopher Basom, CRTP
  • Thomas Christopher Basom, CRTP
25/22/2017 12:31 PM

​Looking for an NATP tax pro who in Orange County (south orange county even better) who wants to join my office and take-over about 40+ small biz returns, some writ-up, etc.

Contact - Thanks

Jen Horton, EA9/10/2017 3:25 PMNo
Picture Placeholder: James M Kronenberg, MBA,CPA,EA
  • James M Kronenberg, MBA,CPA,EA
210/10/2016 8:12 PM

​Looks like "Mass Mailing" FTB notices dated 09/13/16 (regarding 2015 CA540 Individual Income Tax Returns already E-filed)  were sent  by FTB.

FTB requesting  copies of Social Security Cards, last paystub for each employer, copies of IRS form W-2 or 1099 with CA tax withholdings

Need some professional insights & feedback - I thought I had read over this summer in some Tax Practitioner posting on Internet that CA FTB had accidentally erased thousands of 2015 payroll tax documents issued by employers.

If so, rather than resolving this "gap" of payroll information for CA individual income tax filings needed for matching by FTB, they have "willy nilly" and "pontificated" that certain individuals with CA 2015 payroll related tax info to report must "work for the FTB" and provide documenation that borders on the "Absurd".

What in the world is accomplished by demanidng indiviudals provide their last paystub for all employers in 2015 ?

What is their legal standing to request copies of SOCIAL SECURITY CARDS in a time of "RAMPANT" Identity Theft ?  This appears on the surface to be TOTALLY ILLEGAL demand by FTBN since Social Security Cards are not allowed to be FORCIBILY used as means of IDENTIFICATION unless an indivudal has been hired as an employee by a business entity.

Then to have these copies "float around" the desks of the FTB Filing Compliance Burea MF S151 unit borders on INSANITY.  Have FTB top level officials gone "bong - kers" at work or have the mentally ill released over recent years finally infiltrated the FTB upper levels of management ?

Why doesn't FTB deal directly with Payroll Services to "resubmit" those payroll records that were "accidentally erased" ?  Is there a possibility of a conspiracy that top level managers at FTB are supporters of Donald Trump campaign for US President so this would generate more "anger" against government intrusion and drive undecideds to vote for Trump ?

I've been a professional Tax Practitioner (mostly in Chicago & Springfield IL) since 1979 and have relocated to CA in 2012 to continue professional tax work and start a new life after divorce. This effort by FTB to fix their own problem to force individuals to match 2015 payroll tax idocuments to amounts reported on their 2015 tax returns borders on  "GOVERNMENT GONE WILD" that makes the IRS "party time" controversary look very "tame" and "benign" in comparision to this.

What can be done if anything. All I have done is to respond with copies of relevant W-2 fprms and Pg. 3 of 2015 CA540 to irrefutably ​demonstrate that CA withholding got reported properly for 2015.  Is there any FTB official that can be repremanded for this dispicable "gangster" type arm twisting by holding CA 2015 tax refunds hostage in exchange for "working" for FTB with time wasted on matters involving onlyt FTB and payroll service providers ? 

Ahnal Marynika de Gamarra, CRTP12/4/2016 2:06 PMNo
Picture Placeholder: William Houle, EA,CRTP
  • William Houle, EA,CRTP
110/3/2016 1:23 PM

​I would like to reprint the book/written material for my personal use from friday's class. Where can I go to do that? It was the CA chapter class held in Long Beach

Jim Vann, CRTP,AFSP10/11/2016 3:00 PMNo
Picture Placeholder: Eve Ramos, CRTP
  • Eve Ramos, CRTP
14/27/2015 3:42 PM

​my client by mistake gave me a w-2 form thinking it was his deceased wife  . I filed the joint  return with the social security written on the W-2

His daugther came to my office 2 months later to file her taxes. she has the the same name as her deceased mother .Her return was rejected due to a deceased social security

 iF  i do a 1040 X  on the joint return will the IRS inform Social Security of the error

Jen Horton, EA6/10/2016 3:26 PMNo
Picture Placeholder: Letty A Marquez, CRTP
  • Letty A Marquez, CRTP
12/23/2015 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,


Jen Horton, EA6/10/2016 3:24 PMNo
Picture Placeholder: Jeanette Mueller, CRTP
  • Jeanette Mueller, CRTP
410/9/2015 4:24 PM

​A california resident had land purchased by state - they received a

1099S for the sale and were told they have to use the $$ for land beautification and have two years to spend it.

How would you handle this individual return and questions.

JNM Services

James M Kronenberg, MBA,CPA,EA11/8/2015 6:13 PMNo
Picture Placeholder: Roger F Lickteig, EA,CFP(R)
  • Roger F Lickteig, EA,CFP(R)
21/6/2014 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​

Russell Newby, EA9/9/2015 4:27 PMNo
Picture Placeholder: Marion Loiola, CPA,EA
  • Marion Loiola, CPA,EA
33/17/2014 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.

Rebecca Neilson, CRTP8/9/2015 2:02 AMNo
Picture Placeholder: Gary Plumtree, CPA,EA
  • Gary Plumtree, CPA,EA
13/3/2015 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?


Don J Gundry, EA4/28/2015 1:37 PMNo
Picture Placeholder: Romulo L Luber, CRTP,CFE,CRMA
  • Romulo L Luber, CRTP,CFE,CRMA
23/18/2015 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.


Don J Gundry, EA4/24/2015 11:46 AMNo
Picture Placeholder: Grace Fortaleza, EA
  • Grace Fortaleza, EA
25/2/2014 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?

Warren Trester, EA4/7/2015 9:08 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: Megan Sonicksen, PFS
  • Megan Sonicksen, PFS
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
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