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Client got a letter from the IRS that needs to be responded to in 20 days. The letter is dated 4/7/2024. I got the letter today.... The letter asks for "Any Supporting Documents Verifying Income". The client has a Sch. C with 500K of gross income and a loss on the bottom line. At least I did not get it after it was too late to respond. I am blessed that my clients are so thoughtful. 20 days to respond, 20 weeks to get a response back. Anyone taking the under on getting a response before 20 weeks? Tom Longview, TX

Regarding this entire issue of deducting frills, back when I was a young accountant and knew everything, I challenged a client about his wanting to claim a deduction for a boat, a 4-wheeler, and 2 trailers on his business return. I explained in great detail how "ordinary and necessary" expenses worked, putting his logo on them doesn't make them business expenses, how this would be a red flag in an audit, and how his mechanic and barber didn't know as much as I do about these things. When I finally stopped to take a breath, he calmly replied to me, "John, how do you think my crews get around when we are surveying heavily wooded property and undeveloped land?" (Did I mention he was a land surveyor?)

At least screenshot the tracking showing the first mailing was delivered to the Post Office before the 4/15 date. Once it leaves the taxpayer's hands and is in the custody of the USPS, I think they would have to allow a duplicate submission. You might need to go to a supervisor for that, and you also might need to use the words "Tax Court" to that supervisor. Tax Court would probably find for the t/p and they would also ream out the agent & supervisor who disallowed the re-file due to USPS failure after they have Certified Mail in their custody.

Ask more questions. Every day rented at below market rate is considered personal use, and this may not be a rental at all as far as deductions are concerned. If that is the case, the income becomes ordinary income, deductions evaporate except for those that would be allowed on Sch A.

It can be hard for legit farmers to show a profit. A lot of the hobby farms have a few acres and "someone" told them they can take the loss. Maybe they raise five cattle for beef in a year, butchering one for themselves. When I tell them I'm going to decrease feed, vet, etc by 20% they aren't happy.

Exactly why I wish ATX would create a one-stop-shop location for all CF/CO -- Wolters Kluwer, if you're listening, this would be a really great addition and help alittle in justifying the large increase in software costs we get every year!

Now that the convo seems to have exhausted and concluded, I found this funny clip about those farm trucks. It is a Facebook clip, so I'm sorry that those of you not on that platform won't be able to see it. https://www.facebook.com/share/r/16AqLmzUXp/?mibextid=D5vuiz

I had one similar, not as bad on furnishing, but constantly traveling to their condo even when they had a management company. But they vehemently insisted that every trip was to work on the condo and all I could really do is say that they might be required to document what they actually did on every trip if they were audited (I also "culled" them from my client list after that return). I would try to avoid judging them based on "taking advantage" of the law, but it's still your choice whether or not to prepare their taxes. One factor is if part or all of the loss is not allowed, special depreciation is not really doing much for them.

Sounds like the trucks some of my farmers have pulled up in. No tags, no inspection, and sometimes even no doors!

We had that selfsame vehicle as a loaner summer before last when we had car trouble on vacation! Smelled like the chickens it had been recently used to transport, and we called it the Chicken Mobile. Every time you turned it on, a different set of warnings would come up.

That just takes you to the Tax Summary form, which, unless it's been seriously updated, does not have anywhere near all of the carryover amounts. I don't have any complex returns so I can't see what is and what is not included.

Is this client using a management/rental agent? If so, those companies usually have a report that shows the actual days rented and the days it was owner occupied. If you can get that, you may be able to see if receipts for fixing up and repair costs match up to any of those dates after it was put in service. If there are no receipts for repair supplies but the report shows owner usage, then what exactly were they doing there? Even something as simple as painting requires materials, but if it is a nice enough property to be rented as a vacation spot that the owners choose to stay themselves, then what would be needed at that point other than routine cleaning or fixing something minor that was broken by a tenant? Are you sure that all of the $75K is furnishings that would allow the bonus depreciation? Is it available for rental this year, or is it already out of service? I also wonder about the $2,000 of income for 61 days of rental. That seems really low to me, but maybe it is your location compared to mine. What kind of property are we talking about here? Are these short-term rentals in a nice vacation area or a more rustic site like a cabin in the woods?

With second homes stuff happens and plans often change so just because you can doesn't always mean you should

Direct Pay is pretty easy.

For a business devoted to buying and selling houses, I'd say it's listed under inventory costs, to be used when the house is sold.

Well in our area all farmers drive big fancy trucks and run them into the ground hauling animals, feed, etc.. And they have to drive on the interstate to get places. Not uncommon to spend over 1/2 million on a combine that comes stock with gps farming systems, ac and a descent sound systems. Is that extravagant and doesn't meet deductible standards ? Hell we have farmers with multiple thousands of acres. Sell millions in crops and animals each year. If I said you can not depreciate your 1/2 million combine with a stereo system or your Ford F450 extended cab with leather seats because they are too extravagant, I would get prodded with a pig sticker !!!! If its not 100% farm use, give them a percentage.

You have to consider as well that a smaller truck cannot haul heavy trailers. I have a client that has a nice 350 that I know is occasionally used for personal stuff (hauling the boat.) But if you consider how much a loaded trailer weighs when you load a piece of equipment on it thats weighing 20,000 lbs, you need a pretty big engine to move that thing, and stop that thing. Then add a few hills or mud, then he needs a big truck. He needs to keep track of usage, but this kind of truck is basically a piece of equipment. I tell my farm and contractor clients to take pictures of the trucks hauling something heavy so when asked I can let the auditor from NYC know that this truck has a purpose.

ATX has carryovers for Sch D in the worksheets. Same for 8582 losses, foreign tax credit, contributions, PTP losses, etc. There's no one central place to see them all.

It doesn't have all the carryover info on it but it's better than nothing.

Look on Form 1116 in the first tab, Pages & Worksheets. Scroll down to Sch B (1116) - Credit Carryback/Carry forward and enter the data there.