Harlan Lunsford <hlunsfordns[at]bellsouth.net> wrote:
- quote -

The limited exception carved out for the disabled relates to
income received for services performed at a sheltered
workshop. Here is what Pub 501 says:

Disabled dependents. For this gross income test, gross
income does not include income received by a permanently and
totally disabled individual for services performed at a
sheltered workshop. The availability of medical care must be
the main reason the individual is at the workshop. Also, the
income must come solely from activities at the workshop that
are incident to this medical care. A sheltered workshop is a
school operated by certain tax-exempt organizations, or by a
state, a U.S. possession, a political subdivision of a state
or possession, the United States, or the District of
Columbia, that provides special instruction or training
designed to alleviate the disability of the individual.

Alan
http://taxtopics.net

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John H. Fisher wrote:

- quote -

Ahah! Now we're getting somewhere. You say the 1099's do
not come from the school? Where? private industry?
charitable foundation(s)?

AS devil's advocate now, what IF 1. a major corporation were
wanting to donate to the university, but couldn't get a
writeoff beccause of 10% charitable contribution limit,
therefore disguised their real contribution this way?
(Just like a major industry in my home town used to give the
church funds with which to in turn give to their designated
and destitute employee)

If one payor is a corporation and the other a charitable
organization, what is relationship of those two? or three?

BTW, just noticed you said "but IRS does not agree." Does this
mean it's an audit case or CPC 2000 notice situation as of now?

"gets curiouser and curiouser....."

C$,
HL

the 10%

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John H. Fisher wrote:
- quote -

Speaking of the support test and handicapped children.

there is SOMETHING in the tax law, SOMWWHERE about this.

Provided the parents meet the support test, they can still
claim the handicapped student regardless of age even though
child's income is over the threshold.

One of my clients (joint return) still claims their
handicapped 39 year old daughter who works minimally at
Goodwill.

Can't give you a cite right now though, but if you can't
find it, just whistle. (You DO know how to whistle , don't
you?)

Cheer$,
Harlan Lunsford, EA in LA

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Harlan Lunsford <hlunsfordns[at]bellsouth.net> writes:
- quote -

20 now is better than 120 later!!!=

- quote -

I'm led there, also, Harlan!!! My main problem is
determining the source of the non-employee compensation and
what it actually represents. There is more than one
payor.and neither is the university. The likelihood is that
you, and others, are correct!! Thank you!!=

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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"Arthur L. Rubin" <ronnirubin[at]sprintmail.com> writes:
- quote -

Therein lies the rub!!!= I'm sure we can overcome the
support test (at least for the prior years in question).
I'm not so sure about itemization. I've been toying with it
in many ways. I haven't been able to figure what the 1099
income represents. It comes from different sources and is
not part of the scholarship/fellowship, as far as I can
determine.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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kamlet[at]panix.com (Arthur Kamlet) writes:
- quote -

Hopefully not, Art!!= I'm grabbing for everything I can
in order to escape hardship for the parents. At this point,
if I can knock out enough of the child's income, the parents
will not have to amend their own returns for 2001.

Some might consider these handicaps a blessing. Frankly,
they leave me aghast!!!

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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John H. Fisher wrote:

- quote -

John, seems to me that client is either IN a trade or
business, or NOT in a trade or business. If the latter,
then the 1099-misc which has the amount(s) in box 7 I
presume has to be explained away in order to avoid the
wholesale application of se tax.

If he is in trade or business, then the burden of proof on
him to prove same, the reasonable expectation of making a
profit and open to work for anybody, not just a "captive"
employer. (sort of sounds like the twenty questions,
doesn't it?)

But I would be surprised if he actually had a contract with
the school to do research. After all, you did say "full
time student"?

So, income on line 21, no se tax, and any impairment related
expenses to schedule A if applicable.

Cheer$,
Harlan

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John H. Fisher wrote:

- quote -

I hesitate to jump in, but I don't think that taxable
scholarships are normally subject to SE tax, so Schedule C
might not work. However, it's possible that the scholarship
would make him fail the support test, making him ineligible
to be a dependent, and therefore getting his own standard
deduction and exemption.

The support devices seem to qualify EITHER as medical
expenses and as expenses for the production of income (the
scholarship), so he might be able to itemize.

After all, if the scholarship is taxable, related
expenses should be deductible.

--
This account is subject to a persistent MS Blaster and SWEN attack.
I think I've got the problem resolved, but, if you E-mail me
and it bounces, a second try might work.
However, please reply in newsgroup.

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"John H. Fisher" <taxservice[at]aol.compliance> wrote

- quote -

Clearly some prorating of expenses are in order, and some
portion would be allocated to the activity of generating
income. The other would be personal and/or medical
expenses.

What does he pay along that line?

--
Paul A. Thomas, CPA
taxman at negia.net

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John H. Fisher <taxservice[at]aol.compliance> wrote:

- quote -

Can't help to call this "work related disability edquipment
expenses" if they insist on calling the 1099 nonemployee
business expense. For employees, work related disability
equipment expense is a Schedule A Line 27 (Misc deduction
not subject to the 2% floor) deduciton. Would the IRS dare
deny such a deduction for a self-employed person?

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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I now have a client who is blind and quadriplegic. He is a
full time student, under age 24. His mother is HOH and is
also blind. She also has a second child who is blind. The
quadriplegic has scholarships/fellowships and receives
1099's as "other income"/non-employee compensation. His
parents thought the income was all tax free. IRS does not
agree. The student needs 24 hour care, hires drivers
(specially equipped vehicle) and readers to help in his
studies. We are not aware of any services performed for the
1099 income but will have to report it and file a return.
Are there any suggestinns to offset this income. I've
thought of filing a Schedule C showing income as a
scientific researcher (which he is) and deducting drivers,
vehicles, readers, and the support system which allows him
to perform whatever is considered his service. The child is
somewhat of a genius and, in the current year, is operating
under an NSF fellowship which we have not yet determined to
be taxable.

Any suggestions???

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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