Leaderboard

I stay out of my client's investments, until last year, I broke my rule. Client is in a PTP for 30 days, loses $100 and the K-1 drops a few dollars of interest expense and depreciation on her. Add in my charge for Sch E page 2 and the 1256 straddle form and she lost a couple hundred bucks for a 30 day investment. I asked if she knew what the partnership did, she had no clue. So I gave her some questions to ask the advisor. She called me back and said he promised not to put her into those investments again. I never know where the line is to talk to my clients about their investments when I think they are being taken advantage of. I try to tell myself it is none of my business, but I care about my clients and it pi$$3s me off when I see these "professional advisors" putting their profits before my clients best interests. Tom Longview, TX

I think the only factor that matters is the big commission stream earned by the broker. They have a huge conflict of interest. I explain to my clients that these partnerships were created because borrowing money from the banks is expensive and the operators didn't want to risk their own money, so they went public to get unsuspecting investors to buy in, and they pay brokers big fees to foist these investments on you.

I have never seen so many small, meaningless and unprofitable K1s in my life as I have seen this year. Almost everyone with investments has two or three of them.

I think there are two main factors. 1) A misguided (or potentially deceptive) effort to create the illusion of "diversification". In fact, these small investments have virtually no impact on performance because they are so small in relation to the size of the portfolio. Whether they gain or lose, they don't move the needle very much in the long term. But they generate lots of paperwork which conveys the illusion that they're working hard for the client. After all, my guy must really be looking out for me if these sophisticated investments require all this fancy reporting. 2) A commitment to stay focused on focusing on specific funding objectives. Client: "You said this strategy would be good for the college fund for our kids." Broker, "Oh, you must have misunderstood. I was talking about building the college fund for MY kids. These LP's/ MLP's/ REIT's pay awesome commissions!"

I'll never forget the look on my clients' faces when they bought 10 of these K1 investments, and I told them each K1 adds $75 to their tax prep bill, every year, and $150 when the each K1 is sold, so I hope they make a lot of money on these. They went back and told their broker who then called me. Of course these are prices from about 10 years ago.

Is your computer on a battery backup surge suppressor?

I think these partnerships that investment advisors purchase, especially within IRA’s, must pay really generous commissions. After all, SOMEBODY needs to benefit from all this mess created by the k-1’s.

I had one client who had 30k in phantom income when she sold these because a large portion was currently taxable ordinary income, and the big capital losses had to be carried forward because she already had plenty of capital loss carryforwards.

Here's my guess at what is meant: Total income other than SS: 44671 Gross SS: 16860 Taxable SS: 13736 AGI (as originally stated): 58407 MAGI for Form 8962: 61531 (this assumes no tax-exempt interest/dividends) Without the year of marriage calculation, this would require a repayment of $3150 With the year of marriage calculation, the monthly contribution is $63 and repayment is $704 Form 8962 is filled out as follows with everything else blank: 1. 2 2a,3. 61531 4. 19720 (assuming other 48 states is checked) 5. 312% 7. 0.0630 8a. 3876 8b. 323 9. Yes 10. No Lines 12-22: 1256 1193 63 1130 1130 1194 24. 12430 25. 13134 26. 0 27. 704 28. 3150 29. 704 36. 1 63 01 11 ----------------------------------------------------------- If you need worksheet III for the spouse: 1. 1 2. 30766 3. 14580 4. 211% 5. 0.0244 6. 751 7. 63 8. 01 9. 11

I had to uninstall and re-install my ATX software. Not sure if the thunderstorm is exactly why, but I am blaming the thunderstorm. So far I have only had to deal with 2023 and 2024. Haven't tried to open anything older yet. Kind of a pain. Has anyone else had trouble lately?

I just got off the phone with the IRS. A refund check will be issued in about 4 weeks. After my initial call, I spent about 30 minutes waiting for a call back. It took about 10 minutes to verify my client and my own identity. It took another 10 minutes for the agent to go into another system and schedule the refund check. He didn't know why the scheduled Direct Deposit never happened.

I charge $$ for answering these letters. Over 50% of IRS letters are totally wrong or wrong in part. I do charge, but somehow I can't seem to charge enough. Clients don't understand why it takes so long to write a response, plus produce statistical information which is almost always needed. And the clients aren't really anxious - they feel if they just file their taxes correctly once a year, and do nothing wrong, that should be enough.

I hope you have been paid. And I hope you will send this client packing! Any client who makes my fee dependent on their tax outcomes is not someone I want to deal with. If you let them get away with making that statement, they will make it again the next time they don't like the outcome. Tom Longview, TX