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Makes me wonder, when seeing animals of different stripes (who they say cannot reason) can agree on how to enjoy each other’s company. Why can’t people of different stripes (who supposedly can reason) cannot find a way to agree to enjoy each other’s company. How ironic. I think I need more tax returns to do.

I would hope that nothing happens, but all you can do is wait to see if your client receives anything.

How is all the gain related to depreciation recapture? You don't have any basis allocated to land?

Resurrecting this topic to emphasize how much this thread has meant to me as an accountant. The knowledge here completely changed my understanding of AAA/basis/RE etc. It couldn't have come at a better time given the losses many of my Sub-S clients experienced in 2020, basis reporting requirements, and throw in PPP loan forgiveness reporting and basis challenges and I'm just so grateful to have labored through learning this stuff. I now have the attached picture below taped to the wall of my office so it's information continues to be reinforced in my head. I hope it helps someone else that maybe struggles grasping what I found to be a complicated, difficult concept. I tried to keep the summary info simple and limited to what my own clients normally encounter so it's not a complete textbook of the concept, but if anything below seems wrong, please let me know.

I disagree with denying the IRS the power to regulate preparers, but first let me disagree with Tom. The IRS did not release those numbers of wealthy people. If I'm wrong please direct me to your source. Statistics are released on national tax filings, and the identities of some of the people at the top may be guessed because there aren't many who make $55 billion or whatever a year. That tax info can also can be gleaned from public records (like when companies bid on projects and have to disclose tax records of officers, etc). The focus on conservative nonprofits was in my opinion entirely justified and part of the required legal process of vetting nonprofits to make sure they fill the bill. Many of the groups that lost nonprofit status had no public benefit purpose but operated mainly in the politics arena. Some legit organizations that really do some public good got caught in the net, but that didn't justify letting pseudo-nonprofits off the hook, which is what happened and continues. As for Frog believing IRS will just shut tax prep offices down at will, I really don't think so. Until recent years, the IRS has treated tax pros as stakeholders and often said it couldn't carry out the tax laws without them. The new commissioner and Sect of Treasury seem to voice the same. I have attended seminars given by the Office of Professional Responsibility, and they always assured the audience that they don't go after people for a mistake here and there but look for patterns. Like when the normal audit selection process pulls five of your EITC clients and every one of them says they don't have a business and don't know how that Sch C got on their return, then they pull maybe 100 more; If the majority of them have the same issue, a case against the tax pro is opened. OPR is an office by itself and not necessarily affected by understaffing and overwork in other parts of IRS. I firmly believe that licensing will improve accurate filings. Right now taxpayers have to trust that the person doing their taxes knows more about the law than they do. At least the license will weed out those who don't necessarily cheat but just don't know what they're doing. If you know of a preparer who's been cheating for decades, too bad IRS audit rates are down so much because of lack of money and staff. We had a couple of CPAs in our area who did the same thing for years and are now out of business thanks to IRS auditors. And I have read many times that the accuracy rate of returns in states that license preparers is higher than elsewhere. Sure there may be a few outliers like the one near cbslee, but perhaps that firm was taking on clients that were beyond their level of expertise? I have had several clients who came to me because their prior preparer said their return was getting too complicated for their knowledge level. Some preparers just won't admit it, which is what you saw. Licensing at least proves a minimal level of competency, which is more than taxpayers have now.

cbslee - who is going to make the determination that a preparer is incompetent? How will the OPR get the referrals to investigate? How does the appeal process work? Will you be able to continue to work if accused by a RO or Agent of incompetence until a hearing is held? Our PTIN is critical to our profession. IF the IRS has unfettered ability to revoke without recourse, we lose our ability to practice. I fear that kind of control in the hands of public servants who have shown ethical lapses during my career. Remember when they went after conservative non-profits? Remember when they released wealthy taxpayer confidential information just a few months ago? Why did the Clinton administration have to pass a Taxpayer Bill of Rights to curb abuses by the IRS? I have no faith in the workers at IRS anymore. They don't have the tools or resources, are overworked, underpaid, and the last thing you want to do is give a marginally talented, stressed out government employee is a weapon to take your business away because you disagree with their findings. You may not fear them, but I would much rather see an organization outside the Treasury Department having oversite of preparers. I don't trust the IRS with that power. Tom Longview TX

I am with the "frog" on this one. How many of us think the IRS is going to look at HRB? JH? LIberty? They are not going after the pop ups either, cause they are gone by the time the return is reviewed. The revocation of the PTIN just gives the IRS another intimidation factor against legal preparers. Accept the audit findings or lose the ability to efile (which would shut you down). The PTIN was instituted to protect preparer's SSN. Now it will be a weapon used against us. Tom Longview, TX

I may be the only one to disagree, but I think the IRS has bigger problems to deal with - like the ones addressed by Olsen every year in her review. This doesn't mean I support bad preparers or bad tax returns. None of us do, and I wish they weren't out there. Especially shifty-eyed Sam across town who will deduct anything or lie for his customers. But Sam would be most likely to be shut down by increased audit activity than regulation. The problem with regulation of any industry is the enforcers pick and choose who to scrutinize. They are quick to go after low-hanging fruit to justify their jobs, but are not so anxious to tangle with difficult violators who can effectively throw up roadblocks. In other words, they could shut me down for accidentally failing to sign a return, or a failure to observe a petty regulation in Cir 1230. But a very bad preparer in a nearby town some 30 miles away has been spewing out inaccurate returns for 30 years, but is married to a Federal Judge. Big companies support regulation and in public relations campaigns they decry bad practices in their industry. Regulators can eliminate small competitors by shutting them down, but if a regulator knocks on the door of a Fortune 500 company, they are told "Our lawyers will be in touch" and that will be the end of it. I don't expect "like" emoticons from the group, but this is where I stand.