Seth Breidbart wrote:

- quote -

I believe the matter would turn on the totality of the
"facts and circumstances." Although passage of time might be
an important factor, I doubt it would be controlling without
other objective evidence that the business had been
terminated or abandoned. After all, the one year of
inactivity could have simply resulted from no work coming in
the door.

MTW

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Seth Breidbart wrote:

- quote -

Agree.

HL

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[Consulting business]

- quote -

For how long? For instance: someone is a consultant in
2004-2005, then gets a full-time job. He works only at that
job (no more consulting) for several years, and stating in
2008 does consulting again. Is that consulting considered
the same business, and therefore the election sticks?

I would contend that a full calendar year without any
consulting means that the existing consulting business has
ended. (I'm not claiming that such a break is a
requirement, merely that it suffices.)

Seth

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Thomas Healy wrote:
- quote -

Always good advice, thelast paragraph of course.

However, once chosen, won't the accrual method stick?

ChEAr$,
Harlan Lunsford, EA n LA
Thu 10 Feb 2005

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On what dates did you receive the checks? You are most
likely a cash-method taxpayer, which means that you don't
have income until you either actually or constructively
receive payment - generally not until the check is sent to
you. If you received payment for the work in 2004, then
it's 2004 income; if you received payment for the work in
2005, then it's 2005 income.

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"davidspierce99[at]yahoo.com" <davidspierce99[at]yahoo.com> wrote:

- quote -

You report what you received, not what the 1099 shows.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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davidspierce99[at]yahoo.com wrote:

- quote -

Assuming the 1099 reflects the total actually PAID you
during the tax year 2004, nothing you can do. In short,
we are taxed on income actually received during the year,
and not on the basis of work done.

ChEAr$,
Harlan Lunsford, EA n LA


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"davidspierce99[at]yahoo.com" <davidspierce99[at]yahoo.com> wrote:

- quote -

Since it appears that this is your first year in business as
a consultant, you actually can choose to operate on the
accrual method of accounting (most people prefer the cash
method, because it defers income to the next year). In your
case, it might be preferable to take the income in 2004
instead of 2005 because of your unique circumstance. The IRS
doesn't care if you report more income (or less) than is
shown on 1099's, as long as you can support the differences;
choosing accrual accounting would be one of those
differences.

You need to consider, though, that the consulting income
will be subject to self-employment tax, and that could
increase your 2004 total tax liability. Though it would
reduce your 2005 liability accordingly.

I'd recommend talking with a local tax pro to sort out the
choices you have.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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<davidspierce99[at]yahoo.com> wrote:

- quote -

Nope. You can be happy that you'll pay less self-employment
tax, which isn't affected by itemized deductions, than you
thought you'd pay.

--
Phil Marti
Clarksburg, MD

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Due to personal circumsatnces I did not work for the first 9
months of 2004. I managed to pick up some consulting work
for the final 11 weeks of 2004 - and naively thought the
income that I would receive for these 11 weeks of service
would largely be "tax free", as I could offset against my
crazy Californian mortgage interest payments, property taxes
etc.

Lo and behold, when I received the 1099-MISC, I notice that
only the first 5 weeks of my earnings were recorded, as
opposed to the 11 that I had expected. After a little bit of
investigation, I now understand that the company issuing the
1099-MISC uses the dates the checks are cut, as opposed to
the dates that I delivered my services, in order to
determine which tax year a payment falls into.

Bottom line is that with only 5 weeks of earnings in 2004,
I'm left with a sizeable tax deduction that I'm unable to
claim, and an opportunity that will be lost as I hope to
work a full year in 2005.

I realize now that I should have been more aware, but is
there anything I can do at this stage?

Thanks.

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