Leaderboard

This line: "but by the end of the conversation she was laughing " after a few minutes with you, I would presume we would all be laughing.... Rich

Documentation requirement is what crosses the line and makes us auditors rather than just due diligent preparers. Indeed if the IRS comes calling, they only need to ask for documentation and this serves as audit papers for the taxpayer. In all honesty, they couldn''t care less about tracking down a taxpayer - if they are in your office asking for documentation they are interested in a preparer penalty. Going across the tracks to find someone whose car is up on concrete blocks with broken glass in the street and screen windows torn is NOT why they came to your office.

She was so mad I had to do something, anything, to lighten the mood. I wasn't sure how she'd take it, but the Lord was with me.

exactly! We all know that this college kid is seriously in the business of coaching: Head coach: do you want to coach these little kids... I'll give you 50 buck college kid: OK (do I have to get up before 11 am to do it?) and certainly it is a SSTB: endorsements, personal appearances all of that

I hear you, my friend just shared this article: https://www.forbes.com/sites/robertwood/2019/02/07/trying-to-trick-irs-during-audit-can-mean-criminal-tax-charges/

Illmas, I represented a couple in a audit September 2018. The Tax Compliance Officer said the industry average for COGS for her retail store was 49.83% of gross sales. The taxpayer sells new clothing, jewelry, shoes. They had made such a mess trying to handle the audit themselves, nobody argued with me when I told them it was in their best interest to believe her and stop talking.

Home office deduction is a deduction attributable to a qualified business, so it does reduce QBI. It can be a specified service business if it falls under the category of "consulting". The regs define consulting as the provision of professional advice and counsel to clients to assist the client in achieving goals and solving problems. The performance of service in the field of consulting does not include the performance of services other than advice and counsel, such as sales or the provision of training and educational courses. Facts and circumstances used in making the determination include, for example, the manner in which the taxpayer is compensated for the services provided. Performance of services in the field of consulting does not include the performance of consulting services embedded in, or ancillary to, the sale of goods or performance of services on behalf of a trade or business that is otherwise not an SSTB if there is no separate payment for the consulting services.

go for it

I have won a similar situation on appeal by proving dependents spent the most nights with my client. Final document to appeal officer was 33 pages. If you get to that point I will gladly help you organize for appeal.

Does this activity rise to the level of a trade or business under sect 162? Also advice the kid not to go over the threshold for SSTB exclusion!

We try to get the 1095C from the client. It kills two birds with one stone. It shows the Health Insurance requirement was met, and it shows the dependent name, last 4 of the social, and the address of the taxpayer is on it as well. Not perfect, but I now can answer truthfully that I have seen a document that I relied on to prepare the 8867. Tom Modesto, CA

There is another thread that covered this recently. The IRS has clarified that the businesses that depend on a person's reputation mean only famous people, like Oprah advertising Weight Watchers or Michael Jordan Nikes. This from KITCES: According to the proposed regulations, a business is only considered an SSTB by virtue of the “reputation or skill” provision if, and only if, it generates fees, compensation, or other income via one or more of the following: Endorsements of products or services; Use of an individual’s image, likeness, name, signature, voice, trademark, or any other symbol associated with the individual’s identity; Appearances on radio, television, or other media. As a result of the IRS’s extremely narrow interpretation of the “reputation or skill” provision in the 199A regulations, the provision has gone from potentially being one of the primary culprits of classifying a business as an SSTB, to being fairly benign, and applicable only to an extremely limited number of “businesses” that are truly built around “celebrity” endorsements, appearances, and the like.

Me too; only thing, I'm still hackin', longly (is that a word?) and unhealthily, at this muck and they're going to outlive me.