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It definitely is expensed in the year that it is paid. There is even a line for it on the Schedule E.

If it was my client I would expense the property taxes in the tax year in which the property taxes were paid via the mortgage closing. One year clients complain that their taxes are too high, the next year they want to show more income.

I think it is the same year - they want to show that they made millions and yet they want to pay -0- in income tax. They are convinced that is what rich people do and if we were just "good" enough at our jobs to find them those same loopholes, they could make money without paying taxes.

This isn't a 3115 change because it doesn't affect more than the most recent 2 tax years. Amending is the appropriate method to correct this.

As I'm fond of saying, we account for what actually happened, not what someone hoped had happened. There is zero basis for capitalizing past due real estate taxes in this situation.

This is a classic case for the filing of a Form 3115 and a 481(a) adjustment. Since the 481 (a) adjustment will be positive, your client can choose to spread the increased income over the next 4 years.

You're getting all the [fill in the blank] ones this summer, aren't you?!

Because the depreciation has been taken for over two tax seasons, you do NOT amend. You will use Form 3115 to calculate/report the correct depreciation and make the 481a adjustment on the current return.

Hi Judy, I've been going back and forth with this and thanks for the clarification. From the onset, my original post was to use form 4797. All of the responses were good and some make you question what you already know. Thanks for the straightforward answer. The accountant that prepped the P&L really threw me off with the negative other expense and including the gain in other income. After I questioned this, they removed those two entries. I've read in the past were some say to correct the depreciation in the current year instead of amending. I've never been in favor of this but did question the possibility. As I said, amending the 2021 will make a small dent in an already substantial loss and of course, differences in the shareholder basis. Thanks!

Ah, Mr. Google does know almost all. Judy has the gift of the proper wording or using the right key strokes in the search box. She's found stuff for me in the past that I searched for hours trying to find. She's either got that Midas touch or I'm too dumb to ask exactly what I'm searching for

My package is unlimited efile; all states and three licenses as per usual. Something a little different on payroll, but I only do a few 1099s. Yes, price went up, but so did Drake and probably every other program. I have always been happy with ATX MAX and no reason to change my mind now.

She already picked up a physical folder of her 2021 returns, and I uploaded a set to FileShare and sent complete copies via eSign. No future set unless she pays her $800 fee to me! And, picks them up in person AND signs for them.

You are not allowed to give those records to anyone except the soon-to-be former client without her written consent to release the information. Personally, I wouldn't do that even with permission because that opens yourself up to be a responsible party for those documents being conveyed to her next preparer and this (missing docs) is already her complaint against you. Why would you give her another opportunity to blame you again if there is something SHE has missed giving you in what you have for 2022.

Likely the wisest steps. If the neighbor wanted to get involved, the client would already have given you the neighbors signed and backed by their license and e&o opinion letter. Instead, you likely have a no evidence based threat to get you to pay for their mistake A younger me would handle it differently, but age and experience has taught me not to waste time on folks who handle themselves in such a manner. And that paying for insurance is a reason to use the service one is paying for.

Personally. I would return all documents, keeping copies. Some sort of signed delivery. I would not ask for any back amount due, and I would send something like a note agreeing to forward copies to their next preparer if desired, or include a sealed set of copies intended for their next preparer. The idea is to make it clear you are done, but not to be closed off or showing emotion. It sounds like a catch-22. You cannot prove non receipt of something and they cannot prove you received something specific. BUT, consider there must be a reason the person is not using their “neighbor” already, so personally, I would not be surprised if that part of the statement is a toothless threat, if even true. Either way, once the letter is sent, no need to communicate with them directly again. If needed, you have your insurer to step in. Maybe your insurer has advice, or is willing to help with the firing?

Are you saying you are essentially hostage? What is the loss of firing when you have already reached out to your insurer? If you did nothing wrong, you have at least some chance of a successful defense, assuming they follow through. Sadly, one can pay for any desired opinion.

Same as are taught to sports officials, personal, profane, and/or prolonged is a request to be ejected. For pro sports, profane is ignored. For amateur games, profane may be ignored if no spectator could have heard it, depending on the situation.

I would fire immediately based on the threat, then do nothing. No need to file a claim or take any action based on a childish threat. Any customer who leads with or starts with some sort of threat immediacy becomes an ex customer. In my case, threats are usually to cancel, to challenge a charge card payment, or to post bad reviews. These are almost allays the first sentence in the first message in a thread. It seems safe to believe these folks have Come to believe being unprofessional is the way to get things done.

Some people have the strategy of either purposefully trying to offload responsibility, believe responsibility cannot possibly be theirs, or have a plan to defer and deflect as long as possible.

Seems to me this client needs to be released into the wild. I'm very close to informing mine that they need to go elsewhere. I'm certainly not paying a penalty which will likely lead them away - hopefully. The wife is very nice, the husband thinks he's a VERY big deal. Previous years he made 2.5x more than she does and this year she's expecting to make about 50% more than him. I'm interested to see how that dynamic unfolds in our conversations.

I have one like that now. Retired teacher who neglected to give me her NY and CT 2021 Forms 1099-R. I knew she needed them (long-time client) but she claimed she gave them to me with her 2021 tax info in October 2022. She finally obtained duplicates from NY and CT in February 2023. Now she says her neighbor the CPA tells her that I should pay all her penalties and interest because I filed her returns so late!! She is threatening further action if I don't "do the ethical thing." I've contacted my E&O provider who wants me to file a claim. Very time-consuming. In the meantime, she dropped off her 2022 tax info; I filed 2022 extensions for her. And, of course, she did NOT pay my 2021 fee. (She said she was leaving me a check when she picked up her 2021 tax return folder, but she did not.) By the way, this woman has been communicating electronically and was one of my first to use CCH's eSign to sign her returns and receive her review copy a few years ago. But for some reason this year she said she cannot use FileShare that she's used for years nor eSign, not even email except when she chooses to email me. She has been mailing things like the missing Forms 1099-R and Form 8879, adding weeks to our 2021 preparation time.