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The light at the end of the tunnel, IMHO, is when the IRS stops making our offices the stopping point for welfare checks. Nobody should ever get more refund than they pre-paid in taxes without going to a government agency and qualifying for free money. It infuriates me, can you tell? But, I smile and do the Dorito Dance with every big (honest) refund because that's my job. I have a few substantial LLC single owners who routinely use their business account for personal use. I am now insisting they hire a bookkeeper or I am no longer doing their tax returns. Fortunately, I have enough clientele to make these demands. The risk to us tax pros is too great these days, to play around with Sch C's and refundable credits. No refundable credits on this particular return, but I recently had a Single Owner LLC tell me that she did her own taxes this year. She just used MY work from last year, took my numbers out and plugged hers in. I have been doing her taxes for at least 15 years. My only response was, "Good luck with that. I hope it doesn't blow back on you." I felt like I was robbed at gunpoint. Oh, and the best part? I was dropping off the Easter Cantata booklet and CD so she would sing in the choir with us. Praise The Lord! ermagerd

Some time ago I prepared taxes for a hairdresser who owned her own shop, and had another hairdresser pay her "chair rent". She didn't really have much in records to support either revenue or expense but we did the best we could with a bank account. I have 6-7 other cosmetologists with varying income so I have somewhat of a grasp, but certainly not as much grasp as would have been the case with adequate records. Most hairdressers are better cosmetologists than they are record-keepers. She ended up owing some money. She then proceeded to order me to remove revenue until her tax liability was reduced to zero. Nope. Not this guy. Bye Bye hairdresser who owns your own shop and turns in only $150 a week. She did have a child. A friend of hers told me earlier tonight that she found another tax preparer, and that she ended up with a $4000 refund. She and all her friends think her new tax preparer is a genius - and I am not very good at all. Grrrr! I have found out that the IRS is much more interested in penalizing preparers than they are going after the taxpayers themselves when cheating is determined. A couple years ago, a colleague of mine called his congressman whom he personally knew. In a day or two the congressman wrote him the intent of the earned income credit was to redistribute income and that tracking down cheaters was counter to their purpose. The interception of violations is basically now upon tax preparers. From the mass numbers I've been made aware, a good 25-50% of EIC recipients are not due, similar to my experience above. Aggressive claiming of social security numbers not entitled, social security numbers for sale on the black market, phony relatives, etc. In my county, the existence of 2-3 audits per year would scare off most of the cheaters. It is amazing how much they know about earned income credit. Yet the 8867 places all the burden on the preparer where in almost all instances, the preparer has no vehicle to be aware of violations. You've heard all this whining before, of course. Most of you have experienced it first-hand. But where is the light at the end of the tunnel?

/s BUT JUDY: The IRS gives us so much and asks so little. Besides along with "other sites" they are always with us, that is why you and Eric protect us and are always watching .... Be well and enjoy before the snow flies!

I'm right there with you on this! We're supposed to work for our clients, not act as gatekeepers for the IRS.

My solution several years ago was to stop preparing returns claiming EIC. I know that isn't practical for everyone in this business or even everyone on this forum (and there's always that issue of the adult child of a regular/profitable client), but I simply started telling people who have large EIC that they needed to have a preparer with deeper pockets than I have. I usually just gave them the address of a local HRB office and tell them they will probably pay a lot more than I would have charged, but "that's life". In recent years I haven't received that many inquiries, but when someone would approach me, that's one of the first questions I'd ask. Along with whether they own any rental property, whether they use the Obamacare exchange, and whether they regularly have lots of stock/mutual fund transactions - all of which are usually deal killers.

Yes, the sale of investment property is reported on Schedule D. If there is some considerable improvement within the last 12 months, that portion would be short-term, but generally speaking, most or all of the transaction is probably going to be long-term. I have some old case law that I could dig out on the issue of short-term reporting if that is needed. The expenditures for the rehab of the home are part of basis, and depending on the type of any other charges incurred that were associated with the property and how they were handled or ignored, some of those carrying charges might also be included in basis if an election was made to do so. You can read more about that here: https://www.law.cornell.edu/cfr/text/26/1.266-1

The headline says "preparer" but I only see taxpayer penalties. If my client forgets about a 1099 vendor and only tells me in June, how can I be subject to penalty?

I see plenty of reasons to back off from this one. Choice of entity is not generally a "back-off" flag for me - as long as the reason to have me involved in the decision is tax and accounting repercussions, not legal. As soon as the discussion approaches legal, I tell folks "I'm not a lawyer and don't even play one on television" which generally makes them laugh but reinforces that I don't provide any legal advice - except to talk to a lawyer for legal advice! In this instance, though, it seems that the legal aspects are substantial (conglomerates all by themselves are a big flag; THEY will have big-ticket lawyers watching their interests, the builder should have equal protection).

You might want to back off for another reason or two. Being asked to recommend the choice of entity alone is reason enough.

You can change your email under "change login information".

The Office of Management and Budget (OMB) released President Donald Trump’s proposed FY 2018 budget for the federal government on Tuesday. Included in the proposals are several tax items, including a proposal to authorize the IRS to regulate all paid tax return preparers. http://www.journalofaccountancy.com/news/2017/may/trump-budget-tax-proposals-201716729.html