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One tax return, that I recall taking the longest was my very first one. I only had this for calculations... I finished it just before I retired. I got me one of these fancy store, plugin, button pushing gismo's.....

Hope you are not including me in that three - I'll re-quote you and say I'm not worthy! Judy's the expert, and Abby is right up there too. Remember my accounting and tax knowledge is due only to years of study at HKU (Hard Knock University).

Absolutely. I will often not transmit a balance sheet if the corporation is below the limits, but I always print it out. Just a year or two ago there was a $30,000 loan to a corporation recorded nowhere - but the balance sheet was off, so we knew something was very wrong. Sent the clients off to dig (and it took them some time, too - these particular clients are clueless) and they finally found the supporting documentation for that loan - including the loan schedule and interest rate (hey, they'd forgotten that interest expense, too - real winners; we're now doing monthly bookkeeping for them).

Uh, I'm no expert and there are those here with more expertise or knowledge here that will correct my errors. I just help where I'm able, when the post interests me, or when I see a post isn't getting any responses. And Ringers, ever since your "wow" comment I've had SNL's Wayne's World theme stuck in my head, although my version is more like Wayne's mom starting at about 50 sec mark in the clip below. Party On!

These mostly arise when the shareholder has zero basis and the preparer doesn't want the shareholder to pay capital gains tax on distributions. It's a ruse the would not pass IRS scrutiny, especially if there are no loan documents, interest rate or regular repayments, and they likely totally ignored imputed interest rules. You'll have to move those to distributions if the shareholder can't/won't repay the money.

Here's a good summary of some of these issues: https://www.thetaxadviser.com/issues/2014/jan/nitti-jan2014.html

WOW!!! Three of this board's heaviest hitters responding to my questions. As was often said on Wayne's World, "I'm not worthy!!!" All of the information and suggestions were excellent. First of all, with regard to negative AAA, my understanding now is that it CAN be negative, but can not be made negative or reduced below 0 by distributions, which would then be treated as capital gains to the shareholder--is that correct? All clients have copies of their returns which they have provided but 4562 forms just have depreciation from prior year assets or are simply not included. New assets are sometimes listed on the return as "new acquisitions" rather than increasing fixed assets. Even when the fixed assets rise from 2017 to 2018 on Sch L, they are not listed on the 4562 forms. The clients have bank reconciliations that they do and some receipts for recent fixed assets, but little else. The original accountant had both 1120-S corps set up with no compensation paid to shareholders but with other C corps. used to pay shareholders and other employees and then "lease" them back to S corp for an inflated price. Individuals own the vehicles used by the S corp (both Dental practices) and are being depreciated on the individual 1040 returns at 95% and 100% business use with no mileage figures give. Both shareholders say that the vehicles are used mostly for commuting and just occasionally for lab work. One client has at least part of the dental practice on QB and I am getting that as well as whatever information they can get me in terms of fixed assets. One of the dental clients, however, asked me "what is a balance sheet." Abby, the $110000 loan is a loan TO the shareholder which he has no idea how it got there! I Have given all of the taxpayers a detailed spreadsheet citing all of the missing items for each entity and asking for their help in reconstructing all of the inaccurate or incorrect items. Between two clients, we are talking about 2 1120-S, 2 1120-C employee leasing corporations, 1 1065 LLC owning one of the office buildings, and the 2 1040 returns (one with 2 schedule C's), all prepared by the same accountant whose wife, thus far, has not been able to find ANY written records. I am not trying to belittle the prior accountant. We have known each other a long time socially and both went to the same school in IN (the one with the leprechaun mascot). He is a CPA with a JD as an international tax attorney, but as I said it has been a struggle for him to prepare these clients' returns for the past 3 or 4 years due to declining health. The clients' responses to my queries have been "I trusted him to prepare my returns for the last 20 years." Unfortunately, they did not keep the records they supplied him and neither did he. I truly appreciate your combined help in this situation. Respectfully, Ringers

I have fewer extensions this year than ever before. My clients came in about when they usually do. But the usual May & June crowd were done and not extended this year. I have the right amount to carry me through 15 October. But, this year -- from when the IRS and all the states I needed postponed the deadline to 15 July -- I'm getting an hour more sleep each night, took off most Sundays and even full weekends. I'm healthier and less stressed. I may feel it in September & October. But, I did NOT feel it in April nor July! What filled up too much of my time was taking webinars each time new "clarifications" came out, but webinars are less stressful than tax preparation; and my CEs are in great shape for this year.

My clients are not that way. They come in the same time every year, regardless. I just hate having to do extensions for days on end, and the constant worry that I missed extending someone. I'd rather just be finishing tax returns. And doing 50% of my work in essentially two months is my least favorite thing about public accounting. I'd much rather spread the work out over the year, and work more normal hours most of the year.

I will let you know when I finally get the documents from the client to finish it. Tom Modesto, CA

Obviously, if this was money going out TO the officers and is shown as an asset, it can't be add'l pd in capital as Abby Normal suggested. Also, I know Abby has an adversion to debt basis in an S corp, but the transactions should be recorded based on the actual facts, clients' actions, and their intentions, not what we want them to be. Either way, this is a big mess! Clients have convenient memories when it comes to money they've taken out of their corporations or have used the company checkbook as their own, and those amounts can easily result in large sums if this has occurred over many years. It's also possible that the accountant didn't know how to handle distributions in excess of AAA and was creative. This reminds me to mention reasonable compensation, if the owners are on payroll, and the status of quarterly and year end payroll reporting.

Exactly. Spreading out the workload and lessening the stress were always goals of mine. I love my clients who always go on extension. There's no way I could do them all by 4/15.

First, I would move the shareholder loans to additional paid in capital. S corp debt basis is an unnecessary complication. Too many preparers plug the balance sheet, which I hate! If the balance sheet is wrong, the tax return is probably wrong too. Ideally, you should recreate all the returns from inception and reconstruct basis too. You didn't mention stock basis so I'm guessing the prior preparer didn't track that? Are there actual balanced books for these companies?

Some other suggestions and thoughts - What records were used to prepare these returns that the client can provide? Possible clues may be found there. Depending on #1, you may be looking at amended returns for all open years. Does the client have copies of any returns? Have client request copies of returns from IRS? Form 4562 should be included with any year that has asset additions. Use that to reconstruct the fixed asset schedule as best you can and see how close you are. Consider a plug for the remaining differences of cost and accumulated depreciation to tie in to the lastest balance sheet figures, but do NOT depreciate those "plugged" tie-in amounts since you really don't know what those are. I'd have to know what your clients can dig up before commenting further.

#1 could be true if the S corp doesn't have anything that would flow to the Other Adjustments Account, usually tax-exempt income and related deductions. #2 - This is incorrect. S corp losses can result in AAA being a negative balance, but distributions can't reduce it below zero. Shareholder's basis that can't be reduced below zero. #3 - See #2 above. Well, ignoring the error related to #2 and that AAA can be negative, if this was an S corp since inception, always on the tax basis of reporting, no timing differences, and no other activity that would be in the OAA, it is a possibility that AAA and retained earnings could be the same.

you have clients who pay estimates? We would not have had to have them pay vouchers if they did estimates!! Maybe I will try the pay 1.2 with tax due method.. D

What’s is the longest time it has taken you to prepare a return for a client that has multiple business intermingled with one another?

Including the time it took to get the client to dredge up all the records? Two and a half years since the first docs showed up. Subsequent years have taken less time, but the client I'm thinking of usually files a minimum of six months after extension deadline has passed.

Talk to the clients about prior-year K-1's. Perhaps someone has *something* that will give you a clue where to start digging. They may not know anything about those booked loans (for example) but the K-1's may have information that will help you to nudge their memories.

It never really does anyway. I put my foot down years ago that I will NOT half-kill myself to accommodate clients who knew, back on Jan 1, what the deadline was (and this year, had extra time!). They know that, and frankly if they go PAST the deadline, that's their problem, not mine. Anyone who whines is very welcome to go elsewhere. That said, I'll do my best - within reasonable limits that *I* set.

I always had allergy problems and/or bronchitis between Apr 15 and Aug 15. So the excuse on the 2688 was always "Due to recent tax preparer illness, additional time is respectfully requested to complete this return." That was my story and I'm sticking to it. Always got that magic "Approved" reply. (Remember how we had to file it in duplicate?" ) I agree with Lion, too. Extensions meant more money in my bank account because I could prepare more returns in 10 months than I could in 4. Plus I could live a more normal life in the first 4 and stop trying to be a tax martyr working until all hours of the night & sacrificing weekends.

I can prepare a lot more tax returns until 15 October than I can to 15 April. This is my job. I WANT to work and make money all year! 15 October still gives me plenty of time to take classes and enjoy various holidays with family.

I always calculate extension payments for my clients to include both the balance due for the old year plus the new year's 1Q and 2Q ES payments, using the safe harbor and rounding up generously. Then, when we finally prepare their returns (maybe in September after that pesky K-1 finally arrives) we're not running behind for the current year. Paying the BD and 1Q and 2Q with the extension instead of separately means they're all dated 15 April (well, 15 July this year) and makes the balance due and 1Q on time and 2Q covered until we can prep the returns. If the payments flow into 2Q and 3Q and even 4Q, that's OK. But, most usually, we catch up (or reduce payments) in 3Q and 4Q. It's so much simpler than trying to calculate exactly how much to pay with the extension and exactly how much to pay with the 1Q voucher and then hustling to prep the returns or calculate exactly how much to pay with the 2Q voucher.

Sometimes I think it's best to skip a first-quarter estimate and just add that amount to the extension request. For example, I never know what I'm going to owe either. I guess $1k and usually pay $2k or so each estimate. So I pay $3k with the extension. At least I don't underpay for the year, and what's left over gets rolled to the next year (hopefully close to what the first estimate should have been). I know a CPA who pays all four quarter estimates with his extension request. He says that's when his bank account is full with tax season receipts so he might as well. If he's under a bit, he has time to make it up in a later quarter.

Abby, NO! We had automatic extensions this year to July 15, and we saw what happened. The April 1st folks all came in July 1st. If they thought they had an automatic extension until October 15, they'll show up Oct 1. They will overlap with the usual extension folks who wait until October 10. Tax season will never end!

My real sales line on this subject goes something like this: "I charge by the form. I don't know for sure what forms you need, so I don't know for sure what it will cost. If you will show me last year's return, I can tell you how much I would have charged for that return. When we get done with the return this year, If you don't like the price, you can pick up your documents and walk out, no hard feelings. I price my services reasonably, and I think you will see that when we get done." I have never had anyone pick up their documents after I have completed the return. I think that knowing I will give them a last minute opt out gives them confidence. Or, I have them so far into the process that even if they think I am a little high on price, they don't want to go through the exercise again with someone else. Tom Modesto, CA